Gas hope crosses tender barrier | The Daily Star
12:00 AM, October 12, 2011 / LAST MODIFIED: 12:00 AM, October 12, 2011

Gas hope crosses tender barrier

Hyundai gets compressor job 5 years into the initiative to better gas supply

Five years after taking an initiative to set up gas compressors to improve country-wide gas supply flow, and the cancellation of two rounds of tenders and an odd resistance from Petrobangla, the government finally gave the job to Hyundai.
Sources said Petrobangla's subsidiary Gas Transmission Company Ltd (GTCL) yesterday issued a work order to the Korean company to install two gas compressors at Ashuganj and Elenga at a cost of $122 million.
Hyundai would finish its job within 21 months from signing of the agreement, which is expected to take place very soon.
Once installed, these two compressors along with another being installed by US oil company Chevron in Muchai would ensure a reliable gas supply pressure. Gas-dependent industries would not face sudden drop of gas flow pressure that disrupts production. It would also end pressure drop during the winter due to accumulation of condensate in the pipeline.
The work order was issued following approval on Sunday by the GTCL board headed by the Petrobangla chairman. Earlier this month, the project's financier Asian Development Bank gave concurrence to the selection of Hyundai as the lowest responsive bidder in the project's third tender floated last year.
But earlier last week, the Petrobangla chairman, who had been promoting an unsolicited deal with Russian company Gazprom for the job, had asked GTCL not to place the proposal at the Sunday's board meeting. The chairman had been resisting the GTCL bid for many months now.
Sources said on Saturday Prime Minister Sheikh Hasina called up the chairman and said any further delay in the ADB-funded compressor project was undesirable and the authorities could not afford to disappoint the ADB at this point.
Following the prime minister's intervention, the GTCL board approved the Hyundai deal.
Since the beginning, the compressor tender saw a series of hurdles. The first tender seeking installation of all three compressors was cancelled by the ADB in 2006 when it smelt foul play in the tender process.
The second tender was floated in 2008 but immediately after floating the process, the-then Petrobangla chairman started a parallel correspondence with Chevron over awarding it a compressor installation job in Muchai, even though it conflicted with the on-going GTCL tender.
In May 2009, the-then Petrobangla chairman cancelled the tender going against the opinion of the project consultant. He led the government to award US oil company Chevron to install one compressor on the gas pipeline system owned by GTCL. Hyundai had then turned out to be the lowest responsive bidder quoting around $140 million for three compressors.
The chairman had justified the cancellation saying that the bidders had asked for a price three times higher than the original estimate.
He also argued with higher authorities that fresh tender process for the remaining two compressors could be completed within a short time and therefore, this would not additionally affect the country's grim gas scenario much.
The Chevron's compressor was set to start operation in Muchai in July-August this year but the company failed to launch it. Even if it had launched, it would not have improved the gas supply situation with the absence of the other two compressors, experts say.
After the third tender was floated, Petrobangla was once again resorting to various measures to slow down the process. Earlier this year, it alternatively brought into the limelight the prospect of signing a government to government deal with Russia. Under instruction of the chairman, the GTCL could not proceed with its own tender.
Soon afterwards, Petrobangla chief was asking Gazprom to set up two compressors in Muchai and Elenga, the same place marked for the ADB-financed tender. At first, the energy adviser to prime minister told The Daily Star that Russia would provide additional compressors to be installed in the south-western region. Then he changed his stance saying that the government was pursuing a parallel deal to create a sense of competition between the ADB-funded project and Gazprom.
However, the enthusiasm over Gazprom was watered down in August when the Russian company finally gave a financial offer of nearly $300 million for the two compressors, more than double the price asked by Hyundai. Besides this, the money would have to be provided by the government.
Despite this disappointing offer, the Petrobangla chairman once again asked Gazprom to submit a new price.
The country's gas supply scenario did not make any improvement in the last three years.

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