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The lone bidder -- Indonesian PT Pertamina - quoted higher-than- expected costs in the tender for operations and maintenance (O&M) of the country's maiden Tk 80-billion single-point mooring (SPM).
As a result, the state-run Bangladesh Petroleum Corporation (BPC) is set to cancel the bid and go for re-tender for the same, according to a top official.
"We are going to cancel it (the offer) and seek re-tender to keep the O&M costs rational," BPC chairman Md Amin Ul Ahsan told The Financial Express on Thursday.
Sources said the cost quoted by Pertamina was higher as the BPC intended to assign a foreign contractor to look after operations for both of its onshore and offshore pipelines.
The BPC initially planned to operate the onshore portion of the SPM itself to lessen operation costs, said a senior BPC official.
Its newly formed subsidiary company -- Petroleum Transmission Company PLC (PTCPLC) - was to operate oil pipelines.
But a vested quarter has allegedly been active to assign a foreign company to operate both the onshore and offshore portions of the 220km pipeline linked to the SPM, it is alleged.
The government should assign a foreign company only for the O&M job of its offshore portion of the pipeline as the BPC and its subsidiary companies do not have any experience operating offshore pipelines, he said.
On the other hand, the O&M job of the onshore portion of the pipeline should be kept with the BPC to reduce cost as it has relevant experience, according to the official.
Six storage tanks have also been constructed onshore.
The tanks have a combined capacity of 240,000 tonnes of petroleum products-- 150,000 tonnes for crude oil and 90,000 tonnes for gas oil.
The ongoing delay in selection of a contractor is delaying the formal operations of the SPM, said sources.
Currently, the PTCPLC has been operating 126 kilometres of pipeline of a 131.50-kilometre Bangladesh-India Friendship pipeline.
The pipeline is currently carrying diesel from India's Numaligarh refinery to Parbatipur in Dinajpur.
The state-run PTCPLC is also operating the 250km Dhaka-Chattogram pipeline, which was inaugurated last month.
The SPM has already been kept idle for around a year and the BPC is counting extra money while using lighter vessels to carry fuel from mother vessels to tanks onshore as a consequence.
Officials said Chinese firm --China Petroleum Pipeline Engineering Co Ltd (CPPEC)-- completed the construction of the SPM with a double-pipeline project and handed over the infrastructure to the BPC a year ago in August 2024.
The SPM system is used for piping petroleum from vessels far offshore and onshore storage tanks, thus slashing both time and cost of oil imports.
Sources said CPPEC built the country's maiden SPM system after being selected as a contractor 'unsolicitedly' under the currently repealed Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010.
The project cost escalated by 60 per cent to Tk 80 billion from the initial target of Tk 50 billion, they said.
The Chinese firm handed over the SPM project to the BPC in August last year.
The contract with the Chinese firm on building the SPM expired in June 2024.
The installation of the SPM with the double pipeline project was implemented with Chinese concessional loans worth around $554 million.
Of the total, China provided around $467.84 million as preferential buyers' credit and the remaining $82.5 million was available as soft loan.
The Exim Bank of China provided the money, which is to be repaid within 20 years at an interest rate of 2.0 per cent per annum with a five-year grace period.
Once it is fully executed, the BPC will be able to unload petroleum products from a 100,000-deadweight tonnage tanker within 48 hours, which now takes 11 days.
No lighter vessels would be required to carry fuel from mother vessels, which are now moored at the outer quay, after the project's implementation.
However, The BPC is still paying $5.50 per tonne to lighterage or small vessels, owned mainly by the Bangladesh Shipping Corporation (BSC), to ferry petroleum to its onshore tanks from larger mother vessels.
The SPM is set to save the BPC's cost significantly in unloading fuel once it initiates commercial operations.
Once the SPM becomes fully operational, Bangladesh will annually save around Tk 8.0 billion ($75.50 million) solely by reducing the transport costs of petro products from outer anchorage to onshore fuel tankers.
The SPM will enable the offloading of 120,000 tonnes of crude oil within 48 hours and 70,000 tonnes of gas oil (diesel) within 28 hours.
Bangladesh annually imports around 7.0 million tonnes of combined crude and refined oils to meet the growing demand driven by a thriving economy.
Azizjst@yahoo.com