Both cost and time of installation of single point mooring (SPM) with double pipeline project, designed to ease imported energy unloading, are going to increase after the scheme has faced setbacks due to the coronavirus pandemic.
The Power, Energy and Mineral Resources Ministry sent a third revision of the project proposal seeking Tk 5.56 billion more money plus one year time extension, said the related sources at the Planning Commission.
It mentioned these are the main reasons for a third time project revision.
“The work could not be accomplished according to the previous schedule as the contractors were unable to complete work after the restrictions on international travels were issued during the Covid-19. So the project time has been increased,” said Planning Minister MA Mannan.
He also expected that the scheme will help increase energy security as it seeks to set up alternative oil reservoirs.
The revision proposal is expected to be tabled at the next Ecnec meeting for final approval after the Project Evaluation Committee (PEC) of the Planning Commission has completed its scrutiny of the proposal.
The state-run Eastern Refinery Ltd (ERL) under Bangladesh Petroleum Corporation (BPC) is implementing the project. ERL meets 20 percent energy demand of the country at present, while 80 percent demand is met through import.
Once the pipe lines are ready, the oil unloading won’t require lighterage ship operation which will save transport cost and cut wastage.
It will also raise ERL’s annual crude oil processing capacity to 4.5 million tonnes while an amount equivalent to Tk 8 billion foreign currencies will be saved every year once the scheme comes into operation.
The original project cost was Tk 49.36 billion which was revised up to Tk 54.26 billion after the first revision. The cost rose further to Tk 65.68 billion after the second revision of the project.
Now, the cost has been proposed to raise to Tk 71.25 billion. The scheme was supposed to be completed during November 2015 to December 2018. After failing to do so, the project time is being extended to December 2023.
After the government decided to implement the SPM project in 2015, it clashed with some other development projects like CPGCBL power project in Kutubdia navy channel of Bangladesh Navy.
As a result, it was later decided to install the 19-metre pipelines below Kutubdia Navy channel Chart Datum Level (CDL) and 22.5 metres below the Matarbari approach channel CDL.
The pipelines have to be laid 6 to 7 metres beneath the seabed at Kutubdia channel and 8-9 metres below at Matarbari channel instead of the initial plan of 1.5 metres. The contractors have to be paid more for the additional work.
Besides, IT, VAT, bank charge, different fees and new exchange rate have pushed the project cost as well.
The scheme includes installations of single point mooring (SPM) and pipeline and manifold (PLM), 146km offshore pipeline, 74km onshore pipeline, construction of three crude oil reservoirs with 60,000 cubic metres capacity each, and setting up three diesel tank farms alongside land acquisition and development.