Govt looks out for funds as Chinese firm offers to build SPM in Bay

FE Team | Published: February 08, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

FE Report
The China Petroleum Pipeline Bureau (CPPB), a subsidiary of the state-owned China National Petroleum Corporation, was seeking to install Bangladesh's first single point mooring (SPM) to carry petroleum from vessels at the outer anchorage to depots onshore, a senior official said.
He said the Chinese firm had shown interest to build the SPM in the Bay of Bengal with buyers' credit. After submitting an initial proposal, the Chinese firm also submitted a technical proposal in this connection.
The Energy Division under the Ministry of Power, Energy and Mineral Resources did the initial evaluation of the proposal and found the CPPB qualified for building the SPM as it has experience in installing oil and gas pipelines and building liquefied natural gas (LNG) terminals and crude and product storage tanks.
The government is looking out for funding assistance from interested financiers to build the much-needed SPM at an estimated cost of US$ 327 million.
The Jeddah-based Islamic Development Bank has agreed to increase its funding by 70.54 per cent to $ 220 million from the earlier commitment of $ 129 million to help install the SPM near the Kutubdia island.
The IDB is also trying to convince the donors in the Middle East and the Gulf countries to offer the remaining funds for building the offshore floating terminal.
The country's move to install the SPM earlier hit snags as project costs increased by 140.44 per cent from the previously estimated $ 136 million.
The BPC, the implementing authority of the SPM, had initially estimated the project cost at $ 136 million on the basis of a feasibility study conducted by a Pakistani firm, the official concerned said without mentioning the name of the firm.
But the estimated costs grew later, when the German-based firm, ILF Consulting Engineering, carried out a detailed study on the proposed SPM and re-estimated the project cost, said a BPC official.
The German firm proposed a different route for the SPM pipeline by adding another 30 km to the initial 77 km, as proposed by the Pakistani firm, to carry fuel from the offshore Kutubdia Island via Moheskhali island to the Eastern Refinery Ltd, the country's lone refinery located at Patenga in Chittagong, he said.
The BPC undertook the SPM terminal installation project in May 2010 to check pilferage and ensure efficient handling of imported petroleum products.
The IDB also had inked an agreement with Bangladesh in June 2010 to provide $ 129 million for building the SPM. The remaining $7 million was to be borne by the government of Bangladesh.
The proposed SPM from the deep sea port would save both time and money, as it would help unload crude and refined petroleum from ocean-going vessels in the deep sea without berthing at the port, said the BPC official.
It might save at least $ 10 million annually on account of unloading oil in the deep sea, he said. The BPC, the country's petroleum products import and marketing monopoly, currently pays $ 5.50 per tonne to small vessels of the state-owned Bangladesh Shipping Corporation to ferry petroleum to the shore from larger vessels moored at the outer anchorage in the Bay of Bengal, he added.
The platform would save around $8 per tonne that the BPC had to spend on vessel transfer, said the official.
It will also bring down the fuel unloading time to around one-fifth or two-three days from the current 12-15 days and thus raise the fuel handling capacity of the BPC.
The SPM facility will help handle the country's mounting demand for fuel as Bangladesh's annual fuel use is growing with commissioning of about three dozens of fuel oil and gas oil-fired power plants since mid-2010.
Bangladesh's oil import is increasing rapidly as it launched a drive to increase oil-based power generation in mid-2010 with its natural gas resources rapidly depleting. It has already commissioned nearly three dozen new oil-based power plants.
The BPC imported 5.2 million tonnes of crude and refined oil products for the fiscal year 2012-13 at an estimated cost of around $5 billion.
During the fiscal year 2009-10 Bangladesh imported a total of 3.75 million tonnes of fuel-crude and refined combined.
The BPC funded its oil imports mostly with loans from the International Islamic Trade Finance Corporation or ITFC, the lending arm of the Islamic Development Bank.
The state-run company also took loans from foreign banks. It also took loans from the government to pay its import bills. A part of the funding also came from revenue generated from sale of oil products in the domestic market.
The BPC currently has term deals on import of refined oil products from the Kuwait Petroleum Corp., Petco, the trading arm of Malaysia's state-owned Petronas, the Philippine National Oil Company, Emirates National Oil Company, Egypt's Middle East Oil Refinery, Maldives National Oil Company, the state-owned PetroChina, and Indonesia's Bumi Siak Pusako until December 2014.
It also has deals in place on import of crude oil from the Saudi Aramco and the Abu Dhabi National Oil Company up to December 2014.