Consultant hiring delay pushes back Matarbari land-based LNG terminal project

A delayed move to hire a consultant has pushed back the process for selecting a qualified bidder for the country's maiden land-based LNG (liquefied natural gas) terminal project at Matarbari in Maheshkhali of Cox's Bazar, energy industry sources said.

According to sources, the government in last year’s January invited bids seeking Expression of Interest (EoI) from international companies to build a LNG terminal with floating storage and re-gasification and storage unit (FSRU) capacity of 7.5 million metric tonnes per annum (MTA).

As per the project proposal, a private sector sponsor will set up the LNG terminal on Build-Own-Operate (BOO) basis once it is selected by the developer - Rupantarita Prakritik Gas Company Limited (RPGCL).

The move for LNG terminal came as part of the government's plan to increase the import of natural gas to resolve its shortage that has specially been impeding industrialisation and power generation.

Under the move, the RPGCL, a subsidiary of the state-owned Petrobangla, received bids from 12 international companies in March last year, reports UNB.

A technical evaluation committee was formed headed by a director of Petrobangla to shortlist the technically and financially capable companies for the project. But the committee's works remained stuck up as it failed to submit its report, said the sources.

"Despite passing of more than one and a half years, the committee could not submit its evaluation report to the Energy and Mineral Resources Division," said a top official of the RPGCL, declining to be named.

"Actually, there was a flaw in the process that ultimately delayed the government's move for the LNG project," he said explaining that normally when the government conceives an idea for a new project where it does not have enough expertise, it first appoints a consultant and goes for feasibility study.

If the feasibility study gives positive outlook, then the consultant prepares necessary documents on the basis of the study report and floats an international tender.

"But in this case, before appointing a consultant and feasibility study, the government directly moved for sponsor selecting process which came as "putting the cart before the horse".

RPGCL officials said recently the government realised its mistake and moved for appointing a consultant.

Official sources said Petrobangla primarily selected Japanese company Tokyo Gas Co Ltd as consultant for the project.

When approached, Petrobangla Director Quamruzzaman said the appointment of consultant is still under process.

At present, two LNG terminals with FSRU capacity of 3.75 million tonnes per year are in operation in Moheshkhali and re-gasify around 550 million cubic feet per day (mmcfd), although they have capacity of re-gasification of 1,000 mmcfd.

The country's total gas production and supply is about 3,100 mmcfd against the demand of 4,000 mmcfd.

Economists believe the country's demand for gas supply will go up in the coming days with implementation of gas-based power plants and establishment of 100 economic zones now drawn up by the government to promote industrialisation.

Recently, the government moved to revise its Power System Master Plan (PSMP) 2016 to increase the share of gas in power generation reducing the share of coal as primary energy source.

As per the existing PSMP 2016, the country's power generation will reach 24,000MW in 2021, 40,000MW in 2030 and 60,000MW in 2041.

In this case, gas and LNG will share 35 per cent in primary energy source for power generation. The share for coal is 35 per cent, renewable 15 per cent, nuclear 10 per cent and petroleum oil 5.0 per cent.

Sources said the Power Division put forward a proposal to the government's policy level to convert some of the power plants which earlier planned to be coal-based into LNG-based considering the environmental issues as gas is considered to be cleaner than coal.