In a significant plea, Summit Group has called on Petrobangla to reconsider its decision to terminate Bangladesh’s third floating storage and regasification unit (FSRU) project, citing potential exacerbation of energy insecurity in the country. This appeal comes at a time when the readymade garment (RMG) industry is grappling with power supply challenges, making the timely implementation of this project crucial for the sector.
Summit Group, which has already invested approximately US $ 20 million in the FSRU project located in southeast Bangladesh, responded to Petrobangla’s notification of termination issued on 7th October of last year, followed by a final notice on 14th January. The cancellation was reportedly based on claims that a performance bond was submitted by Summit’s local parent company, Summit Corporation Ltd, instead of the designated entity, Summit LNG Terminal II Co Ltd (SLNG II).
Petrobangla also asserted that the bond did not adhere to the agreed template and was not submitted within the stipulated 90-day deadline. In response, Summit sought legal counsel from both international and local firms, including Herbert Smith Freehills and Kamal Hossain & Associates. Their findings indicated that the termination was invalid under the terms of the terminal use agreement.
Summit further engaged with Petrobangla and the government, urging them to reconsider the termination decision. The company noted that Petrobangla had previously acknowledged receipt of the bond, submitted in the form of a bank guarantee, which Summit claims provides equivalent security.
According to Summit’s statement, the agreement stipulated that if any conditions were unmet, either party could issue a written notice within a 30-day period, which Petrobangla failed to do. As a gesture of goodwill, SLNG II expressed its willingness to replace the original performance bond with a bank guarantee in its name.
The project, initially signed off on 30th March of last year by Petrobangla and the former Awami League government, aims to regasify 600 million cubic feet of LNG per day. Given the current energy supply issues faced by the RMG industry, the successful execution of this project could provide much-needed relief and stability to the sector, which is a vital contributor to Bangladesh’s economy.
Summit Group, the largest private sector player in power generation and energy infrastructure in Bangladesh, estimates that the project will require an investment of US $ 550 million in foreign direct investment, underscoring its significance in addressing the country’s energy challenges.
