China is set to finance $550.4 million for a major infrastructure project in Bangladesh to install single point mooring at Moheshkhali and lay two pipelines to transport imported fuel oils to onshore storage in Chittagong.
On Sunday, Economic Relations Division secretary Kazi Shafiqul Azam and Chinese Ambassador to Bangladesh Ma Mingqiang signed a framework agreement in this regard.
State minister for power, energy and mineral resources Nasrul Hamid attended the signing ceremony at ERD office in the city.
He said once the project is completed, the government will save approximately $120 million per year.
Unloading of imported fuel oil from a 100,000 DWT vessel would take two days while it takes 10-11 days now, Nasrul said, adding that it would also be possible to eliminate theft and wastage of fuel oils during their loading and unloading to and from lighterage.
The Chinese funding will entirely be used to pay to China Petroleum Pipeline Bureau under an engineering, procurement and construction contract for developing the facilities, said officials.
The Bangladesh government and state-run Eastern Refinery Limited will finance the rest of the amount of the total project cost estimated at $617 million. The project is expected to be completed by December 2018, they said.
Of the $550.4 million credit, China will provide $ 82.56 million as soft loan
and $467.84 million as preferential buyer’s credit, according to a handout distributed at the framework signing ceremony.
The Chinese credit carries a two per cent interest. Bangladesh will repay the loan in 20 years with a five-year grace period, the handout said.
Amid severe criticism, the government in December 2015 approved in principle the unsolicited proposal of the Chinese company for the Installation of single point mooring with double pipeline under the Speedy Supply of Power and Energy (Special Provisions) Act 2010 that indemnifies officials against prosecution for any decision.
The Chinese funding was finalised one year ago when president Xi Jinping visited Dhaka.
Under the contract, the Chinese firm will construct a floating jetty in the deep sea with 27m draft, two 36’’ pipelines connecting the jetty and the tank farms, power plant and pump on the island and two 220km 18’’ submarine pipelines from the farms to the storages in Chittagong, according to the project proposal.
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