The Financial Express

Spot LNG purchase from 'tainted' Singapore company approved

| Updated: February 18, 2021 14:32:25

Spot LNG purchase from 'tainted' Singapore company approved

The government on Wednesday approved the import of 6.720 million British thermal units (MMBTu) of liquefied natural gas (LNG) from a Singapore-based company having a questionable track record.

The company Vitol Asia Pte Ltd was blacklisted thrice in Sri Lanka for supplying dirty fuel and its US-based unit was accused of bribing officials in three Latin American countries to secure bids.

According to the offer of the company on the supply of LNG to Bangladesh, one MMBTu of gas will cost US$9.3123 and $9.3611 in case of sixth and seventh LNG cargos respectively.

The total cost stands at Tk 6.2364 billion for importing entire gas.

The cabinet committee on government purchase at a meeting gave its approval. Finance minister AHM Mustafa Kamal presided.

A web search has revealed that Vitol Asia Pte Ltd was blacklisted thrice in Sri Lanka for supplying "dirty fuel" in 2009, 2001 and 2014.

In December last year, the US unit of Vitol agreed to pay $163 million to settle criminal and civil charges for bribery. Its officials paid the sum to take advantage of securing bids for oil in Brazil, Mexico and Ecuador.

When his attention was drawn to the blacklisting of Vitol Asia in other countries, the finance minister said, "They are not blacklisted in Bangladesh."

The company did not do any business here so far, he added.

"Even if they are blacklisted somewhere else, it is not affecting us," the minister said, adding: "If they fail to supply, their security money will be forfeited."

Mr Kamal said Vitol will get payment after supplying gas against the letter of credit. "There is no advance payment against procurement of gas."

"We are not making any loss," he added.

The minister also said he has no idea if the company is blacklisted anywhere. "Okay, we will inform our office about it and they will look into it."

"In the next meeting, we will try to let you know about the update. We will also inform the ministry concerned about it," said Mr Kamal.

Replying to a question about the necessity of buying LNG from the spot market, the minister said sometimes they do not get LNG under long-term deals. "So, we are trying to buy LNG from the spot market for the first time."

"Since we need LNG, we are now buying it from spot to meet additional demand," he said, adding: "But our long-term deals with different sources will continue."

Asked whether the spot price is higher than the prices on the state-to-state deal, Mr Kamal said one should not compare long-term price with spot price. "These are two different mechanisms."

"In the spot market, price fluctuates on a daily basis," he added.

In the meeting, the cabinet committee also approved construction of a 12-storey bachelor officer's quarters, 10-storey force barracks and 8-storey DAD mess-cum-MT shed at the RAB headquarters at a cost of Tk 1.92 billion.

Besides, it approved two proposals for construction of a 15-storey residential building at Sylhet district police lines at a cost of Tk 596.3 million and construction of two 20-storey residential buildings for government officials at zone-A of Azimpur government colony at a cost of Tk 1.76 billion.

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