CVO Petrochemical hopes to resume production soon as the Bangladesh Petroleum Corporation (BPC) has approved the private petrochemical refiner to produce light fuel by fractioning naphtha – a petroleum by-product.
On 20 September, BPC sent a consent letter to the company, which is listed on local stock exchanges, regarding the allotment of naphtha for five years.
The government agency also signed a buy and sell agreement of naphtha with the refiner on 22 September.
The company will produce solvent (light fuel) by fractioning naphtha at its existing factory. The product is used in garments, chemical, automobile, and light engineering factories for washing goods.
At present, this product is fully dependent on imports and it will be the first private company to produce this item.
Khwaza Mowin Uddin Hossain, company secretary of CVO Petrochemical Refinery, told TBS, "To produce such products, the company needs to upgrade its existing machine and install new machinery. But the board did not finalise the project yet. When the board will approve the final project, we disclose detailed information on that."
He also said, as per the agreement with BPC, the company will collect naphtha from Eastern Refinery and sell the refined product to Padma Oil.
CVO Petrochemical's main operation is producing fuel such as diesel and petrol by refining condensate. But BPC suspended the supply of condensate from local gas fields to all private condensate fractionation plants from July 2020 until further notice.
The corporation took this decision upon the condensate crisis and an allegation that the private refineries had sold the condensate without refining.
That is why its production halted for more than 14 months.
The company secretary said the refiner had earlier requested BPC to resume condensate supply saying many investors would lose their investment if the listed company could not get back to production soon.
According to sources in BPC, the government is likely to import condensate to help resume the operations of 12 private refinery plants including CVO that separate the liquid into individual products, such as diesel, petrol, and octane.
The imported condensate will contain a high level of diesel and the refiners will only be allowed to produce diesel. If they produce other gasoline, they will have to maintain the standards set by the Bangladesh Standards and Testing Institution.
From July to 20 September this year, CVO Petrochemical's share price jumped 213% to Tk261 at the Dhaka Stock Exchange (DSE) on social media rumours that the company is on the verge of getting back to production.
The company replied to DSE's queries three times and lastly on 19 September said that there is undisclosed information for the unusual price hike.
In the first nine months of fiscal 2020-21, the private refiner incurred a loss of Tk4.83 crore and the revenue fell 93% year-on-year due to the shutdown.
The company had a net income of Tk3.43 crore in the July-March period. At one point in the previous year, the revenue was Tk52.92 crore and the loss stood at Tk1.07 crore.
The loss per share increased to Tk1.97, from Tk0.37 in the same period of the previous year.
In the January-March quarter, the company had no income and incurred a loss of Tk1.73 crore due to operating expenses.
In 2014, CVO Petrochemical Refinery shifted its business from producing edible oil to refining condensate. Its installed production capacity is 150 tonnes per day.