Once again the single-point mooring (SPM) project, which will enable Bangladesh to pipe imported oil from deep sea direct into refinery, is up for time and cost escalations, officials said.
Physical progress of the project, funded by China, is now reported 97 per cent.
Notwithstanding the works being close to completion, the executing authority, Eastern Refinery Limited (ERL), in a fourth revision now, has proposed raising the project cost by Tk 11 billion or 15.41 per cent and implementation time by one more year until June 2024.
The Planning Commission is scheduled to evaluate the project progress and proposed revisions this week, sources said.
Styled 'Installation of Single Point Mooring with Double Pipeline', the project was taken up back in June 2015 and on 03 July this year trial operation of crude-oil transportation through pipeline from the SPM started.
However, the trial operation stopped within five hours owing to a glitch that occurred in the pipeline connecting the ship to the SPM.
Sources said the main development-project proposal was prepared with the timeline for the implementation of the project between November 2015 and December 2018. Later, the timeline was extended till December 2019, June 2022, again to June 2023 and now both cost escalation and time extension until June 2024 are being sought.
The project cost was initially estimated at Tk 49.35 billion which in first revision was ramped up to Tk 54.26 billion, and again to Tk 65.68 billion, later to Tk 71.24 billion, and now proposed to extend to Tk 82.22 billion.
Officials at the Planning Commission, quoting revision proposal, said in the third revision of the project the price of US dollar was estimated at Tk 85.50 and of euro at Tk 97.12 according to exchange rate as of 18 November 2021.
However, due to significant rise in exchange rate of foreign currencies in the recent months an additional Tk 5.37 billion is needed to make payment of bills of the EPC Contractor and consulting company and also procurement of equipment and other materials, and construction-related works.
The EPC contractor of the project-China Petroleum Pipeline Bureau (CPP) - in July 2021 sent 12 variation claims and in May 2022 sent 23 more claims worth a total of $92 million.
Later in March 2023, the contractor updated its variation claims to 26 and demanded a total of $94 million. The variation claims later was settled at $35 million through negotiations.
The consulting company of the project, ILF Consulting Engineers, Germany, has also demanded an additional amount of 8.89 million euro against additional works.
A total of Tk 6.20 billion is now required for the additional pay to EPC contractor and consulting company and related income tax, value-added tax and bank charges.
Furthermore, an additional Tk 590 million is required to pay to the public exchequer as income tax and VAT in line with the new method of calculation as instructed by the central bank.
Officials have said the EPC contractor has cited the Covid-19 pandemic-related disruptions having delayed project works caused time extension until December 2023.
Moreover, additional 6 months are required for issuance of takeover certificate by Bangladesh Petroleum Corporation, the parent body of Eastern Refinery Limited, submission of bills by the contractor and review by the consultant and approval by the authority concerned and release of fund by the Exim Bank of China, the lender.
A senior Planning Commission official told the FE that a meeting of the Project Evaluation Committee (EPC) would be held Tuesday on the review proposal of SPM project where the members may raise question on the justification for extending tenure till June 2024 despite 97-percent physical progress of the project.
"The members may also question the rationality of proposed increase in civil-works cost by Tk 1.33 billion, Tk 4.58 billion for pipeline, and 8.72-percent cost escalation in case of all other cases," he says.
"The proposal for raising fees for EPC contractor and consultancy will also come under scrutiny in the meeting," he adds.
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