Cost rises more than five times
The cost of building a pipeline in the Bay of Bengal, for unloading fuel from tankers in the deep sea to storage facilities on mainland, went over five times higher than the initial estimate.
The cost is now Tk 4,936 crore, about 5.17 times more.
When the project was first approved by the Executive Committee of the National Economic Council (Ecnec) in 2010, the cost was estimated to be Tk 954 crore and was set to be implemented by 2012.
Yesterday, Ecnec approved the project titled “Installation of Single Point Mooring with Double Pipeline”. The Chinese government had agreed to fund 79 percent of the cost on condition that a Chinese company implemented the project.
The project is scheduled to be implemented between November, 2015, and December, 2018.
A high official of Eastern Refinery Ltd said the first project was proposed for building a single pipeline but later it was changed to a double pipeline. He said the first project design was faulty and hence a German consultant firm changed it.
The cost also went up due to the changes in the design and extension of the timeframe, the official said.
Under the project, the Single Point Mooring installation would be built in Sonadia island area in deep sea where large oil tankers would anchor.
As per the latest project design, two large 36-inch pipelines would be built there to pump the oil to a storage facility 16km away on the Matarbari island in Maheshkhali.
One pipeline would pump crude oil and the other diesel.
The length of each of the pipelines would be 110km.
According to the project proposal, there would be six tanks in Maheshkhali.
Presently, large tankers anchor in deep sea and smaller ships unload and bring the oil to storage facilities of Eastern Refinery Ltd (ERL) in Chittagong. This process called lightering is an expensive operation and it takes 11 days to unload 1 lakh tonnes of oil. Other than time and cost, a lot of oil is systematically stolen during the process, officials said.
But if a pipeline was installed, it would take just two days to empty a vessel carrying such a volume of oil. This would cut cost and stop the pilferage.
After the Ecnec meeting yesterday, Planning Minister AHM Mustafa Kamal told reporters that the project would save the government Tk 1,000 crore every year and that the project cost would be recovered in five to six years.
The Islamic Development Bank was expected to finance the project but as the cost shot up, it withdrew.
According to the project proposal, Chinese government expressed its interest in financing the project and nominated China Petroleum Pipeline Bureau for the job.
The Bureau has signed a Memorandum of Understanding with Bangladesh Petroleum Corporation in this regard.
The Chinese company has vast experience in installing pipeline on land but not in the sea.
China would be giving Tk 3,903 crore as loan at 2 percent interest with 15 years repayment and five years of grace period.
However, the unsolicited selection of the company raised many questions.
The Ecnec yesterday gave the nod to 9 other projects involving a total cost of Tk 2.341 crore.
Questions had been raised about some of these projects by the media as those might influence the upcoming municipal elections. The issue was discussed and the questions were binned in yesterday's Ecnec meeting.
Planning Minister Kamal said the projects were national projects and there was no scope for those influencing the polls.