Bangladesh Petroleum Corporation has been tasked with working on Russia’s offer to sell refined fuel oil to Bangladesh, State Minister for Power, Energy and Mineral Resources Nasrul Hamid has said.
Speaking to bdnews24.com on Wednesday, Nasrul also said a committee was already formed to look into the matter and it began discussions.
After Russia had offered to sell crude oil to Bangladesh in May amid sanctions imposed by the West over the Ukraine war, Nasrul said the refineries of Bangladesh do not have the ability to refine Russian crude.
Russia’s integrated energy company Rosneft last week sent another proposal to sell refined oil to Bangladesh.
On Tuesday, Prime Minister Sheikh Hasina asked her cabinet colleagues in a meeting to find ways to import Russian fuel oil amid the lingering energy crisis. The government has recently raised fuel oil prices by as much as 51.68 percent.
Sanctions on Russia in the wake of the Ukraine invasion on Feb 24 reduced the global oil supply, sending countries scrambling for fuel. For its part, Russia came up with an offer -- oil at a discount with non-dollar payment.
To combat the crisis, Indian refiners have been snapping up Russian oil sold at hefty discounts to Brent and Middle East staples after some Western companies and countries shunned purchases from Moscow.
Indian companies are using Asian currencies more often to pay for Russian coal imports, the Reuters news agency reported, citing customs documents and industry sources.
The method allowed them to avoid the US dollar and cut the risk of breaching Western sanctions against Moscow.
Hasina also told officials to figure out what currency should be used to buy fuel from Russia.
A top BPC official, who requested not to be named as he was not authorised to speak to the media, said Rosneft is sending representatives to Dhaka to discuss many factors, such as shipping cost, the process of shipping, currency or payment, which banks will be used and how many days Bangladesh will get to make the payment.
Bangladesh imported more than 6.1 million tonnes of fuel oil in the 2020-21 fiscal year. Three-fourths of the oil were refined. Although refining domestically saves money, the government steps to expand refining operations have not seen success.
To save US dollars now, the government has stopped buying liquified natural gas from the spot market. More than half of Bangladesh’s power plants are run by gas.
It also suspended production at power plants run by costly diesel. These factors have forced the authorities to resort to recurring power cuts and enforce staggered weekly holidays in industrial areas.
As the energy crisis continues to hamper production, make life difficult during heat and lead to price rises beyond people’s purchasing capacity, it will be better for Bangladesh to buy fuel oil from Russia at cheaper rates, said energy expert Professor M Tamim.
“We should of course buy refined oil if the cost is lower than the international market,” he said.
Western sanctions on Rosneft and restrictions on the use of the SWIFT system to make payments to Russia, however, may make it difficult to make transactions with Russia.
Analyst Ahsan H Mansur has said Bangladesh may still be able to pay Russia in Chinese yuan as Russian rouble is not much available, but it should also keep in mind the sensitivity of the issue.
“Because the US and Europe hold 80 percent of our export market. We can’t do anything that may make them unhappy.”
“Maybe they won’t object if we can make them understand that people are suffering here.”