The government has scrapped talks with Reliance Power Ltd to build a new floating, storage, regasification unit (FSRU) for LNG imports at Kutubdia Island.
A high-powered committee backed down from the final round of negotiations with the Indian company to award it the contract, a senior Petrobangla official told the FE on Thursday.
The Indian company was supposed to build a 3.75 million tonne per year-capacity FSRU-based LNG terminal near the port city of Chattogram.
To this end, it inked a memorandum of understanding (MoU) with state-run Petrobangla more than three years ago.
But inadequate funding support, coupled with the initial struggle of the maiden FSRU at Moheshkhali, prompted the government to cancel negotiations, the official stated.
He said Petrobangla sought $1.4-billion fiscal guarantee last year from finance ministry before inking the final deal with Reliance Power but failed to obtain guarantee.
Months ago, the government shelved plans for three small-scale FSRUs following objections from Chattogram Port Authority.
LNG imports at the first full-sized FSRU at Moheshkhali Island also ramped up.
The relatively high cost of mini-LNG projects further contributed to the shelving of the project initiated by energy and mineral resources division under power, energy and mineral resources ministry.
Commodity traders Trafigura, Gunvor and Vitol, and Belgian Exmar NV were in final talks with Petrobangla and its subsidiary, Rupantarita Prakritik Gas Company Ltd, to build the FSRUs and sell gas to Petrobangla.
Petrobangla did not have any binding agreement with any of the firms, nor with Reliance Power, to award contracts, said the official concerned.
Bangladesh, however, is going ahead with the company's plan to build a 718-megawatt power plant that will run on 110 million cubic feet per day of regasified LNG, he added.
Petrobangla will supply regasified LNG via pipeline to the proposed plant of Reliance Power at Meghnaghat in Narayanganj, some 24 kilometres south of Dhaka.
The Indian company will also sign a power purchase agreement and an implementation agreement with Bangladesh Power Development Board (BPDB) to sell electricity to be generated from the plant.
The BPDB is expected to purchase electricity from the Reliance plant for 22 years at a levelised tariff rate of 7.31 cents per kilowatt-hour (kWh).
The state-owned Gas Transmission Company Ltd (GTCL) will install a gas pipeline from Moheshkhali to Bakhrabad.
It will build another pipeline from Kutumbupur to Meghnaghat with its own funds to supply gas to the plant.
Reliance will pay a wheeling charge to the GTCL for using the pipeline, the Petrobangla official added.
The Asian Development Bank (ADB) on December 05, 2017, approved debt financing and partial risk guarantees totalling $583 million for the Reliance Bangladesh LNG and Power Project, said an ADB statement.
The project includes a power generation facility to be located at Meghnaghat and an LNG Terminal at Kutubdia.
The ADB package includes loans and risk guarantees for the power plant as well as for the LNG terminal.
The total project cost is approximately $1.0 billion, the statement spelled out.
The ADB support will help the Indian company develop an initial 750MW of gross power generation capacity and terminal facilities for LNG import, it added.
The country's maiden FSRU-Excelerate Energy's vessel Excellence-arrived at Moheshkhali terminal on April 24.
But it connected to the subsea pipeline network on August 05 and commenced injecting the first regasified gas on August 12.
Technical issues and rough seas during the June-August south-western monsoon kept it stranded off the south coast of Chittagong for months.
The second FSRU, having the similar regasification capacity, is expected to come on line by early 2019.
The local Summit Group in partnership with Japanese Mitsubishi and US-based GE is building it near the currently operational FSRU at Moheshkhali.
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