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Bangladesh Petroleum Corporation (BPC) is planning to build 14 new oil storage tanks by 2014 at a cost of around US$19.23 million, Platts reports.

The state-owned fuel import and supply agency is said to be looking to increase the country's existing fuel storage capacity of 894,000 metric tonnes (mt) to 100,000 mt in order to avoid paying demurrage on delays in discharging oil products.

The storage tanks are slated to be built in Bagerhat District, located in south-west Bangladesh, near the port of Mongla. BPC has issued a tender for the construction of the tanks and the deadline for submissions is May 19.

The winning firm will be required to build the new tanks within 18 months from the date of signing the contract, BPC Chairman Md Eunusur Rahman said.

Project director, Mosaddeque Hossain, is quoted as saying that the company intends to utilize the new tanks to store 180-centistoke (cst) high sulphur fuel oil, 0.25% sulphur gasoil, superior kerosene, 95 RON gasoline and 92 RON gasoline.

Of the 14 new oil storage tanks, the project will include three tanks with 15,000 mt capacity each, one with 10,000 mt capacity, one with 7,000 mt capacity, five with 5,000 mt capacity each, one with 4,000 mt capacity and three with 3,000 mt capacity each.

Demand for oil in Bangladesh has surged since the country's drive to increase the number of oil-based power plants since 2010. During the 2012-13 fiscal year, BPC has forecast that it may need to import approximately 5.90 million mt of crude oil and refined products, up over 11 percent on the previous year.

Compensation and Losses

BPC has this month requested compensation from the Power Development Board (PDB) - the state-owned power generating agency of the country's Power Division - for receiving less furnace oil than the amount ordered in requisitions during the months of February and March.

PDB is said to have submitted a requisition for 80,000 tonnes of furnace oil for the month of February, but it received only 64,000 tonnes. The amount ordered for March was 133,000 tonnes, but it took only 93,000 tonnes.

BPC officials are claiming compensation for the unconsumed fuel and associated costs such as the cancellation of transportation orders, the storage of the unused fuel in vessels or depots and losses from fuel evaporation.

As BPC has limited storage capacity, it says it had to keep most of the fuel unloaded in vessels and pay compensation to shipping agencies. The company says it had to pay approximately US$15,000 per day for keeping the imported fuel unloaded in vessels.

Apart from financial losses from the non-consumption of fuel, BPC has also been incurring financial losses for importing fuel and selling it at subsidized rates.

During the 2011-12 fiscal year, BPC incurred losses of Tk 12,000 crore. As a result, the government compensated the state-owned agency via a subsidy package.