The installation of the second unit of Eastern Refinery Ltd (ERL-2) is hanging in balance over the past several years because of the indecision of the government on the project, despite the lining up of a credit for $ 2 billion from the Chinese government in this respect.
Bangladesh Petroleum Corporation (BPC); which owns the Eastern Refinery got the approval for construction of the ERL-2 in December 2013 with an annual capacity of 3.5 million tones of crude. It was also negotiating for funding of the project with a
Chinese funding agency from 2012.
The ERL-2 was scheduled to go into production by 2016, so that it can refine all the domestic requirement of 5m tones of fuel oil from crude imports. The existing unit of Eastern Refinery can refine 1.5 million tonnes.
Eliminating the need for import of refined oil was the main purpose as it could save cost of oil refined domestically by at least Tk 6 to 7 per litre
During the official visit of Prime Minister Sheikh Hasina to China in 2014 the matter of government to government funding for the project came up for discussion.
In the joint-statement at the end of the visit, ERL-2 project was listed as one of the five projects for Chinese funding. The concerned Chinese state owned company was then recommended about the project by Chinese Economic Counselor in Dhaka clearing the way for installation of ERL-2.
The letter was also delivered to State Minister of the Ministry of Energy and Additional Secretary of the Economic Resources Division (ERD) of Bangladesh government. Subsequently, the Chinese Embassy and concerned Chinese ministry took up the mater and Eximbank, which is the funding arm of the government, and the relevant Chinese company submitted letter of interest to Bangladesh side. The Chinese government also obtained pre-allocations for financing the project.
But the company is not receiving any official reply from relevant Bangladesh government agencies, the local sources said while around USD 2 billion Chinese fund for the project is lying unutilized.
