Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
The Summit LNG Terminal II Co Ltd ("SLNG II"), a concern of Summit Group, has made an appeal to the interim government to review its decision to cancel the third Floating Storage and Regasification Unit ("FSRU") project in Bangladesh.
"We respectfully urge the government of Bangladesh to uphold the sanctity of contracts and to ensure that investors' rights are protected and treated fairly and equitably," the Summit Power International Limited (SPIL) said in a press statement on Wednesday.
It mentioned that the state-owned Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) served a notice on the SPIL, notifying the termination of its project located at Moheshkhali in Cox's Bazar.
The Moheshkhali terminal ("2nd FSRU") is the second floating gas terminal project of the Summit Group, having a proposed regasification capacity of 600 million standard cubic feet a day.
"SLNG II is owned by Summit Power International Limited ("SPIL"), the largest private sector investor in energy in Bangladesh with a proven track record of developing long-term infrastructure projects in a responsible and transparent manner," it said.
It said the company's investments helped to catalyse foreign direct investment ("FDI") into Bangladesh. Clarifying its position, the press statement said in late 2020, the government of Bangladesh made a strategic decision to transition from coal-fired power generation to natural gas, a cleaner energy source.
The initiative was also aimed at boosting gas supply to ensure energy security and support industrial growth. Summit Group submitted a proposal on 11 October 2021, to implement an FSRU on a Build, Own, Operate, and Transfer (BOOT) basis. The proposal was approved by the Cabinet Committee on Economic Affairs on 14 June 2023, it stated.
The approval followed two years of extensive negotiations and consultations with international law firms to address the contractual and technical challenges, said the statement.
Summit, in collaboration with Petrobangla and Rupantarita Prakritik Gas Company Limited ("RPGCL"), finalised the Terminal Use Agreement ("TUA") and Implementation Agreement ("IA") on 12 October 2023. These were legally vetted and approved by the Cabinet Committee on 12 December 2023, according to the press release.
SLNG II signed the TUA and IA on 30 March 2024 with Petrobangla and Government of Bangladesh ("GoB") for the 2nd FSRU, it said, adding that on the same day SLNG II also signed a long-term Sale and Purchase Agreement ("SPA") to supply 1.5 million tonnes of liquefied natural gas ("LNG") to Petrobangla, starting in October 2026.
To fulfil the initial conditions precedent ("CPs") of the agreements signed on 30 March 2024, SLNG II has to date committed investments of approximately $15 million to implement the 2nd FSRU, reads the press release, it mentioned.
The termination notice received on 7 October 2024 was issued on the basis that the agreements signed on 30 March 2024 had not become effective as a performance bond was not submitted within 90 days as stipulated, i.e. on 28 June 2024. SLNG II said that as that date fell on a Friday (not a banking day in Bangladesh), the performance bond was delivered on the next possible working day, with acknowledgement by Petrobangla, it added.
SLNG II's lawyers have confirmed that SLNG II had not breached any CPs of the agreements of 30 March 2024. Even if any CP was delayed, Petrobangla did not notify SLNG II within the agreed 30-day window and had therefore deemed the CP as accepted, according to the press statement.