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Guarantee period to resolve faults in operation of Bangladesh's maiden single-point mooring (SPM) expires much ahead of its operation in piping fuels from outer-anchorage vessels into onshore storage tanks.
Non-commissioning of the SPM in due time and the expiry of the guarantee mean the government will have to spend huge sums of money only to bring it online in case of any default in operation, a senior official of the state-run Bangladesh Petroleum Corporation (BPC) told The Financial Express on Sunday.
He says fuel-storage capacity built on the Moheshkhali bay island along with the SPM facility, around 240,000 tonnes, remained unused only due to non-operation of the SPM.
Were the SPM properly commissioned, BPC would have been able to store sufficient volume of petroleum products, which could be utilized during the ongoing volatile oil market amid the persistent Middle East crisis, market-insiders say.
Sources say the Chinese contractor -- China Petroleum Pipeline Engineering Co Ltd (CPPEC) -- constructed the SPM having double pipelines with an 18-month guarantee period after handover of the project to SPM authority.
Following a faulty trial operation, CPPEC handed over the project 'officially' to BPC on 24th August 2024 -- only a couple of weeks after the formation of Dr Yunus-led interim government, without proper testing and commissioning, they have alleged.
The guarantee period of the SPM project expired on February 24, 2026 although it has yet to be made operational, the sources say.
Asked how the project was taken over from CPPEC without proper testing and commissioning, SPM project director Sharif Hasnat, who is now serving as the managing director of Eastern Refinery Ltd, did not respond.
The government has now moved to select a contractor for the operations and maintenance (O&M) of the SPM around one and a half years after its 'official' handing over.
After failing to award the O&M job to a contractor through the initial tender that had drawn single bidder, BPC re-tendered and was now evaluating bids of three interested contractors -- Indonesia's Pertamina and Chinese CPPEC and Hilong.
As the guarantee for the SPM project has already expired, the petroleum corporation has offered to bear the cost of making the system operational before awarding O&M job to a bid-winning contractor, says a senior BPC official.
Contacted over the conundrum, energy adviser of the Consumers Association of Bangladesh (CAB) Prof Shamsul Alam demanded scrutiny into the handover of the SPM project to BPC by the Chinese contractor without proper testing and commissioning.
"The construction contractor must be liable for compensation if it doesn't work properly," he the FE.
Professor Alam also demands appointing an O&M contractor immediately to reduce fuel-transportation costs of the government and check corruption.
Officials say the Chinese firm - CPPEC -- built the SPM system after being selected as contractor unsolicited under the now-defunct Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010.
Project cost also escalated by 60 per cent to Tk 80 billion from initially targeted Tk 50 billion, they add.
The 'installation of the SPM with double-pipeline' project was implemented with Chinese concessional loan of around $554 million.
Of the total loan amount, China has provided around $467.84 million as preferential buyer credit and the remaining $82.5 million as soft loan.
The Exim Bank of China provided the money to be repaid within 20 years at an interest rate of 2.0 per cent per annum with a five-year grace period.
As part of the project, a 220-kilometre pipeline has been installed, with most of it laid in the waters of the Bay of Bengal. Six storage tanks have also constructed.
The tanks have a combined capacity of 240,000 tonnes of petroleum products, with 150,000 tonnes designated for crude oil and 90,000 tonnes for gasoil.
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 vessel, which is now moored at the outer quay, after implementation of the project.
The BPC is currently paying US$5.50 per tonne to lighter or small vessels, owned mainly by Bangladesh Shipping Corporation (BSC), to ferry petroleum to its onshore tanks from larger mother vessels.
Once operational, the SPM will save the cost of unloading fuels significantly.
The government will be able to save around Tk 8.0 billion alone by reducing transport costs of petro-products from outer anchorage to onshore fuel tankers, BPC officials say about the upside of single-point mooring.
Azizjst@yahoo.com