State-owned infrastructure processes barely 23 percent of Bangladesh’s 6.5 million tonnes annual fuel oil demand, leaving the state-run Bangladesh Petroleum Corporation (BPC) heavily reliant on costly refined imports.

To curb this exposure, Super Petrochemical PLC — a subsidiary of industrial conglomerate TK Group — is expanding its processing complex in Juldha, Chattogram. The project, now past 80 percent completion and slated for commissioning in March 2027, will add 1.7 million tonnes of capacity to its existing 0.5 million tonnes footprint.

With annual refining capacity rising to 2.2 million tonnes, the facility will eclipse state-owned Eastern Refinery as the country’s largest fuel processor, allowing domestic refiners to satisfy 56.92 percent of national demand.

Refined products command a steep premium over crude on global markets, placing a heavy drain on foreign currency reserves. Super Petrochemical, one of four private suppliers converting imported naphtha and condensate into diesel and octane for BPC, projects the expansion will cut the state importer’s annual bill by $200 million while stabilising local supply.

Super Petrochemical currently produces mainly octane, with the government buying much of its output each year. It also makes diesel on a smaller scale. That mix will change once its new refinery comes on stream, adding 1.7 million tonnes of annual refining capacity and taking the company’s total production capacity to 2.2 million tonnes.

At full capacity, the refinery could supply about 34 percent of Bangladesh’s total fuel oil demand, company officials said. Diesel will become the main product, replacing octane as the dominant output. The refinery will also produce about 450,000 tonnes of furnace oil a year, as well as marine fuel and other petroleum products for the shipping and industrial sectors.

Super Petrochemical and BPC said the company can process 16,700 barrels of naphtha a day and operates two condensate fractionating plants. Its existing terminal holds 116,650 tonnes of fuel oil. Another 184,000 tonnes of storage is under construction, which would take total storage capacity to about 300,000 tonnes once the projects are complete.

The expansion will also add 35,000 barrels a day of refining capacity, taking the company’s total to 51,700 barrels a day.

Industry participants said the previous government opened the door to private refining in 2021 by allowing CRU-based fractionation plants and private refineries to import condensate, or line crude. It also set financial, technical, experience and other requirements for private investors and created a framework for marketing privately refined fuel and supplying it to the government. The move prompted entrepreneurs to draw up refinery projects, they said.

Mohammad Mustafa Haider, group director of TK Group and managing director of Super Petrochemical PLC, told Bonik Barta that the 2021 policy decision underpinned the company’s investment in refining and storage capacity.

“Our ongoing refinery project will start production next March,” he said. “Once it reaches full capacity, private-sector crude imports will rise and BPC’s imports of refined fuel oil will fall substantially. This will create domestic jobs and save BPC large amounts of foreign currency on refined fuel oil imports.”

Local state-owned and private companies supply just over 1.4 million tonnes of the fuel oil distributed by BPC. Their contribution includes 767,000 tonnes of diesel, or 17.65 percent of total diesel supply; 258,000 tonnes of octane, or 62 percent; and 380,000 tonnes of petrol, or 82 percent.

In the 2024–25 fiscal year, BPC spent BDT 501.95 billion on fuel oil imports, including BDT 396.92 billion on refined products. Almost two-thirds of its fuel import bill goes towards refined fuel oil due to limited domestic refining capacity, putting further pressure on foreign currency reserves.

More than five decades after Eastern Refinery was built, industry figures see the failure to expand refining capacity as a major gap in Bangladesh’s energy sector. Successive attempts to build new refineries also stalled during the Awami League’s 15 years in power.

Private companies are now building refineries and fuel infrastructure outside government-led projects, which energy-sector figures see as a significant shift. Experts believe if those companies can refine fuel locally and supply it to BPC, then the corporation’s costs should fall.

Professor M Tamim, an energy expert and vice-chancellor of Independent University, Bangladesh, told Bonik Barta: “If the private sector expands refinery and storage capacity, processes crude oil and supplies the fuel to BPC, the price will certainly be lower. If locally refined fuel costs less than imports, that is certainly positive. It could make a big difference, particularly for diesel, because we have such a high demand. BPC will commercially benefit if diesel is refined domestically.”

Eastern Refinery produces naphtha while processing imported crude into various petroleum products. BPC sources said the naphtha is supplied as feedstock to four private plants that produce fuel oil and other petroleum products: Super Petrochemical (Private) Limited in Chattogram, Aqua Refinery Limited in Narsingdi, Partex Petro Limited (PPL) in Chattogram, and Petromax Refinery Limited (PRL).

Besides importing refined fuel oil, BPC also collects large volumes from state-owned and private fractionation plants to meet domestic demand. In fiscal 2024–25, it received 700,000 tonnes of petroleum products worth BDT 81.17 billion.

Private refineries collect condensate from domestic gas fields, particularly those operated by Sylhet Gas Fields Limited (SGFL), BPC officials said. State-run CRU plants receive 60 percent of the condensate, while private companies get the remaining 40 percent. But domestic condensate is not enough to keep the plants running at full capacity, forcing private operators to import naphtha and condensate. They refine these into diesel, octane and petrol, selling those to BPC. Some also import crude oil for private refining, with BPC buying the resulting products.

“Super Petrochemical has built substantial refining and storage capacity under private management. That’s good for the country’s energy security and benefits BPC,” a BPC official told Bonik Barta on condition of anonymity. “BPC’s refined fuel imports will also fall as a result. Refining crude domestically through private operators could reduce the need for expensive refined fuel imports and cut BPC’s foreign currency spending.”