Almost three years have elapsed since Reliance Group of India signed a memorandum of understanding (MoU) for making an investment worth $3.0 billion in power and energy sector in Bangladesh, reports UNB.
Nearly 35 months down the line Reliance is yet to rollout the investment as it could not sign a final deal with the government, official sources at the Power and Energy Ministry told the news agency.
Intending to set up a 3,000-megawatt (MW) gas-fired power plant and a 500 mmcfd LNG terminal in Bangladesh, Reliance signed the MoU during Indian Prime Minister Norendra Modi's Dhaka visit in early June, 2015.
Import of liquefied natural gas (LNG), use of the required gas at the power plant and also selling of the remaining portion of the imported gas to Bangladesh government were all parts of Reliance's initial plan.
During the same period, another Indian group Adani put a $2.5 billion investment proposal and it signed a final deal last year to supply 1,600 MW electricity to Bangladesh from its power plant in Indian state of Jharkhand.
The Adani's power plant is now dedicatedly being built for power export to Bangladesh, said the officials.
"But frequent changes in its proposal and mismatch with the government's terms and conditions has put the Reliance in back foot in pushing forward its project in Bangladesh," said a top official at the Power and Energy Ministry.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid also mentioned that Reliance has changed its proposal four times.
Power Division officials informed that after a number of changes in its proposal finally the Indian conglomerate agreed to set up a 750-MW gas-fired power plant in Meghnaghat near Narayanganj instead of 3,000 MW plant.
The latest proposal got approval from the Cabinet Committee on Public Purchase on May 24 last year under which the state-owned Power Development Board (PDB) will import electricity from the Reliance plant at Tk 5.85 per kilowatt hour (unit cost) for next 22 years.
For the project Bangladesh government will have to spend a total of Tk 80,945 crore (about $8.0 billion) over the 22-year period for buying electricity from the plant.
Official sources said that following the Cabinet body's approval the Power Division issued a letter of intent (LoI) to the Reliance Group on July 26 last year as a follow-up step.
Subsequently, a draft copy of power purchase agreement (PPA) and implementation agreement (IA) was sent to the Reliance Group for its acceptance and initial signing to the copies to move forward to sign the final deal.
"But in last 10 months, no final deal was signed for power plant project," said the official requesting anonymity.
He, however, said possibly, the issue now remained stuck up with the LNG Terminal deal with Energy Division which was not finalised as yet.
Admitting the issue Energy Division officials said that after a long negotiation, Reliance reached an understanding with the government that it will just set up a 500 mmcfd capacity LNG terminal, known as floating storage and re-gasification unit (FSRU) at a location in Chattogram area.
"Reliance will be allowed only to set up the FSRU like other companies are allowed to do so in Bangladesh," Zanendra Nath Sarker, joint secretary at the Energy Division, told UNB.
He said Reliance had to drop its original plan to import LNG, use that gas in its power plant and then sell the remaining portion of imported gas to the government as there were disagreements between the two sides.
Now, the government will import LNG and re-gasify through Reliance's FSRU at a certain charge that was determined for the other FSRUs, he noted adding that the government will supply gas to the Reliance's power plant from the national gas network.
The senior official said the Reliance has to sign a number of separate agreements with the state-owned Petrobangla for its energy projects.
These are terminal use agreement (TUA) for re-gasification of imported LNG and gas supply agreement (GSA) for supplying gas to the power plant and an implementation agreement (IA).
The draft agreements are ready, but the Energy Division is now waiting for the decision of the National Hydrographic Committee under Bangladesh Navy for the approval about the location of the proposed Reliance's LNG Terminal (FSRU).
Reliance selected a location for its floating LNG Terminal at a place in between Kutubdia and Moheshkhali and the location is under the control of Bangladesh Navy, said the official.
It is unlikely to sign any deal with Reliance on energy projects until such approval is received, said the official.
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