The Cabinet Committee on Economic Affairs Tuesday sent back the proposal on inking a liquefied natural gas (LNG) terminal deal, citing 'lack of adequate information' as the reason.
The cabinet committee meeting, with Finance Minister AMA Muhith in the chair, asked the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) to re-submit the proposal after making necessary changes, MPEMR state minister Nasrul Hamid told newsmen.
"We shall soon submit the proposal again," he added.
EMRD proposed for an approval over awarding the deal to US consortium of Astra Oil and Excelerate Energy for building the country's first LNG terminal at Moheshkhali Island in the Bay of Bengal.
The government will have to spend an estimated $2.7 billion or Tk 211 billion per year to foot the bill for importing around 500 million cubic foot per day (mmcfd) equivalent of LNG, it estimated.
Of the total estimated cost, $2.58 billion will be required to import LNG and $90.16 million to meet terminal charge, a senior EMRD official said.
The spending breaks down as: $ 17.10 per mcf (1,000 cubic feet) at transmission end with the import cost of $ 14 per unit (1 mcf), operation fee for providing storage and re-gasification service of $ 0.49 per unit and freight charges (delivery ex-ship).
But the cost of LNG, as estimated, is much higher compared to the current downturn in global prices of the fuel, industry-insiders said.
Currently, the US is selling LNG at around $9.60 per unit for European markets, and $11.69 per unit for the markets in the Asia-Pacific region.
There are also signs for further slide of the gas prices in the global market, as the current LNG market is oversupplied, they pointed out.
The country's average electricity generation cost from the gas-fired power plants, which accounts for 66 per cent of the overall generation, will double to Tk 4.37 per unit (1 kilowatt-hour) from the existing Tk 2.20 per unit, if the planned quantity of imported LNG is used for power production, analysts said. The existing average price of gas at the user-end will also almost triple to $4.30 per unit from $1.60 as a consequence, they added.
Currently the government purchases over half the overall natural gas production from the international oil companies (IOCs) at an average price of around $2.60 per unit. But the price of indigenous output is only around 10 US cents per unit.
The planned LNG terminal will have floating storage and re-gasification unit (FSRU). The floating LNG-import terminal will have a capacity to handle 5 million tonnes of LNG per year and a re-gasification capacity of at least 500 million cubic feet per day (mmcfd).
It will have berthing and mooring facilities for LNG vessels with a capacity of 138,000-260,000 cubic meters, with the construction contract to be awarded on a build-own-operate-transfer (BOOT) basis for 15 years.
Earlier on June 26, the state-owned Petrobangla entered into an initial deal with the US consortium, four years after the initial bidding.
azizjst@yahoo.com