Bangladesh Scraps Reliance FSRU
The Bangladesh government has scrapped ongoing talks with India’s Reliance Power over its planned new floating LNG import terminal at Kutubdia Island near port city Chattogram (formerly Chittagong) but will proceed with its power plant project.
A top government committee ended the final round of negotiations with Reliance over a contract to build a 3.75mn metric ton/yr floating storage regasification unit (FSRU), a senior Petrobangla official told NGW October 18 citing a lack of funds. Petrobangla had sought a US$1.4bn guarantee last year from the finance ministry, prior to inking a final deal for the FSRU with Reliance Power, but failed to obtain it.
Reliance Power had inked a memo of understanding with Petrobangla to build the FSRU-based terminal more than three years ago, and then executed related project agreements in April 2017.
Several months back the government shelved plans for three small-scale FSRUs following objections from the main port authority, and as LNG imports at its first full-sized FSRU ramped up. Traders Trafigura, Gunvor, Vitol and Belgian shipowner Exmar had been in final talks with Petrobangla and its subsidiary to build the mini FSRUs and sell the gas to Petrobangla.
The Petrobangla official said it had no binding agreement with any of these firms, or with Reliance, to award contracts.
Bangladesh however will go ahead with Reliance Power's $1bn planned 718 MW power plant that will run on 110mn ft3/d gas, he added. This is expected to come from the country’s existing Excelerate-run LNG import terminal at Moheshkhali Island. State-run Gas Transmission Company (GTCL) will build gas pipes from the terminal to Meghnaghat, 24km south of the capital Dhaka. Reliance Power will pay a transmission tariff to use the GTCL-owned pipelines.
Reliance Power is expected to sign a 22-year power purchase agreement (PPA) with state-run Bangladesh Power Development Board, for the plant’s output at a levelised tariff rate of 7.31 US cents per kilowatt-hour (kWh). The plant may benefit from some of the $583mn debt guarantees approved ten months ago by the Asian Development Bank for what then was an FSRU/power project.
Meanwhile Bangladesh’s second FSRU, being developed by local Summit Group and Japan's Mitsubishi, is still expected to start operations by early 2019 - close to Excelerate's existing FSRU at Moheshkhali Island.