Bangladesh's Beximco and Saudi Arabia's Marasel to Bid for Eastern Refinery Expansion Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Beximco Group (Dhaka, Bangladesh), Bangladesh's leading industrial group, has announced that it will form a joint venture with Marasel Company Limited and bid for the proposed expansion of the refinery complex operated by Eastern Refinery Limited (Chittagong, Bangladesh). The government of Bangladesh recently decided to increase the refining capacity of the facility from 1.5 million to 4.5 million tons per year.

The Beximco Group and Marasel Company will bid for the financing of the $1 billion balancing-modernization-renovation-expansion (BMRE) project. The project will be implemented on a build-operate-own-transfer (BOOT) model. Eastern Refinery proposes to undertake the BMRE project at the site of the existing refinery at Chittagong Port. The project is expected to provide huge cost savings on infrastructure, storage and other facilities. The project is likely to be executed in 36 months.

Eastern Refinery, which operates Bangladesh's only refining complex, fulfils about 30% of the country's demand for petroleum products. The remainder is imported. Presently, Bangladesh's demand for petroleum products is about 3.8 million tons per year. Commenting on the decision to participate in the bidding process, Salman Rahman, the vice chairman of the Beximco Group, indicated that the BMRE project presented huge potential, and his company had made the necessary financing arrangements. The expansion is likely to help Bangladesh meet its growing demand for petroleum products. The BMRE project has become critical to ensure energy independence and security. The project is also expected to produce Euro-III compliant fuels.

Earlier, Eastern Refinery completed a feasibility study for the BMRE project with financial assistance from the Islamic Development Bank (Jeddah, Saudi Arabia). According to project reports submitted by Eastern Refinery, the BMRE project will yield average annual currency savings of $220 million after tax returns on a fixed capital cost of 16.6% and a payback period of 4.5 years. Bangladesh shares its borders with India and Myanmar. The country's economy has been struggling due to corruption, poverty, overpopulation, floods and political instability.

The Beximco Group, which is one of the biggest diversified business groups in Bangladesh, is owned by brothers Salman Rahman and Sohel Rahman. The group's business interests span ceramics, textiles, construction, energy, real estate, media and pharmaceuticals. Recently, with the strategy to develop high-end, luxury hotels in the country, Beximco Group acquired a stake in the company that manages Westin Hotels. The group also bought a 50% stake in GMG Airlines (Dhaka, Bangladesh), which is the country's largest private-sector airline company. Marasel Company is owned by Prince Salman Bin Sultan Bin Abdul Aziz Al-Saud, a member of the Saudi Arabian royal family. The company has business interests in several sectors including oil, gas and power.

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