China has sought clarifications of a couple of terms, including investment requirement, Bangladesh proposed to procure four oceangoing vessels with Chinese loans.
In a recent letter to the government agency concerned, China mentioned that the investment proposed in this regard by the Bangladesh side was too high.
It also questioned a term that says the core equipment of the vessels should be made in other countries, not in China.
China requested Bangladesh to clarify the issues for ensuring approval of the project loan and suggested revising the investment proposal apparently to downsize the cost.
When contacted, Chairman of the Bangladesh Shipping Corporation (BSC) Commodore Mahmudul Malek told the FE that they received the letter. "We're working on it," he added.
The BSC plans to procure the ships from China to enlarge its fleet to book a bigger slice of shipping business which is expected to significantly help save the country's foreign-currency reserves.
Of the four ships -- to be procured on a government-to-government deal -- two are crude-oil mother tankers and two others are mother bulk carriers.
Currently, the BSC has no crude-oil mother tankers in its fleet as it sold its lone one styled 'Banglar Noor' in 1982. For carrying imported oils, the corporation now has to charter foreign mother tankers.
It is seen as a significant and important move by the stakeholders on the heels of a massive expansion of the country's external trade as they consider it to reduce depletion of the forex reserves.
Each of the mother tankers has a capacity of 114,000 DWT (deadweight tonnage), while the capacity of each mother bulk carrier is 80,000 DWT.
Previously, the BSC had a plan to purchase six ships.
China National Machinery Import and Export Corporation (CMC) has been nominated as the contractor for supplying the ships after several rounds of negotiations. The procurement of the ships will be completed by December 2025.
The Cabinet Committee on Economic Affairs recommended implementing the project on a G2G basis, officials at the BSC said, adding that the rate of return on investment in the project is estimated to be 19.38 per cent.
According to the BSC, the objectives of buying the ships include increasing the number and capacity of its existing fleet and developing its capacity for carrying crude oil to meet the requirement of Eastern Refinery Limited.
The corporation says that the procurement will enhance national energy security in line with the Sustainable Development Goals (SDGs).
The move will also help make the BSC more profitable and ensure robust logistics for meeting the energy requirement of the country, said officials.
Apart from helping ensure the food-security arrangement of the country, the BSC says, the purchase will also help create more employment opportunities and human development in the maritime sector.
The shipping corporation procurement proposal also reads: "As the domestic-funding portion will be invested from its earnings and reserves, there is no direct involvement of government funds and foreign-currency reserves for implementing the project."
After the delivery, the vessels will be operated by the present management of the BSC and placed under the direct supervision of the BSC authority, which will be responsible for employing the vessels, the project proposal mentions.
It says that to derive benefits of the project, it will be required to employ about 40 ship officers and crew members for each vessel on a permanent or contractual basis.
Established in 1972, the BSC presently has a mixed fleet of eight vessels having a carrying capacity of about 0.30 million metric tonnes. The fleet comprises three bulk carriers, as many oil tankers and two lighterage tankers.
More than 90 per cent of the national exports and imports of Bangladesh are being carried by oceangoing vessels.
According to the Bangladesh Flag Vessel Act 2019, sea-borne cargoes to be carried at the expense of public funds shall be carried by the BSC vessels. But the small BSC fleet often stands in the way of proper implementation of the act.
The corporation has to charter foreign vessels by spending huge sums of foreign currencies. This prompts the urgency of the corporation's fleet expansion to reduce pressure on forex stocks.
© 2024 - All Rights with The Financial Express
