Tk8,300cr Ctg oil facility rusts away as latest bid to find operator fails

Highlights:

• Operator search failed; SPM remains unused since commissioning
• Only two bidders; one non-compliant, one over budget
• Government now reviewing China and Indonesia G2G proposals
• Six-month delay likely before possible SPM operation
• Idle system risks corrosion, warranty loss, costly restoration
• Faulty tender criteria reduced competition and stalled progress

Bangladesh's flagship crude-oil import facility off Maheshkhali — the Tk8,300-crore Single Point Mooring system — seems doomed to stay unused for some more time as the latest bid to find an operator also ended in futile.

The contractor, China Petroleum Pipeline Engineering Co Ltd, which built the SPM, was first in line to run it under a special provision of the Energy Act. That plan collapsed after the interim government scrapped the appointment and opened the operation and maintenance job to international bidding.

More than a dozen firms bought documents. Only two submitted bids: a CPPEC joint venture with buoy manufacturer Bluewater, and Indonesia's state-owned Pertamina. CPPEC-Bluewater was found non-compliant. Pertamina's price was beyond budget.

The process stalled again and the costly infrastructure, which was supposed to overhaul the way the country unloads fuel, has been lying idle for one and a half years after it was commissioned.

Single point mooring (SPM), a floating jetty with110-kilometre offshore-to-onshore pipeline to allow delivery of liquid petroleum products from oil tankers straight to depots, was built for Eastern Refinery Limited, a subsidiary of state-owned Bangladesh Petroleum Corporation (BPC). It was commissioned in March 2024. Had it run, unloading time would have dropped from nearly two weeks to two days, saving about Tk800 crore annually.

BPC Chairman Amin Ul Ahsan confirmed the cancellation of the latest tender two months ago. "The responsive bidder quoted higher than our budget. Now the government is reviewing two G2G proposals from China and Indonesia," he said. If neither is approved, the authorities plan to retender — a process that cannot begin before February because of procedural requirements.

With the G2G review underway, officials say it could take another six months before the SPM becomes operational — if the current process succeeds.

Now, the entire system is left to decay at sea.

Meanwhile, valuable equipment including bearings, swivels, subsea hoses and other critical parts are now going without routine maintenance. Engineers say rough seas are accelerating corrosion, and the longer the delay, the higher the cost of restoring the system to operational standard.

Energy expert M Tamim warned that equipment will lose capacity simply from sitting idle. "They will also lose their warranty period. The government will have to spend again to make them operative," he told The Business Standard.

Amin Ul Ahsan, however, claimed that the company that built the system is still in charge and maintaining the equipment to keep it functional.

Economist Professor Anu Muhammad blamed the inefficiency and reluctance of the government for the delay in appointing an operator. "It's the inefficiency of the government for which the Tk8,300 crore project has been sitting idle for more than one and a half years."

He said, "The government is hurrying to lease out the port terminals. But, in the case of making SMP operational, the government seems to be very reluctant."

Why tender failed to make headway

Insiders and engineers found faults with the tender criteria, which, they believe, itself narrowed the field long before the bids were opened. The problems, they said, the problems are administrative, not technical.

Offshore and onshore operation and maintenance must be separated into distinct contracts as they require entirely different skill sets. But in the tender process, offshore SPM operations and onshore tank-farm management were bundled into one contract, which might have discouraged firms with related skills.

And the documents did not require foreign SPM experience, even though it is considered standard for such work.

Engineers involved in the project say the budget does not match the technical demands of running an offshore system of this scale. When tender conditions mix unrelated responsibilities and cut margins tight, credible operators step aside and tender process becomes less competitive.

According to experts, qualification criteria, including foreign SPM experience, need to be restored to ensure a competitive and credible global bidding.