Private entrepreneurs continue to invest in both mega and small projects in different sectors, including power and energy, contributing to the country’s economic development.Economists and businessmen observed that private sector’s involvement in different sectors is helping reduce the country’s dependence on foreign products and services.
The fast expansion of the private sector has become possible due to business-friendly policy support extended by the present government led by Prime Minister Sheikh Hasina, they added.
Amid the thrust in private sector investment, leading business conglomerate Bashundhara Group has taken up a mega project to construct the country’s largest oil refinery in Chittagong at a cost of Tk 10,000 crore. The refinery will produce refined LPG, diesel, gasoline, furnace oil and jet fuel.
Bashundhara Oil and Gas Company Limited, a concern of Bashundhara Group, will build the refinery on 220 acres of land at Sitakunda in Chittagong. The oil refinery is expected to meet 80 percent of the country’s demand for refined oil.The construction work of the refinery will begin in July this year and is scheduled to be completed by 2022. The oil refinery will have the capacity to refine one lakh barrels of crude oil per day. Currently, the country’s lone refinery in the public sector, Eastern Refinery Limited, refines 33,000 barrels of crude oil a day.
The mega oil refinery will produce 4.7 million tonnes of petroleum oil every year against the local demand for 5.89 million tonnes.
Belayet Hossain, senior deputy managing director of Bashundhara Group, said, “Our refinery plant will be one of the biggest private projects in Bangladesh with the capacity to refine one lakh barrels of crude oil per day. We have been working on this project for the last two years.”
Out of the total investment of Tk 10,000 crore, Tk 6,400 crore will be mobilised from syndicated loan and the rest will be arranged by Bashundhara Group in the form of equity investment.Nine private banks have already sanctioned loans for the project while 15 other banks are considering the loan proposals. The refinery will sell its products to state-run Bangladesh Petroleum Corporation (BPC) and other local buyers.
With Bank Asia as the lead arranger, a total of 24 public and private banks are putting their efforts to arrange the funds through the syndicated loan. As of now, Tk 3,300 crore out of targeted loan amount has been sanctioned by nine private banks.
Of the rest 15 banks, seven banks have already decided to finance the refinery project while eight others are scrutinising the proposal.
Islami Bank Bangladesh Ltd is likely to approve Tk 1,500 crore and three state-owned banks — Agrani, Janata and Sonali — are expected to contribute another Tk 1,500 crore to the syndicated loan.Shams-Ul-Islam, managing director of Agrani Bank, said the oil refinery project taken up by Bashundhara Group is a mega project involving huge funding requirements, though the risk involved in financing such project is very low as the government will be one of the biggest buyers of refined fuel from this proposed refinery.
“This project will become a pride project and the government also wants this project to succeed,” hesaid.
The refinery project will fetch the country’s biggest-ever syndicated loan. The loan will be repaid in 11 years. Earlier, GPH Ispat Ltd mobilised a syndicated loan worth Tk 1,280 crore.
Sources at Bangladesh Bank said as part of the syndicated loan, some banks sought approval to lend funds beyond the set limit for single-party exposure.
The central bank taken the matter positively and asked the lead arranger to submit all proposals together, they said.In the South Asian region, only India can export refined oil after meeting the local demand.
As of 2016, Pakistan produces 40 percent, Sri Lanka 30 percent and Bangladesh 20 percent of their total refined oil demand. Rest of the demand is met by imports.
Source: daily-sun.com
