Summit awaits final nod to set up LNG terminal
Summit Group is one step closer to setting up its first floating liquefied natural gas terminal on Moheshkhali Island in Cox's Bazar as the government is set to give its final verdict on the proposal today.
The proposal will be presented at the scheduled meeting of the cabinet committee on economic affairs.
The development comes after the high-level expert committee formed to scrutinise whether Summit Group's proposal was compatible with another proposal submitted by a Singapore-based company gave the green light, said a Petrobangla official.
The government has also completed negotiations with Summit for setting up the terminal and supplying LNG. An Energy Division official said a proposal has been sent to the cabinet division for signing a final agreement with the local company.
Summit Group signed an initial contract with Petrobangla on January 3.
Under the proposal, Summit LNG Terminal Company, a unit of Summit Group, will develop the floating facilities within 18 months of signing the final contract.
The LNG terminal company will supply 500 million cubic feet of gas per day, for which the government will pay a total of $1.56 billion in a year.
The terminal, which will cost Summit $500 million, will be set up on a build-own-operate and transfer basis. The tenure of the agreement will be 15 years.
State-run Petrobangla will pay $158,511 per day to Summit as fixed component fees, $30,500 daily as operating component fees and $30,500 for port service component fees.
Summit LNG Terminal Co will pay $20 million as performance bond to Petrobangla within 15 days of signing the agreement, according to the proposal.
Bangladesh is looking outside to alleviate its energy shortage largely caused by the depletion of domestic reserves and rising demand. 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. The government aims to set up four land-based LNG terminals and one or two floating storage and re-gasification units.
The demand for gas will stand at 8,000 MMCFD in 2041, according to an estimate of the Energy Division.
The government has already received proposals from 14 companies for setting up LNG terminals.
China Huanqiu Contracting & Engineering Corporation has proposed to set up an LNG plant in Moheshkhali, while KOGAS-MGCB-KSBL Consortium wants to set up a land-based terminal in Sonadia.
Besides, Singapore's Sembcorp Utilities Pte Ltd submitted a proposal for setting up a Gravifloat terminal and storage tank in the deep sea. The Gravifloat technology allows the LNG terminal to be fully built and completed at a shipyard and installed in shallow waters to facilitate direct ship loading of LNG.
In December, Petrobangla signed an initial agreement with India's energy company Petronet to set up an LNG re-gasification terminal on Kutubdia Island and a pipeline at an estimated cost of $950 million.
In July, state-run Petrobangla and US-based Excelerate Energy signed the final deals to set up Bangladesh's first LNG terminal.
The terminal to be set up in Moheshkhali will handle imported LNG and supply it to the national grid from early 2018.
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