“ERC can Check Low-standard, Adulterated Lube”

Munirul Islam, Managing Director, Gulf Oil Bangladesh Ltd.

Munirul Islam, Managing Director of Gulf Oil Bangladesh Ltd said it was a pragmatic decision of the government to open import and marketing of lube oil, LPG and bitumen to private sector by breaking the state monopoly. “That's why we are now getting lube oils of world famous brands in the local market. And since allowing the private sector in the lube market, the country never experienced any crisis of lube oil; rather price has been competitive,” he said.
However, Munirul Islam observed that there has been a negative impact too. “Some traders are misusing the government's open policy and marketing low-standard lube oils. The owners of vehicles and industrial units are affected by using the low-standard lubes. On the other hand, local partners of world renowned lube producers are also losers as they don't have any scope to compromise with standard,” he said.
The MD of Gulf Oil alleged that the government has failed to check selling of low-standard and adulterated lube oils although there are laws. “Opening lube and other petroleum products for private sector was a successful implementation of guidelines of the National Energy Policy. There is also a guideline principle of 2000 that categorically described the standard of lube oils that can be marketed in Bangladesh. Under the 1974 Petroleum Act, one has to face punishment for marketing low-standard lube. The BPC had formed a cell to look into the matter. I don't know why they failed.”
“I'm however optimistic that low-standard and adulterated lube oils that flooded the market can be checked when the Energy Regulatory Commission starts functioning. I'm not pessimistic. At the initial stage of opening an area for private sector, there can be such evil practices. But it can be checked and I believe the ERC will be able to control it,” he said.


“Mobil is Ready to Provide its Lab”

Azam J Chowdhury, MD, Mobil Jamuna Lubricants Limited

Withdrawing government's control and opening any business for private sector is no doubt an admirable initiative. But, Azam J Chowdhury, Managing Director, Mobil Jamuna Lubricants Limited said: when it is a sensitive product like lube oil, it was not proper to privatize it before ensuring that who will be the controlling authority and formulating a guideline for the consumers' right to be protected. “It should have been made open for the private sector after the Energy Regulatory Commission (ERC) begins functioning.”
“After allowing import and marketing of lube oils by the private sector, lube products are coming into the country haphazardly. Base oil, re-cycling oil are now imported with fake declaration and sold in the name of attractive names at a cheap price causing huge losses for the consumers at the cost of national exchequer,” he said.
Azam Chowdhury also said: country's industries are losing lifetime of their machines by using substandard lube oils and the same thing is happening in case of country's automobiles and agri-equipments. “The immediate effect of using substandard lubes may be invisible, but in long run the damage is huge,” he added.
In reply to a question, he said a policy was formulated in 2000, which stated the standard of the lube to be sold in the market and what policy should be followed for blending. “But who will be responsible for implementing the laws not stated in the guideline? However, a committee was formed later with BPC Chairman as head to implement the guideline. I was also a member of that committee, which did not see even a single meeting till today.”
He said: it would take few more months for the ERC to start its functioning and be skilled in controlling and testing lube oil standard. But, the flooding of substandard lube oil in the market at present does not allow us to spoil any further time. The government should start controlling the standard right at this moment. “If necessary, Mobil is ready to provide its testing lab to test the standard of lube oils available in the country.”


“It's a Transitional Period”

Capt. (rtd) Imam Anwar Hossain Chairman Imam Group

Imam Group Chairman and former President of Bangladesh Ocean Going Ship Association Capt. (retd) Imam Anwar Hossain praised the government's decision to allow import and marketing of lube oils in the private sector. “It is true that substandard oil draining into the market is not controlled. But one should keep in mind that it's a transitional period. When you'll switch over from controlled economy to market economy, a few bad things would primarily occur. It's just like that. But, I believe that ERC would be able to play an effective role to control the lube oil.”
The Chairman of Imam Group which has been engaged in marketing Conoco lube in Bangladesh for last one year, thinks that substandard lube oils are imported with fake declaration and under-invoicing. “The local market is currently flooded with substandard and low quality lube oils. If the government wants, it can control such situation at import level,” he observed.
Imam said customs and PSI agents all are involved in the import of low quality lube and they must be controlled. As the importers are selling the lube at a cheap price, the consumers are being cheated and eventually counting losses.
He said the market size of Bangladesh does not allow more than 10-12 lube companies as determined by the market itself. “Those who are now purchasing substandard lube would be careful in future. The effect of using the low quality lube in the industries and automobile sectors may not be visible right now and we will have to wait for one or two years for that.”
Capt. Imam thinks that the government should develop the ERC in a way that it can control the standard of lube apart from protecting the rights of the consumers.


“Base Oil being Sold as Lube”

Engr M Fazlul Haque, Vice President (Business Development), Baraka Limited

Engr M Fazlul Haque, Vice President (Business Development) of Baraka Limited that imports and markets Servo brand lubes of Indian Oil Corporation, highly appreciates the government decision to allow private sector in the lube market. “But due to failure in ensuring standard, the low-standard and adulterated lube oils flooded the local market. We'll not realize the impact of using low-standard and adulterated lubes, but the country in next 2-3 years will have to bear the losses caused by low-standard and adulterated lube oils in the automobile and industrial sectors,” he said.
The former Chairman of Bangladesh Petroleum Corporation (BPC) said the adulterated and low-quality lube oils are very cheap. As a result, he said, the users are encouraged. “Since there is no campaign to make the users aware of quality lube, they are opting for the cheap lubes, but ultimately they will be the sufferers as those low-standard lube oils are damaging their vehicles and industrial machinery.”
“Due to flooding of below-standard lube oils for their low costs, those who import and market standard lube oils are not getting market,” said the Baraka Vice President.
Asked whether the government was not aware about the matter before opening the sector to private sector, the former BPC Chairman said: it's not like that the government was not cautious. The government formulated guidelines about the quality. It had categorically said that no lube below SC/CC standard can be marketed. Also, no direct minerals like base oil can be sold in the name of lube oil. It must be mixed with additives. But in Bangladesh, base oils are being sold in the name of lube oil.”
He informed that the BPC had formed a committee to check adulteration and low-standard lube oils. “It's tough to say as to why this committee couldn't succeed. However, I'm optimistic that once the ERC starts functioning, it will be able to check import and marketing of adulterated and low-quality lube oils.
He however said: I don't think the ERC from the next day of his launching will be able to check it and there will be no adulterated fuels or lube oils in the country. They will need to be prepared -- like being equipped with skilled manpower and setting up a testing laboratory. It may take six months. But after that, I believe, the ERC will be able to work with success in checking the adulteration and low-standard.”