Negotiations ripe for procuring four China ships

Negotiations for procuring four oceangoing ships from China are ripe for sealing the deal as issues related to equipment and pricing are all clarified from Bangladesh side, sources say.
After getting proposals from Bangladesh for the procurement with Chinese loan, China had sought clarification on a couple of terms, including equipment origin and reduction in the number of vessels from six to four with the same funding.
Though originally Bangladesh Shipping Corporation (BSC) had envisaged buying six ships when the loan was pledged in 2020, the number was finally reduced to four due to rise in prices of machinery.
"Due to COVID-19 restrictions, both parties suspended normal activities for more than a year, and ultimately negotiation on specifications and configuration finally approved by the Chinese Government in 2019-2020 is no longer sufficient to cover the construction cost of six vessels now," the BSC response reads.
Considering the necessity and viability of the project, proposal for procurement of four vessels was approved by the Executive Committee of the National Economic Council (ECNEC) of Bangladesh in April 2023 with unit price CNY/RMB 526.53 Million for Crude Oil Mother Tankers and CNY/RMB 311.74 million for Mother Bulk Carriers. Thus, the total price of the four vessels came to CNY/RMB 1.67654 billion.
According to the shipping corporation, the recommendation of the Cabinet Committee on Government Purchase (CCGP) for the purchase of these four vessels within the quoted prices was also approved by the high-ups, as the purchase comes as a forex-saver.
It has further explained that in the new Feasibility Study Report, the prices of the vessels were considered in US dollar following the international practice of pricing of new shipbuilding.
"But the loan amount from China for this project was proposed as preferential loan (government concessional loan) in RMB (CNY). However, later on, the Bangladesh side converted the price to RMB and the unit price was fixed as CNY/RMB 526.53 Million for one Crude Oil Mother Tanker and CNY/RMB 311.74 million for one Mother Bulk Carrier."
Thus, says the corporation, the total price for four vessels comes to CNY/RMB 1.67654 billion which will be used for procurement of ships only. Therefore, the loan-application amount is also RMB 1.67654 billion, which does not exceed the original loan amount of CNY/RMB1.768 billion approved by the Chinese Government.
The BSC in its proposal suggested that the main equipment of the ships should be of world-famous brands, excluding Chinese brands.
In response to the letter of China Exim Bank, the BSC said as world- famous equipment companies have plants and joint-venture companies in China, equipment can be procured from those companies.
Regarding the Main engine, the vessels of this project will be fitted with MAN B&W brand manufactured by China CSC-MES Diesel Company Limited (CMD) and CSSC Engine Company Limited (CSE). Both companies are Chinese manufacturers and authorised by the original MAN B&W brand and Chinese-made equipment. "This marine-engine brand has the highest market share and their quality is tested in the market," the BSC response said.
"The Main Engines used in BSC's existing fleet are al MAN B&W brand models. As such ship's crew is comfortable enough on operation and maintenance of this brand of main engine due to their long-time experience in handling those, the current operating conditions of all the MAN B&W engines are good and stable, which has been confirmed by the ship's crew."
It has also pointed out that the MAN B&W-brand models have authorised production enterprises in China and are manufactured by Chinese enterprises.
Presently, there are two Chinese authorized manufacturing companies for the MAN-brand main engine to be used in the ships of this project. One is China State Shipbuilding Corporation Diesel Engine Co Ltd (CSE) and the other is CSSC-MES Diesel Co Ltd (CMD).
And BSC believes that the fabrication of the main engines for this project will be customised by China State Shipbuilding Corporation Diesel Engine Company.
"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," Bangladesh Shipping Corporation Chairman Commodore Mahmudul Malek has told the FE writer.
Of the four ships-to be procured on a government-to-government deal-two are crude-oil mother tankers and another two 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.

[email protected]