BPC finally floats tender for SPM operation after costly year-long delay

After more than a year's delay, Bangladesh Petroleum Corporation (BPC) has finally taken steps to operationalise the country's first Single Point Mooring (SPM) system.

On 30 April, the state-run agency floated an international tender to appoint a contractor for the system's operation and maintenance (O&M), over 14 months after commissioning the dual-channel crude oil terminal in March 2024.

Industry insiders said the delay has already cost the country heavily. They estimate a loss of around Tk800 crore in unrealised annual savings, along with disruptions in energy logistics and no return on investment.

According to the tender, interested bidders must buy documents by 18 June. The deadline for submission and opening is 19 June 2025.

Sources familiar with the process told The Business Standard that the contractor onboarding process may take several more months. This would further postpone the cost-saving benefits the SPM was designed to deliver.

Raihan Ahmad, managing director of the Petroleum Transmission Company, which oversees the SPM, told TBS, "A tender to appoint an O&M contractor for the SPM has been floated. We will appoint a contractor for 40 months."

The selected contractor will also be required to train BPC staff to eventually take over operations, reducing long-term dependency on foreign expertise, he added.

As of yesterday, the BPC confirmed the sale of three bid documents. Two potential bidders have visited the office and expressed interest. All three bids come from joint venture firms.

"These joint ventures are being formed as individual companies often lack a few required qualifications," said Amir Masud, BPC's general manager (Planning and Development).

Before floating the tender, BPC returned a large part of the performance guarantee money to China Petroleum Pipeline Engineering Company (CPPEC), which had previously been engaged without tender under a special provision.

The new tender replaces the cancelled deal with CPPEC, which was awarded under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, bypassing competitive bidding.

Strict qualification requirements

The BPC has outlined stringent eligibility criteria. Bidders must have at least seven years' experience in SPM operations, with a minimum of one year as a prime contractor, subcontractor, or management contractor.

Firms must show at least $5 million in liquid assets or working capital, guaranteed by an international or scheduled Bangladeshi bank. Average annual turnover must be $25 million over the last three years.

A maximum of two firms may form a joint venture, and each tenderer must deposit $2 million as tender security.

Why SPM matters

The SPM project, initiated in 2015 by Eastern Refinery Limited, aims to cut transportation time and cost by transferring crude oil directly from mother vessels via pipeline.

Currently, BPC pays $5.50 per tonne for lighterage-based oil transfer. This is expected to drop below $2 once the SPM is fully operational.

Besides reducing cost, the SPM will also prevent oil theft and reduce risks posed by rough weather, which has previously disrupted supply and caused fatalities.

Delays push up cost

Though the project was taken up in 2015, commercial operation only began in March 2024. Project cost has risen to Tk8,341 crore, from an initial estimate of Tk4,936 crore.

China financed the project with two loans totalling $550.34 million, repayable over 20 years at 2% annual interest, with a five-year grace period.

Tender or no tender: Interim govt's dilemma

Previously, the interim government considered reappointing CPPEC without a tender. The Advisory Council Committee on Economic Affairs approved this in principle on 21 November 2024.

The plan drew sharp criticism. One energy official said anonymously, "We repealed the deal with CPPEC as it was signed without tender. If the interim government follows the same path, we will walk in Hasina's shoes."

The government reversed course on 2 January, opting for competitive tendering.

The SPM, built on 90 acres in Maheshkhali, Cox's Bazar, is linked to storage tanks at Kalamarchara, Matarbari through a 36-inch pipeline. From there, crude oil is piped 220km to Eastern Refinery in Chattogram via an 18-inch line.

Once operational, BPC expects the fuel offloading time to drop from 11–12 days to just 2 days.