The interim government has turned down Summit Group's plea to revive the cancelled contract earlier signed to build its second floating storage and re-gasification unit (FSRU) at Moheshkhali island in the Bay of Bengal.
The Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) rejected the request of the Summit LNG II Terminal Co. Ltd. in this regard, following recommendation from the Ministry of Law, Justice and Parliamentary Affairs, Energy Secretary Mohammad Saiful Islam told the FE on Wednesday.
Petrobangla has been asked to inform the Summit Group about the EMRD's latest decision, he said.
When contacted, a Summit Group high-up preferred to respond formally over the issue after getting the letter from the Petrobangla.
Officials said Petrobangla cancelled the contract in October last year due to non-compliance of the terms.
The Terminal Use Agreement (TUA) and Implementation Agreement (IA) with Summit Group were cancelled in line with an instruction from the EMRD, they added.
Summit LNG II Terminal Co. Ltd, a subsidiary of the country's leading privately-owned business conglomerate in the energy sector, was supposed to build a FSRU with a capacity of 4.50 million tonne per year (MTPA) on build, own, operate and transfer (BOOT) basis by 2026 and continue operations for 15 years.
It was the first time Bangladesh scrapped a FSRU deal with a contractor after inking a deal.
The contract cancellation letter, signed by Petrobangla secretary Ruchira Islam, says Bangladesh Oil, Gas and Mineral Corporation, mostly known as Petrobangla, has cancelled the TUA in accordance with Clause 27.1 (a) (i) of the signed contract due to non-compliance and non-satisfaction of the key Conditions Precedent which resulted in non-effectiveness of the signed TUA and IA.
The letter also pointed out non-compliance and non-satisfaction of one of the key Conditions Precedent - Performance Bond for cancellation of the deals.
The TUA between Petrobangla and Summit LNG Terminal II Co. Ltd. and the IA between Energy and Mineral Resources Division and Summit LNG Terminal II Co. Ltd. were signed on March 30, 2024.
Referring to violation of the conditions precedent, a senior EMRD official said that as per the terms of the deals Summit was supposed to deposit a performance guarantee worth US$20 million within 90 days of inking the deals, meaning by June 28 of the year. But Summit deposited the money on June 30, two days after the deadline, he added.
Earlier, a four-member committee - one purchase expert, one deputy attorney general, one planning commission representative and one RPGCL representative - recommended scrapping the deal based on which the EMRD instructed Petrobangla to cancel it.
The EMRD had constituted the committee on September 11 last to advise the MPEMR about the next course of action regarding the FSRU of Summit LNG Terminal II Co. Ltd., which was inked under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 (Amended 2021) bypassing competitive tender, the official said.
Before the recommendation, the committee took copies of the agreements, scrutinised the process of selecting Summit for the new FSRU project, checked whether any other companies were interested in the project, the circumstance and approval process and pricing.
Summit LNG Terminal II Co. Ltd. inked deals to build a 170,000-cu m FSRU with 600 million cubic feet per day (mmcfd) send-out capacity, which was supposed to be Bangladesh's 3rd FSRU, a senior Petrobangla official said.
Summit carried out a met-ocean survey over its second LNG FSRU and submitted a report to the state-run Rupantarita Prakritik Gas Company Ltd (RPGCL), he said.
Summit Group's existing 3.75 MTPA FSRU - Summit LNG Terminal Co Ltd - located on Moheshkhali island in the Bay of Bengal, started commercial operation on April 30, 2019, and remained operational for 15 years until 2033 as per the existing contracts.
The interim government has already scrapped the special law.
Azizjst@yahoo.com