Bangladesh Lubricants Industry

With a 158 million of population, Bangladesh is the seventh most populous country in the world. Bangladesh is experiencing yearly 5-6% GDP growth for last two decades, though it has to face political instability and slow implementation of economic reforms. It is growing steadily and the demand for base oil and lubricants is continuously growing relative to its growth. After independence in 1971 until 2000, only state-owned oil marketing companies were allowed to blend, import and distribute the lubricants in Bangladesh. During the above mentioned period the lubricant product mix was 65% non-additive treated and 35% additive treated.

But the government liberalized the lubricant market in 2001 to ensure minimum standard. The blending, importing, and distribution of non-additive treated engine oils were also banned and the minimum API standard was set at SC/CC. Since then, more than 70 lubricants brands have entered into this market. Thus the lubricant business in the private sector made it more than a decade old. During the year 2002–2011, the sale of minimum grade SC/CC products by different private oil companies caused a major shift in market share. Government-owned oil companies have to lose market share to private blenders and importers of finished lubricants.

But the low-quality engine oil was still a concern that time and there was a lack of government intervention to ensure the quality of engine oils. Absence of proper monitoring of regulation led to the under-invoicing for the tax evasion for lubricants, the use of recycled oil as base oil, and non-use of the proper additive by the lube blenders and importers of finished lubricants.

In 2007, the government has set up “Minimum Assessment Value” for both finished lubricants and base oils to monitor of the regulations. This allowed the lubricant market, to make easy money by under invoicing tax evasion, by reducing the import of finished lubricants and blending of finished lubricants at different lube oil blending plants in Bangladesh.

Now, the lubricant market has a steady growth in the automotive and industrial sectors, especially by power plants. The annual domestic consumption now stands at around 100,000 tonnes, with almost 3 percent yearly growth, which is on par with India but behind China.

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