State-run Petrobangla (Bangladesh Oil, Gas & Mineral Corporation) is likely to initial its second contract today with Summit, a local private firm, on the use of a floating terminal to be set up at offshore island Moheshkhali in Cox’s Bazar.
‘We have prepared the draft contract… if everything goes well, Petrobangla and Summit will initial the contract tomorrow,’ an energy division official told New Age on Monday.
Summit LNG Terminal Company Pvt Ltd, a subsidiary of Summit Group, would develop the facilities in 18 months after signing the final contract at a later date to facilitate a maximum supply of 500 million cubic feet of natural gas per day from imported LNG, according to the draft contract. Summit would transfer the facilities to Petrobangla after 15 years of operation of those.
Petrobangla will pay approximately $1.33 billion to Summit as service charge and its cost recovery in the 15-year contract period. The amount is $20 million less than the US firm Excelerate Energy would realise from Petrobangla under a similar 15-year build-own-operate-and-transfer contract signed on July 18, 2016, claimed a Petrobangla official.
Petorbangla would sign the final contract with Summit after obtaining vetting from the law ministry and approval from the cabinet committee on the government purchase, he said.
Each of the projects would require an investment of approximately $450 million. The companies would borrow the funding from international financial system, the official said.
Both the contracts have been awarded under the Speedy Supply of Power and Energy (Special Provisions) Act 2010, which facilitates awarding contracts avoiding tenders and indemnifies officials concerned against prosecution for making decisions.
Excelerate Energy would develop the facilities by February 2018 to facilitate production of a maximum supply of 500 million cubic feet of natural gas per day from imported LNG. It would realise approximately $1.35 billion in 15 years as cost recovery and service charge.
A project processing committee of the energy division, which was commissioned on September 18 for awarding contracts in the energy sector without tenders, is also dealing with at least five other similar proposals bypassing tenders.
Being failed in discovering any significant gas reserves over the past two decades, the government started entertaining unsolicited proposals to set up LNG terminals to facilitate re-gasification of imported LNG.
On December 29, Petrobangla signed a non-binding memorandum of understanding with India’s Petronet to set up a land-based LNG terminal on the Kutubdia Island in Cox’s Bazar to facilitate supply of 1,000 million cubic feet of natural gas from imported LNG.
Now Petrobangla supplies approximately 2,700 million cubic feet of natural gas against a demand for more than 3,500 million cubic feet per day.
A Petrobangla estimate says the current level of gas supply would start declining from 2018.
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