SC stays re-tender process for 3rd FSRU following Summit’s appeal

The Appellate Division of the Supreme Court has stayed the re-tender process for the installation of Bangladesh's third Floating Storage Regasification Unit (FSRU) following an appeal by Summit LNG Terminal 2 Co Ltd.

A two-member bench comprising Justice Md Akram Hossain Chowdhury and Justice KM Rasheduzzaman Raja passed the order yesterday, directing the government not to proceed with the re-tender process until legal disputes over the project are resolved.

Summit LNG challenged the legality of the interim government's decision to scrap a previously agreed deal for a second FSRU. Summit has reportedly invested $20 million in the project so far.

The government, on 7 October 2024, cancelled the Terminal Use Agreement and the Implementation Agreement with Summit LNG for the installation of the third FSRU.

Later, as confirmed to The Business Standard by Energy Adviser Muhammad Fouzul Kabir Khan, Petrobangla officially annulled the deal on 14 January this year, citing delays in bond issuance and fund transfers by Summit Group, the parent company of Summit LNG.

Regarding the cancellation of the deal, Fouzul Kabir had earlier told TBS, "The agreement was cancelled because the 2010 law under which the letter of intent for the LNG terminal was issued has been repealed by the interim government. 

"Additionally, the company failed to meet the conditions outlined in the agreement."

But Summit Power International's Assistant General Manager (PR & Media) Mohsena Hassan dismissed the claims while speaking to TBS yesterday. 

Mohsena said, "We have clarified our position on the issues like delay of issuing bond submission and fund disbursement. Finding no other alternative way, we resorted to legal proceedings and court stayed the process of re-tender for 3rd FSRU."

During the Hasina led Awami League government, Petrobangla awarded the third FSRU construction deal to Summit Group on 30 March 2024 without a competitive bidding process.  

It was approved under the controversial Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act of 2010, enacted during the AL regime, which has since been repealed by the interim government.

Under this Act, the government had the authority to award contracts to any company without requiring a competitive bidding or tender process, bypassing the Public Procurement Act of 2006.

The Cabinet Committee on Economic Affairs had approved Petrobangla's proposal to award the construction of the third LNG terminal in Maheshkhali, Cox's Bazar, to Summit on 14 June 2023. 

Nearly a year later, Summit signed agreements to supply an additional 600mmcfd of LNG.

Currently, Bangladesh operates two FSRUs owned by Excelarate Energy and Summit Corporation, with the capacity to supply around 1,100mmcf of gas daily.