Lube oil is the bloodstream of an engine. It makes the machine efficient, delivers more power, ensures longer life and smoothes the operation. Its contribution to our civilized life is enormous, starting from the mundane domestic equipment like a sewing machine to equipment worth millions of dollars like an aeroplane. Lube oils play the vital role in moving the machines usefully. No machines can move without lube oil.
In Bangladesh, we are spending over Tk 700 crore every year for lube oil. About 70 percent of these are being used for automobiles, 25 percent in industries and rest in inland water transports. Hundred percent of the lube oils consumed in Bangladesh are imported either as finished products or as raw materials except small quantity of recycled oils. Before market was opened-up in 1997, three state-run oil marketing companies (OMC) -- Padma, Meghna and Jamuna -- used to handle this sensitive segment. Now over 50 brands are competing for their shares in this profit-making sector.
The OMCs and private companies are competing for the market and offer quality products at better price and with better service. OMCs are facing competition that helps them learn and survive in the competitive environment. OMCs' performance so far is remarkable and quality delivered to end-consumer is appreciated. OMCs are also leading in the quality segment.
Private companies are delivering quality products at better price, and with customer convenient supply and other facilities. They are focusing on the attractive areas and also investing in long-term business projections. Some small-scale importers and traders are concentrating on pure trading. Qualities in some cases are questionable and end-consumers are yet to grow confidence in their consistency.


Functions of Lube Oils

Lube oils are produced from base oil blended with additives (chemicals). Major functions of lube oils are:

• Minimize Friction: Friction is resistance generated between moving surfaces.
• Minimize Wear: Wear is destruction of surfaces due to friction, rust etc.
• Cool Running Components: Heat generates due to friction, load and combustion.
• Provide Good Seal in Piston-ring Zone: To prevent high-pressure gas licking.
• Remove Solid Debris from Piston-ring Zone: Debris produced due to wear.
• Keep Engine Clean: Black sludge produced by combustion, oxidation and abrasives.
• Resist Degradation of Oil Itself: Degradation is end of working life

• Modifiers: Modify the characteristics of base oil to render it more suitable for use.
• Oil Protectors: Protect the oil to prolong it's working life.
• Surface Protectors: Protect metallic surfaces to reduce corrosion, friction and wear.
  
  These additives and quantities are chosen based on the type of oil to be produced. Machine manufacturers decide, in most cases, which additive package will go for which oil. They decide performance level required for their engine. Oil majors follow their formulas and produce oil meeting their requirements.
  It is always better to use manufacturers recommended oil in their engines/vehicles. Use of recommended oil does not only offer better performance but also saves a lot on other areas. For example:
  In long term quality lubricants are not only less expensive but also save on fuel, spare parts and repairs. Bangladesh is spending huge foreign currency on fuel import. The government can save at least 15 percent on fuel import that is about US$ 30-40 billion per annum. The government can also save at least another 15 percent from spare-parts import. This huge wastage of foreign currency can be attributed to low quality inferior lubes (Picture: 2)
  
  
  Standard in Bangladesh
  
  Bangladesh government in 2001 set minimum standard for automotive engine oil, as API SC/CC or higher. It was a right decision moving step by step towards quality lube and slowly to EURO emission norms. The OMCs are strictly following this guideline and have stopped selling all engine oils below API SC/CC. Not only are they selling quality product but also contributing to the state exchequer. They are educating people providing them with training, site visit and with product literatures, leaflets etc. However, in recent years OMCs are facing uneven competition from private sector.
  Private sector companies are flexible in operations, making offers, pricing, door delivery and other convenient offers. But the quality of lube oil they are selling in some cases is in doubt. They are even offering price below base oil cost in international market. Doubts arise whether those products are meeting the minimum standard or not.
  
