LNG Blunder

Disagreement between PetroBangla and ministry
Unravels the flaws in LNG policy.
Energy deals offer clue of corruption,
Eschewing that questions docu's true intention.

Recent news reports reveal some problems within government's LNG policy. It has not been a long time that Bangladesh embarked on LNG age. Two years ago Bangladesh received its first LNG supply after completing appropriate infrastructure. Recently Ministry of Finance asked PetroBangla to send its unused Tk 40 billion to the government as part of a new policy. PetroBangla declined. Instead, it demanded Tk10.94 billion to finance the operations of two floating storage units , operated by Exelerate and Summit, citing volatile nature of the LNG market. Government refused to pay the sum.

Last week government inked a deal with Vitol Asia, a subsidiary of Dutch Vitol. According to a news report, the company has been blacklisted in several countries. On many occasions, the company was found to win government contract through unfair means. It is not yet known how the company bagged the contract of supplying two cargoes of LNG from the spot market. Earlier government had signed several contracts for long term LNG supply. Qatar's Ras Laffan Liquefied Natural Gas Company is one of them. It pledged to supply between 1.8 and 2.5 MTPA of natural gas for 15 years.The deal was signed in September 2017.

LNG is a cheap mean for power generation. As demand for LNG is rising , government has opted for LNG import to produce electricity, to produce fertilizer and industrial good. Stat furnished by PetroBangla reveals that demand for natural gas is projected to be 3463 MMCFD in 2021 and 3554 MMCFD in 2025 (Source: Bangladesh Economic Review 2019). A large part of this demand will go for power generation. A news report claims power generation using natural gas costs Tk 4 per unit. Meanwhile, power generation using diesel costs Tk 22 per unit. Cheaper electricity means lower production cost, more concentration on product quality and grabbing more market share. In 2013-14, 337.4 billion cubic foot of natural gas was used in power generation. In 2017-18, it rose to 398.6 billion cubic foot (Source: BER 2019).

Growing importance of LNG led the government to build LNG infrastructure. Two floating storage and regasification units were installed in Moheskhali. One of them operated by a company having close ties with a ruling party leader. Seeking money for their operations clearly aroused suspicions. In Bangladesh such business and operations are not scam free.

By the same token, there is little reason to believe that just concluded deal with Vitol Asia is not free of any murky affair. It is interesting to see the reaction of the Finance minister when Vitol's past was brought to his attention. He played ignorant about wrongdoings of Vitol Asia in other countries and kept insisting that the deal was struck in a fair and transparent manner.

The September 2017 deal RasGas made with Bangladesh took place at a time when the government lacked international recognition due to its opposition-boycotted election,heavily criticized at home and abroad. The nittty-gritty of the deal is also not known to public. How was the pricing of LNG gas fixed?Such deal could contain ample ammunition of corruption that could draw a widespread media attention. Access to those critical information is kept within the party cronies and government officials. The controversial 2018 general election shed some light. BBC World was more outspoken and open in revealing election irregularities like stuffed ballot-box at the beginning of election day at a polling center in Chattogram and severe beating of a reporter in Shewrapara in Dhaka. Reelection did take place in Chattogram polling center but no action taken against the men who beaten the reporter. Al Jazeera did report on election fraud but it was not as open as its British counterpart.

This kind of energy deal is the allegation weapon that has the potential to disturb a government and the information is readily available to Al Jazeera. Is it because that the deal happened between government-to-government and it could harm the reputation of both governments , so better remained silent?

Focusing on settling down of personal scores that only establishes the credible threat protagonists face at home hardly unsettles any ruling regime.

Our opaque energy and power deals offer many hints of corruption, as no saint involved in such deals.

It is hard to believe that government did not reckon with need of sudden demand of fund to purchase LNG when the LNG plan was conceived. Projection was there, contract was there. And it is neither believable that a public corporation lying on Tk 40 billion of excess fund suddenly needs fund to finance the operations of two floating storage units. Making deals with companies with less transparent business only puts question marks on gov't intention. Responsibility lies with the concerned section of the government to douse the suspicion of unfair means.