Engine oil market widens
The market for lubricants is growing steadily, driven by an increase in demand for quality and branded products, leading players said.
Of the Tk 1,200 crore retail market of lubricants in 2010, automobiles consumed nearly three-fourths, while the industrial sector, aviation, marine and irrigation consumed the rest. The market was Tk 1,000 crore in 2009 in terms of retail sales.
According to MJL Bangladesh that blends and markets Mobil brand lubricants, the market share of 53 percent in 2009 of low-quality and low-cost products has come down to 46 percent of the total consumption in 2010.
“Awareness campaigns have paid off,” said Warisul Abid, a senior official of MJL Bangladesh. He said his company has been trying to sensitise the consumers for some years now.
Lubricant consumption is projected at a minimum 450 kilo barrels (1 kilo barrel=1,000 barrels) for 2011, up by just 15 kilo barrels compared to that in 2010. The consumption was 425 kilo barrels in 2009.
Mobil is by far the market leader with a 29 percent stake worth Tk 450 crore, followed by BP with 13 percent, Total 6 percent, Shell 2 percent, Caltex 2 percent and Castrol 2 percent. The rest 46 percent is dominated by low-quality and low-cost brands.
According to data, sales of these major brands increased significantly in 2009-2010. In 2009, Mobil had a market share of 26 percent and BP 11 percent.
Engine oil, also known as motor oil, is a liquid product used to lubricate various types of internal combustion engines, such as automobile and industrial engines. It is also used in marine, agricultural, train and aeroplane engines.
The key function of the oil is to lubricate and clean the moving parts of machines or engines. It also prevents corrosion and rust and keeps the engines cool by carrying away the heat from the sliding parts.
The private sector lubricant business in Bangladesh is just a decade old. Until 2000, only the state-owned oil companies were allowed to import, blend and distribute lubricants here. At that time, most lube oils (65 percent) contained no additives.
The government liberalised the market and banned non-additised lubricants in 2001, to ensure minimum standards. Since then, nearly 70 brands of lubricants, including renowned multinationals, have entered the market, half a dozen brands of which account for nearly 50 percent of the total business.
Low-quality engine oil has become a concern, as it can ruin an engine. The market players said there is no government intervention to ensure the quality of engine oils.
A litre of low quality lubricant costs only Tk 120 to Tk 130, whereas the price of a litre of oil by Bangladesh Petroleum Corporation is around Tk 200 and a minimum of Tk 320 by Mobil.
“A section of unscrupulous businessmen import used lubricants from Dubai by mis-declarations and recycle those in and around Dhaka for sale at a lower price,” said an official of Meghna Petroleum that markets the BP brand.
Currently, the dealers highlight the oil quality only on paper, he said. As there is no mechanism to check the quality of lubricants marketed by different companies, it is an urgent need to devise a system to ensure the standards, he added.