  
  Lube Oil: Practice in Bangladesh
  
  More than 80 percent vehicle owners in Bangladesh don't prefer purchasing lube oil themselves. Their driver does the job and changes the lube at roadside garages. Drivers are poorly paid employee and in over 90 percent cases they produce bill for genuine high quality lube oil but purchase either adulterated or inferior products. Vehicle owners are not only being cheated with quality but also their vehicles are damaged, making environment more polluted. Thus the government is also losing foreign currency on import of spares, lubes and also on vehicles' future replacement.
  In agricultural sector, the problem is even more serious. Farmers are not properly educated and have no knowledge of quality of lubes and use whatever the mechanic recommends. Almost every year their power-tiller/agri-pump sets require major engine overhaul. They are spending more than double the normal lube bill and end of the day they are the loser. A similar scenario also prevails in the engine boat segment.
  In industry, in speciality segment, it's a big issue. Industrialists are busy men and in over 95 percent cases they are not aware about lubricants, depend on plant technicians and foremen, 3-6 times over charged, using wrong products and end of the day more expenditure on spares and maintenance.
  
  
  OMCs Vs Private Players
  
  Government-set minimum standards of lube oil are not followed by many private sector players. Experts said the government needs to be strict on the quality issue and ensure private sector companies follow the set norms.
  OMCs however are consistent in delivering quality products over the last three decades. But due to uneven competition, they are slowly losing market shares. Virtually they are making no money on fuel sales; major share of their net profit is coming from lube sales. This service sector can be more profitable and at the same time deliver quality products and service better than private sector if they have not to face uneven competition.
  
  
  Experiences of Neighbors
  
  In Pakistan, Pakistan State Oil (PSO) has been given autonomy for their profitability and operation. Government requirement from PSO is: the company should run profitably, deliver quality products, and comply with government set standards and norms. They have been given liberty on their activity and strategy. Today the PSO is a successful and profitable venture by beating multinational and private companies.
  In India, national oil companies are competing with private and multinationals and running profitably by selling quality products as per government norms. They are free in their operations, investments, policies and strategies. Today IOC (Indian Oil Corporation), HP (Hindustan Petroleum), Bharat Petroleum run professionally and are strong in finance and technology and more profitable than most private and multinationals in India.
  
  
  Bangladesh Needs Adjustment
  
  Bangladesh government is encouraging private and multinational investment that is appreciated by all. The government is trying to make profitable the existing state-run companies that are demand of the time. And the move so far is in the right direction. Now the government needs to implement the strategy with little adjustment. Successful experience in neighboring countries should be useful in this case.
  
  All the stakeholders: the consumers, private companies, multinationals, government, people and the environment will be benefited if there is an even competition in the market. Making the lube sector even-competitive, experts made the following recommendations:
  
  
  1. Minimum standards for engine oil should be strictly maintained. BPC (Bangladesh Petroleum Corporation) with law enforcing bodies can monitor the quality of all locally blended or imported lubes.
  2. BSTI (Bangladesh Standards and Testing Institute) should equip with modern lubes testing facilities. Multinational oil majors can help the BSTI in setting standards and training them.
  3. Monitoring of BSTI performance is a must. Law enforcing bodies, multinational oil companies and technical institutions like BUET can be involved in this monitoring system.
  4. All lube marketing companies either private or multinationals or OMCs should have in-house testing facility and technical support team. Monitoring of these in-house facilities periodically is essential.
  5. Government OMCs should be given the liberty for their operations and profitability. Experience and strategies of PSO and Indian government oil companies can be followed.
  6. For imported base oil and finished products, quality assurance of the manufacturer in their own country should be assessed by quality monitoring team and then given permission to market here in Bangladesh.
  7. Some entry barriers should be imposed for long term business projections.
  8. Duplication or adulteration needs to be stopped. Law enforcing agencies should be the best help for this purpose.
  9. Used oil handling norms needs to be set and implemented to stop recycling and if possible to export to other countries. The government can build recycling plant and operate.
  10. Monitoring team frequently should check big lube dealer's sale center and godowns.
  
  
  Shahidul H Khondaker Thomas, Technical Officer, BP Middle East