Boosting Energy Ties: Bangladesh's Diesel Purchase from Assam Refinery
In a significant move strengthening cross-border energy trade, Bangladesh has approved the purchase of 1.8 lakh tonnes of diesel from the Assam-based Numaligarh Refinery Limited (NRL) by December this year. This development underscores the growing energy relations between India's Northeast and Bangladesh.
Negotiations and Agreements
The decision was made at a meeting of Bangladesh's Advisory Committee on Government Purchase, chaired by Finance Adviser Salehuddin Ahmed, on January 6, 2023. The state-owned Bangladesh Petroleum Corporation (BPC) will be responsible for the import, with payments to be split between direct settlement and bank financing. The deal, valued at 14.62 billion Taka, or approximately $119.13 million, was finalized following negotiations with NRL, a subsidiary of Oil India Limited.
Pricing Mechanism
The import cost will be determined by the prevailing international oil prices. The final amount will vary from the calculated $119.13 million, with a premium of $5.50 per barrel over a base price of $83.22 per barrel. This pricing mechanism ensures flexibility in response to market fluctuations.
Long-term Supply Agreement
Muhammad Fouzul Kabir Khan, Bangladesh's Power, Energy, and Mineral Resources Adviser, confirmed that the import is being executed under a 15-year long-term supply agreement signed during the previous government's tenure. This agreement underscores the commitment of both countries to foster long-term energy cooperation.
Transportation and Supply
NRL operates its refinery at Numaligarh in Assam. The diesel will be transported from the refinery to Siliguri in West Bengal and supplied to Bangladesh through the Bangladesh-India Friendship Pipeline, which became operational in December 2022. This pipeline facilitates seamless fuel transportation, enhancing energy security for both nations.
Implications for Northeast India and Beyond
This energy trade boost not only strengthens the economic ties between India's Northeast and Bangladesh but also underscores the potential for broader Indian energy exports. The successful operation of the Bangladesh-India Friendship Pipeline serves as a model for other cross-border energy projects, such as the proposed India-Myanmar-Thailand (IMT) gas pipeline.
A Forward Look
As energy demand continues to grow in the region, collaborative initiatives like this diesel purchase agreement between Bangladesh and Assam-based NRL are crucial for ensuring energy security and fostering economic growth. These cross-border energy ties not only benefit the participating nations but also contribute to regional stability and integration.