The government for the first time is going to import liquefied natural gas (LNG) from the spot market as LNG prices slip on the international market due to reduced demand.
The initiative, going beyond the existing contacts with several countries for LNG supply, will save the government Tk30 crore, said Finance Minister AHM Mustafa Kamal after the Cabinet Committee Meeting on Government Purchase Wednesday.
The meeting approved ten purchase proposals involving a total of Tk1,795 crore, while the LNG purchase alone amounts to Tk132.90 crore. Banks will provide a Tk1,164 crore loan while the government will finance the remaining amount for the purchases.
State-owned Petrobangla will import 3,490,200 million British thermal units (MMBtu) of LNG by Singapore-based Vitol Asia Pte Ltd.
Mustafa Kamal said Bangladesh used to import LNG under a long-term agreement with countries. "For the first time we are going to buy it from the spot market at a competitive price," he added.
Bangladesh has two long-term purchase contracts, a 2.5 million metric tonnes per annum (MMtpa) contract with Qatar Petroleum and another up to 2.5MMtpa with Oman Trading International Ltd.
Rupantarita Prakritik Gas Company Limited (RPGCL)–a subsidiary company of Petrobangla responsible for importing LNG–started importing LNG through Excelerate Energy's Floating Storage Regasification Unit from August 2018.
The Summit LNG terminal, the second of its kind in the country, started deliveries in April 2019. The combined capacity of the terminals is 1,000 million cubic feet per day (mmcfd).
Currently, Bangladesh is importing 590-600 mmcf gas per day, which is 19 percent of the country's total consumption, through its two facilities at Moheshkhali.
The price per thousand cubic feet of LNG on the global market is now around $2 to $2.50, while Bangladesh is paying between $8 and $9. The government spends around $150 million for the import every month.
Md Anisur Rahman, Senior Secretary of the Energy & Mineral Resources Division told The Business Standard that besides the long-term contract, they will import the LNG from the spot market from now on.
"Aside from regular contracts, we will collect it from the spot market to reduce the overall import cost," he said.
The state-run RPGCL received bids from only four suppliers out of the 14 short-listed firms that showed interest to supply LNG to Bangladesh from the spot market, said a source at Petrobangla.
Petrobangla, is eyeing to initiate importing LNG from the spot market from late September to early October to reap the benefits of the low price of the fossil fuel on the international market.
Other nine proposals at Tk1,662-crore
The cabinet committee approved the purchase proposal for two separate 20-storey residential buildings for police in Dhaka and Chattogram police lines. Padma Associates & Engineers Ltd has secured the Tk82 crore construction work at Rajarbagh Police Lines in Dhaka while BBL and DECL will construct the building in Chattogram at Tk81 crore.
The meeting approved the extension of the agreement with Development Design Consultants Ltd by 24-month. The consultancy firm is tasked with construction of multistoried buildings and other establishments for people affected by the Elevated Expressway Project. The agreement extension will edge up the project cost by Tk6 crore to Tk18.74 crore.
Another proposal of 1.5 lakh tonnes of TSP and 2.10 lakh tonnes of DAP fertiliser import from Morocco at a cost of Tk1,095 crore was approved in the meeting. Additionally, the Ministry of Industries will buy 30,000 tonnes of urea at Tk68 crore from Karnaphuli Fertilizer Company Limited.
The meeting approved purchase of 13,570 kilometers of bare ACSR conductor from Meghna Star Cables & Electrical Appliances Ltd at Tk79 crore for power network expansion in: Rajshahi, Rangpur, Khulna, and Barishal.
Apart from this, the revised contract with Hong Kong River Engineering Company Ltd and China Civil Engineering Construction JV for dredging at Mongla Port channel outbar areas got a go-ahead in the meeting. The additional Tk88 crore allocation for the dredging pushed up the project cost to Tk680 crore.