The government is set to build another floating liquefied natural gas terminal as it makes an earnest push towards addressing Bangladesh's gas scarcity.
The cabinet committee on economic affairs last week approved the draft agreement for awarding the job to a consortium of local Hong Kong Shanghai Manjala Power Limited and Malaysia's Global LNG and Petronas for setting up the terminal on Kutubdia Island in Cox's Bazar.
According to the company's website, HSMP was founded in the 1970s by Kazi Zafarullah, a member of Awami League's presidium, the highest policymaking body of the party.
This would be the third company -- after US-based Excelerate Energy and local Summit Group -- to be setting up an LNG floating terminal.
All three floating terminals would have daily generation capacities of 500 million cubic feet (MMCFD), for which the government will pay each of them about $1.56 billion a year.
Setting up the terminals will cost $500 million each, and the government is giving them the jobs on a build-own-operate and transfer basis.
The tenure of the agreement will be 15 years, after which the terminal will have to be handed over to Petrobangla without any cost, according to an energy ministry official. The government can use the terminal for another 15 years.
India's largest importer of LNG, Petronet is also set to make a formal proposal to Petrobangla this month to build another floating terminal on Kutubdia Island, according to Economic Times.
A preliminary agreement on this front has already been signed during Prime Minister Sheikh Hasina's visit to India in April.
Kutubdia Island has a natural harbour with good draft and a natural backwater, ideal for setting up an LNG terminal. Bangladesh is looking outside to alleviate its energy shortage, largely caused by depletion of domestic reserves and rising demand.
At present, gas supply stands at about 2,700 million cubic feet per day against the demand for 3,300 MMCFD. The shortage of gas has affected power generation as well as industries and households. HSMP has proposed to build the floating terminal 10 kilometres off Kutubdia Island and 15 km from the national gridline.
The consortium will set up the terminal within 18 to 20 months of signing the final agreement, the energy ministry official said. The fees and other charges of HSMP are almost the same as the other two companies that already got the contracts. Petrobangla will pay HSMP $158,200 as fixed component fee and $30,500 as port service charge, per day. However, in case of Summit, the fixed component fee would be $158,511. The fixed component fee and port service charge for Excelerate Energy would be $159,186 and $32,000 a day respectively. Summit Group and Excelerate Energy will both set up LNG terminals at Moheshkhali Island.
The government has been holding talks with various countries, including Oman and Indonesia, for importing liquefied gas. The imported gas will be brought to the terminals and then supplied to the national gridline. The finance minister has already indicated that after June next year the gas price may be hiked.
The demand for gas will stand at 8,000 MMCFD in 2041, according to an estimate of the energy division. The government is also considering setting up a land-based LNG terminal, and the energy ministry has already received proposals from more than a dozen companies for the job.