Analysis | Third Floating LNG Terminal Awarded at a Much Higher Cost Without Any Tender

– Shariful Hasan

(International Relations and Politics Analyst)

China National Energy Engineering and Construction Company (CNEC), a Chinese state-owned company, is set to get the job of setting up the third floating LNG terminal (FSRU) in Matarbari to address the country’s gas crisis. According to media reports, the cabinet committee approved the project through a government-to-government (G2G) process without any competitive bidding, following a recommendation letter from the Chinese embassy. Earlier, proposals were sought from 12 countries and institutions, including the United States, China, and Saudi Arabia, but the open process was stopped midway.

Following this decision, a list of data and information was published on social media, raising the question: Why is it being offered at such a high price, when there are institutions that can offer much lower prices?

A review of the proposals of the two Chinese companies that bid for this project—CMI (China Merchant Industries) and CNEE—shows:

Daily terminal fee:

CMI offered $148,110, while CNEE offered almost double that, $342,000.

Storage capacity:

CMI’s proposed capacity is 280,000 cubic meters, while CNEE’s is only 174,000 cubic meters.

Regasification capacity:

CNEE’s 600 mmcfd compared to CMI’s 700 mmcfd.

Construction period:

While CMI promises a guaranteed delivery within 24 months, CNEE’s timeframe is uncertain—18 to 26 months.

Contract term:

Although CMI proposed to transfer ownership of the terminal to Petrobangla after 12 years, CNEE’s contract term is 15 years.

The main question based on this comparison is—despite being ahead on almost every indicator, the less competitive bidder, CNEE, was selected, which could result in an additional cost to the state of up to $2 billion—taxpayer money.

It is only natural that the fear of commission-trading or irregularities behind this decision would arise as a “natural question.” In the past few days, we have seen newspapers, media, and experts raise such questions.

According to government sources, the decision to award the contract to CNEE was based on a direct recommendation from the Chinese government and a G-to-G contract framework, where the rules of general open tender do not apply. The Department of Energy has shown this as a legitimate process under specific sections of the Procurement Act. In addition, the country’s acute gas crisis and the urgent need to quickly increase supply may also be a reason for this hasty decision, the sources said. However, there has been no detailed public explanation from the Department of Energy or Petrobangla as to why CNEE was chosen in terms of price and capacity.

Previous summit deal cancelled, even though it cost less

The work for this third floating terminal was initially awarded to a local company, Summit Group. On December 6, 2023, the Cabinet Committee on Public Procurement approved the draft of the contract, and in March 2024, the contract was signed with Summit under a special law without any tender during the then Awami League government. However, in October 2024, the interim government canceled the contract, alleging that the previous government had given Summit the job with unethical benefits.

According to the Summit Group, they had already invested more than $20 million in the project before the contract was cancelled and the project was well ahead in terms of implementation. Protesting the decision to cancel the contract, Summit called it “unreasonable” and appealed for a reconsideration, and recently requested Petrobangla to reinstate the contract—they claim,

This will save Bangladesh about $1.1 billion compared to the proposal of the Chinese company.

Notably, if the project had not been cancelled after the agreement was signed in 2024 and had gone ahead, the construction of this third floating terminal would have been completed in about two years. In that case, the third terminal could have played an important role as a source of additional supply in the severe gas crisis that has arisen since the fire at the Accelerate Energy terminal in July this year.