State-owned Petrobangla is yet to receive clearance from ministries concerned to sign its final deal with a Singapore-based US company to build a floating LNG terminal in Cox’s Bazar, although over two months have elapsed after it initialed a draft agreement.
Industry insiders apprehend that it may delay the implementation process of the important energy infrastructure even though the government attaches top priority to it.
Officials said the draft deal was inked between Petrobangla and the US firm—Astra Oil & Excelerate Energy Consortium—on June 26 this year to set up the floating storage and re-gasification unit (FSRU) based LNG (liquefied natural gas) terminal by 2016 at a location, 5-10 km off Maheshkhali island in Cox’s Bazar.
After a long negotiation process, the sources said, both parties initialed a ‘term sheet’ for the project. Prior to moving for the project, the government, however, signed a memorandum of understanding (MoU) with Qatar four years ago to import LNG.
At the draft deal signing ceremony, State Minister Nasrul Hamid had said the LNG terminal will be operational by June 2016 if everything goes well.
He also said the government has moved to set up the LNG terminal as part of its vision to turn Bangladesh into a middle-income country.
Officials at Petrobangla said immediately after the signing of the draft deal, they put it forward to the Energy Ministry for necessary clearance from Law and Finance ministries and also for the approval from the cabinet purchase body.
Official sources said Petrobangla has not yet got back the relevant file though two months have passed by.
According to the sources, it is only the Energy Ministry that has cleared the file and then sent it to the Law Ministry for its vetting.
Energy Ministry officials said once they receive the Law Ministry’s vetting, they will move it for clearance from the National Board of Revenue (NBR) under the Finance Ministry and then the Cabinet Division to seek the final approval from the Cabinet Economic Affairs Committee, which means Petrobangla will have to wait more to get the clearance to sign the final deal for the project.
Contacted, Petrobangla Chairman Dr Hussain Monsur told UNB that his organisation has nothing to do but to wait unless it receives the clearance and vetting from the authorities concerned.
He, however, admitted that the Astra Oil & Excelerate Energy Consortium has been in constant touch with Petrobangla to know about the progress of the vetting to sign the final deal.
Once the final deal is signed, Dr Monsur said, the US firm will move to construct the terminal with a target to complete the project within 16 months. Prior to constructing the terminal, it will conduct a feasibility study for determining the site of the project on the basis of environmental aspects.
The Astra Oil & Excelerate Energy Consortium will operate the project for 15 years and it will charge $ 0.41 per mmbtu (British thermal unit) gas for regasification of the imported LNG. With other charges, the cost will, however, go up to $ 0.47 per mmbtu.
The FSRU terminal will have a storage capacity of 138,000-square metre LNG. The project will supply 500 mmcfd of gas to the national gas transmission network to boost gas production.
At present, the country’s daily gas production is about 2350 mmcf against a demand of 2700 mmcf.
Dr Hussain Monsur said the Astra Oil & Excelerate Energy Consortium will invest about $ 500 million for the project.
