Govt to buy LNG from spot market for the first time

The government has decided to buy liquified natural gas (LNG) from the spot market for the first time – a move that would help the country purchase the super-chilled fuel at a cheaper rate, officials said yesterday.

Bangladesh would buy 34,90,200 MMBTus (million British thermal units) of LNG from Vitol Asia Pte of Singapore at $3.8321 per MMBTu, said an official of the cabinet division.

The total cost would stand at about Tk 132.93 crore.

The cabinet committee on purchase in a meeting, presided over by Finance Minister AHM Mustafa Kamal, approved to buy the LNG from the spot market.

In a spot market, financial instruments, such as commodities, currencies and securities, are traded for immediate delivery.

Purchasing from the spot market would help save Bangladesh Tk 30 crore, said Abu Saleh Mostafa Kamal, an additional secretary of the cabinet division, while briefing reporters after the meeting.

Earlier, the finance minister said: “I think we would get competitive prices. This would open up a new window of opportunity for Bangladesh.”

Bangladesh now buys LNG on its own from RasGas of Qatar under a government-to-government purchase agreement. In 2017, Bangladesh signed a 15-year contract with RasGas, which would supply 2.5 million tonnes of LNG every year.

The fuel is supplied at 12.65 per cent of the three-month average price of Brent oil plus $0.5 constant per MMBTu.

The country also imported its first LNG cargo from Oman Trading International in January last year under a 10-year deal. The LNG is priced at 11.9 per cent of the three-month average price of Brent crude oil plus a constant price of 40 cents per MMBTu, Reuters reported.

Bangladesh added LNG to its energy system in 2018 as part of the government’s efforts to eliminate gas shortages and power outages and unlock the potential of the economy.

Excelerate Energy of the US began supplying re-gasified LNG from its terminal in Moheshkhali in August 2017. It has a regasification capacity of 500 million cubic feet per day.

In May last year, Summit LNG Terminal Co Ltd, the country’s second LNG terminal, began supplying re-gasified LNG. The unit has a capacity of supplying 500 million cubic feet of re-gasified LNG.

The cabinet committee on purchase yesterday approved a total of 10 procurement proposals involving Tk 1,795 crore. Of the sum, Tk 630 crore would come from the government and Tk 1,164 crore would be raised from the local banking sector.

The meeting permitted Bangladesh Agriculture Development Corporation to buy 1.5 lakh tonnes triple super phosphate fertilizer for Tk 400.26 crore from Moroccan fertilizer producer OCP.

The state agency also got approval to buy 2.1 lakh tonnes diammonium phosphate from the same company at a cost of Tk 695.68 crore.

The meeting gave its consent to a proposal of Bangladesh Chemical Industries Corporation to buy 30,000 tonnes granular urea fertilizer for Tk 68.52 crore from Karnaphuli Fertilizer Company Ltd.

The meeting also awarded the work to build a 20-storied residential building in the Police Lines in Razarbagh, Dhaka to the lowest bidder, Padma Associates & Engineers.

The construction of the building would cost Tk 82.63 crore and is expected to lessen the housing problem faced by the police.

A joint venture of BBL and DECL won a bid order to construct a 20-storied residential building for the Second Police Lines in the Chattogram Metropolitan Police. It would cost Tk 81.45 crore.

The meeting gave a nod to a proposal to buy 119,212 spun pre-stressed concrete poles from Castle Construction Co Ltd and Contech Construction Ltd for Tk 159.89 crore.

The project, which aims to expand the distribution network of Bangladesh Rural Electrification Board, would be implemented in Rajshahi, Rangpur, Khulna and Barishal. 

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