The government has cancelled its agreement with Summit Group to set up a new floating storage and regasification unit (FSRU), also known as an LNG terminal.
State-owned Petrobangla terminated the deal following a directive from the Energy and Mineral Resources Division under the Ministry of Power, Energy, and Mineral Resources.
A letter, signed by Petrobangla’s secretary Ruchira Islam and dated October 7, was sent to Summit LNG Terminal II Co. Ltd., a subsidiary of Summit Group, informing them of the cancellation.
Summit Group had signed a Terminal Use Agreement (TUA) and an Implementation Agreement (IA) for the installation of the third FSRU on March 30 this year.
In the letter, Petrobangla cited non-compliance with key conditions as the reason for the termination, particularly pointing to non-satisfaction of the "Condition Precedent - Performance Bond," which led to the ineffectiveness of both the TUA and IA.
Summit Group had previously secured the contract for the third LNG terminal under the Speedy Increase of Power and Energy Supply (Special Provision) Act 2010.
As per the deal, Summit LNG Terminal II Co. Ltd. would establish a terminal with a capacity of handling 600 million cubic feet per day (MMCFD) of LNG regasification service for a fee of $300,000 (around Tk 3.31 crore) over 15 years.
Summit has been operating a 500 MMCFD capacity LNG terminal at Maheshkhali, Cox’s Bazar since 2018 under the same Act.
This law allowed the government to award contracts without a competitive bidding process, which has since been linked to corruption and irregularities in the energy sector by economists and experts.
The interim government, which took office following the fall of the Awami League regime in August, has suspended the Speedy Increase of Power and Energy Supply Act and halted new contracts under its provisions.
In response, Summit Group released a statement describing the termination of the SLNG II project as “unjustified,” asserting that it has a proven track record of developing long-term infrastructure projects in Bangladesh transparently and responsibly.
The group confirmed it had executed both the TUA and IA on March 30, 2024, with Petrobangla and the government for the FSRU project and signed a Sale and Purchase Agreement (SPA) for the supply of 1.5 million tonnes of LNG annually over 15 years, starting in October 2026.
Summit said, "We believe this termination is unjustified and will appeal for a review."