A US-Singapore consortium is going to build the first-ever floating LNG terminal in Bangladesh and import gas for $17.1 per million cubic feet (mmcf), 10 times higher than the national gas sales price. The cabinet committee on economic affairs yesterday approved an unsolicited deal with the US-Singapore consortium of Astra and Excelerate (AEC) under the Power and Energy Fast Supply Enhancement (Sp
ecial Provision) Act, 2010. The import of Liquefied Natural Gas (LNG), though at a very expensive rate, is likely to ensure the country's energy security in the long run. Finance Minister AMA Muhith told reporters after yesterday's meeting that the price of the imported gas would have been much higher, but not that much as it would be mixed with local gas. According to an energy ministry proposal, if LNG was mixed with local gas, the average cost of gas will rise to $4.39 per mmcfd from $1.7, implying that the government will have to hike gas price in future. However, the minister said the gas price would not go much higher for the consumers. Prime Minister's Energy Adviser Towfique-e-Elahi Chowdhury said the gas would take two years to reach the country and the price would be fixed in line with the oil price on international market. Advertisement After yesterday's approval, Petrobangla will now sign an agreement with the AEC for setting up the terminal and the company is expected to start supplying gas by mid-2016. The AEC would install the terminal at Maheshkhali in Cox's Bazar to facilitate LNG import from Qatar with which Bangladesh signed a memorandum of understanding in 2011. Finance Minister Muhith said the government's agreement with Qatar would expire this month. He added fresh negotiations would start for extension of the tenure and expressed the hope that it would be done in time. According to the energy ministry's present estimate, the government will have to spend around $2.7 billion annually for importing 500 million cubic feet per day (mmcfd) LNG and using the floating terminal. For the last one decade, the country faced a shortfall of around 500 mmcfd gas. As per the forecast, this would persist even if the country adds new gas to the national grid from its own resources in the coming years. The AEC and two other companies -- Hiranandani Electricity Private Ltd, India and Samsung C&T Corporation, South Korea -- submitted proposals to Petrobangla through an open tender more than three years ago to build the terminal. However, Petrobangla's tender evaluation committee had found all the proposals “non-responsive”, said energy ministry officials. Though the LNG terminal is among the government's top priority projects, Petrobangla could not make any headway with it. Finally, it picked the AEC's offer as the other two missed many details. Muhith yesterday also admitted that the LNG terminal project took much time to reach the final stage. The AEC proposed building the terminal for around $300 million and operate it for 15 years before handing it over to the government. According to the AEC proposal, if four million tonnes of LNG is imported from Qatar a year, the price of per mmcfd LNG would be $14 that includes delivery and shipping costs. With duty, tax and other expenses added, the cost would be $17.1 per mmcfd at the delivery point. The AEC sought a service charge of 56 cents per mmcfd gas for utilising the LNG terminal and shipping services. The consortium also proposed that it be given a service charge for sitting idle in case the government does not import LNG after the terminal's construction. The energy ministry analysed the AEC proposal and explained the cost implication. In its proposal to the cabinet committee, the ministry noted that the estimated diesel import price was Tk 74 a litre. When a combined cycle power plant uses it, the cost of electricity stands at Tk 16.13 per unit. If diesel was replaced by LNG in producing electricity, the price would be Tk 9.4 per unit. And if LNG was mixed with local gas, electricity price would be Tk 4.37 per unit. Qatar tops the list of countries supplying LNG. Japan, South Korea and India had been importing LNG from Qatar under 15-20 year agreements, the ministry said. It also noted that the government had already decided to set up a transmission line from the LNG terminal at Maheshkhali to Anwara in Chittagong for supplying gas. The project is now in progress.
No comments:
Post a Comment