For all latest news, follow The Financial Express Google News channel.
The government has cancelled the deal with Summit Group over setting up a new floating storage and re-gasification unit (FSRU), known as LNG (liquefied natural gas) terminal.
State-owned Bangladesh Oil, Gas and Mineral Corporation Petrobangla cancelled the agreement as per directive of the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resources.
The Petrobangla, sent a letter to Summit LNG Terminal II Co Ltd, a subsidiary of the Summit Group, signed by Ruchira Islam, the secretary of the organisation, dated on October 7, UNB reports.
The Summit Group had signed the agreement for Terminal Use Agreement (TUA) and Implementation Agreement (IA) for the installation of the 3rd FSRU on March 30 this year.
In the letter, the Summit was informed about the cancellation saying that Petrobangla has cancelled the TUA in accordance with Clause 27.1 (a) (i) of the signed contract due to: i. Non-compliance and non-satisfaction of the key Condition Precedent which resulted in the non-effectiveness of the signed Terminal Use Agreement (TUA) and Implementation Agreement (IA).
“Non-compliance and non-satisfaction of one of the key Conditions Precedent -Performance Bond,” was also mentioned as another cause of the cancellation of the agreement.
Earlier, the Summit Group obtained the contract for the 3rd LNG Terminal under the Speedy Increase of Power and Energy Supply Act Special Provision) 2010.
As per approval of the Cabinet Economic Affairs Committee, Summit LNG Terminal II Co. Ltd, signed a 15-year Terminal Use Agreement (TUA) and Implementation Agreement (IA) to set up an LNG terminal with a capacity of handling 600 million cubic feet per day (MMCFD) to provide the LNG regasification service at a fee of $300,000, equivalent to Tk 33.1 million (Tk 3.31 crore).
Currently, Summit Group has been operating a 500 MMCFD capacity LNG Terminal at Maheshkhali of Cox’s Bazar since 2018 which was set up on an unsolicited basis under the Speedy Increase of Power and Energy Supply Act Special Provision) 2010.
Under this Act, the government can award any contract to any company without any competitive bidding or tender process.
Soon after assuming office after the fall of the previous Awami League regime, the interim government took a decision to suspend the Speedy Increase of Power and Energy Supply Act Special Provision) 2010 and not to sign any further contract under this Act.
The economists and energy experts identified this Act as the root cause of major corruption and irregularities in the country’s power and energy sector.
Meanwhile, Summit Group issued a statement in this regard saying the government decision “Unjustified Termination of SLNG II Project”.
It claimed that Summit Group has a proven track record of developing long-term infrastructure projects in Bangladesh in a responsible and transparent manner.
“We can confirm that Summit executed the Terminal Use Agreement (“TUA”) and Implementation Agreement (“IA”) for its second Floating Storage and Regasification Unit (“FSRU”) project with Petrobangla and the Government of Bangladesh on the 30th of March 2024 and executed the Sale and Purchase Agreement (“SPA”) with Petrobangla on the same date, 30th March 2024, for the supply of 1.5 million tonnes of LNG per year for a 15-year period, starting in October 2026.
“This evening we have received a termination notice of the FSRU Terminal Use Agreement (TUA). We believe this is unjustified and will appeal for review”, it said.