Bangladesh Petroleum Corporation Asked to Sign MoU on Moheshkhali LPG terminal
03.25.2021 - NEWS

March 25, 2021 [The Financial Express] Bangladesh Petroleum Corporation (BPC) will strike a deal with the consortium of Japanese Marubeni, ‘controversial’ Vitol Asia Pte Ltd and local PowerCo International Pte Ltd to build an LPG terminal.


Energy ministry has asked it to ink a memorandum of understanding (MoU) in order to construct the facility at Moheshkhali island in the Bay of Bengal.

In a letter last week, energy and mineral resources division under power, energy and mineral resources ministry also instructed that local and international rules be followed before a final deal.

A high-powered committee comprising legal, financial and technical experts and relevant BPC officials should be constituted to evaluate the final proposal, the letter said.

The terminal will be built on a build, own, operate and transfer (BOOT) basis.

The instruction to ink an MoU came following an unsolicited offer made under the Speedy Supply of Power and Energy (Special Provision) Act-2010.

The existing law has a provision of immunity to those involved in a quick fix.

After several extensions, officials said, the law is set to be void this October after 11 years into its enactment.

The consortium partner Vitol has already been a leading supplier of diesel, jet fuel, furnace oil and octane to the Bangladesh Petroleum Corporation (BPC) since 2016.

It is so far the leading carrier of liquefied natural gas (LNG) from spot market for Petrobangla.

The company delivered one LNG cargo in September 2020.

Beyond the knowledge of Petrobangla, Vitol has inked a long-term sales and purchase agreement with Qatar Petroleum this week to supply 1.25-million tonnes per annum (MTPA) of LNG to Bangladesh customers.

Sources said Vitol was blacklisted thrice in Sri Lanka for supplying dirty fuel and its US unit was accused of bribing officials in three Latin states to secure bids.

According to Bloomberg, Vitol’s US unit last December agreed to pay over $160 million to settle allegations of conspiring to pay bribes in Latin America and attempting energy market manipulation.

When asked, BPC chairman Md Abu Bakr Siddique said the MoU would be non-binding, meaning it has an option to exit anytime if the terms and conditions are not mutually agreed.

A feasibility study would be required before a final deal as the BPC was yet to assess whether the project would be profitable for it or not, he added.

Consumers Association of Bangladesh energy adviser Prof M Shamsul Alam sought transparency in awarding every project by the government.

Unsolicited deals under the special law have not brought anything good over the past one decade, he said, adding that it would be harmful in future too.

Officials said building the LPG terminal was required for bulk import of the fuel to cut retail price drastically and ensure public consumption.

More than 25 LPG companies, which vary in size and investment, are now operating in Bangladesh market.

LPG consumption in the country has already reached an estimated 1.5 MTPA, which was around 1.0-million tonnes back in 2018.

Bangladesh consumed nearly 650,000 tonnes of LPG in 2017 which was around 400,000 tonnes in 2016 and 250,000 tonnes in 2015.

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