However, it is yet not clear how much oil could be stored in the private-sector storage tanks as most of them might have been fully or partially filled
The state-run Bangladesh Petroleum Corporation (BPC) plans to rent private storage tanks to hoard an additional amount of diesel oil to benefit from a historic slump in oil prices amid the coronavirus pandemic.
The country's sole importer of all petroleum products, except high-sulphur fuel oil, or HSFO, has already sent a letter to eight major private companies seeking their opinion and required information in this regard by April 15.
The required information includes the number of tanks and their capacity, the receiving points and rents of the tanks, and the rates of other associated costs.
The corporation will sign mutual agreements with interested companies for the time period till December 2020, reads the letter.
Confirming the initiative, Syed Mehdi Hasan, director (Operation and Maintenance) of BPC, said, "We are planning to use private infrastructures as all of the public storage facilities are filled now. First of all, we will crosscheck how cost-effective the initiative is going to be."
However, it is not yet clear how much oil could be stored in the private-sector storage tanks as most of them might have been fully or partially filled.
Oil prices in the international market have fallen drastically in the wake of the coronavirus outbreak and a price war between Saudi Arabia and Russia. The price of crude oil has fallen by 40 percent to below $30 per barrel. Last month, the BPC imported per barrel of crude oil at a rate of $56.
On April 9, the corporation imported each barrel of diesel at a rate of $38.5, a sharp fall from the import price of $45 a month ago. Earlier, the corporation had to spend $70-73 to import one barrel of diesel.
Some countries, including the United States, were planning to buy 77 million barrels of oil from late March. This move was part of a plan to buy large amounts of crude oil to replenish the Strategic Petroleum Reserve (SPR), as announced by US President Donald Trump. This will be done to take advantage of low oil prices, according to Bloomberg.
According to LiveMint, India also plans to take advantage of low oil prices to top up its SPR. LiveMint quoted its source as saying that the Indian oil ministry was seeking a fund of $673 million to purchase extra oil.
But for Bangladesh, such initiatives are quite difficult to implement as the state-owned BPC does not have a sizeable oil storage facility in which it can keep the extra oil.
Bangladesh can store 13 lakh (1.3 million) tonnes of fuels in different depots across the country. This is equivalent to 45-50 days' demand. The government reservoirs have almost reached their saturation capacity by now.
In this situation, if the government continues to import oil there will be no place to store it.
The country's daily demand for fuel is 18,000 tonnes. Diesel tops the demand.
In the pre-shutdown period, from March 9 to March 25, the daily profit of the BPC ranged around Tk240 million, or $2.85 million.
BPC's profits, however, slipped to around Tk80 million per day after March 26, as the consumption of all types of petroleum products declined by around one-third to around 6,000 tonnes a day amid the countrywide transport shutdown.
Meanwhile, consumers are not getting the benefit of the historic oil price fall as oil prices in the country have not been revised in the last four years.
The government last fixed fuel prices in 2016 when prices per barrel of crude oil and diesel oil in the international market were $43.13 and $50.31 respectively.