French firm signs deal to boost Eastern Refinery's capacity

The government yesterday signed a €30.75 million or Tk 257 crore deal with French company Technip to prepare the engineering design in an effort to treble the processing capacity of Eastern Refinery.

Technip and Bangladesh Petroleum Corporation or BPC signed the agreement at the secretariat in Dhaka. 

The deal aims at helping Eastern Refinery set up its second unit. Once completed, the new unit will raise the processing capacity to 4.5 million tonnes of crude oil per year from the existing 1.5 million tonnes. Technip built the country's first refinery in Chittagong in 1968. It will now prepare the design and relevant documents in six months. In line with the engineering design, BPC which owns ERL will begin negotiations with Technip for engineering, procurement and construction of the new unit.

At the press briefing, Nasrul Hamid, state minister for power and energy, said the cost of construction of the second unit has been estimated at Tk 16,739 crore ($2.1 billion). ERL will implement the project and operate the refinery.

At present, the country's annual demand for crude and finished oil is 5.5 million tonnes. Now, ERL supplies 1.2 million to 1.3 million tonnes of petroleum products per year after refining crude oil. Another 3.5 million tonnes of refined products are imported at higher rates to meet the demand.

Once completed in 2018, the second unit will help the country save $220 million a year, according to the BPC, which will provide the entire funding for the project from the sales of fuels in the local market.