Bangladesh is set to pay 35-37 percent more than what it currently pays for regasification services to a Chinese state-owned firm for the proposed third LNG terminal, although the government’s negotiation committee could not determine how much of the premium is justified.
On June 19, China National Energy Engineering & Construction Co (CNEE) submitted a proposal for an offshore LNG terminal at Kutubjom in Maheshkhali under a build-own-operate model, with a base regasification capacity of 600 mmcfd and a peak capacity of 750 mmcfd.
Under the 15-year arrangement, CNEE will charge $3,42,000 per day for the floating storage and regasification unit (FSRU).
At present, the daily fee for Excelerate Energy’s FSRU is $2,54,000 and Summit LNG terminal’s is $2,49,115.
It is also higher than the $3,00,000 daily fee agreed by Petrobangla in March 2024 for Summit’s proposed second FSRU at Moheshkhali with a capacity of 600 mmcfd and a 15-year tenure. Petrobangla terminated the deal in October 2024 following the fall of the Awami League-led government, and Summit contested the termination in court. The matter is still pending.
CNEE’s solicited daily fee is even higher than the benchmark of $2,39,653 per day recommended in a 2025 feasibility study by state-owned Rupantarita Prakritik Gas Company (RPGCL).
Despite the higher rate, the seven-member negotiation committee on August 30 recommended two options before the government: a 15-year deal at $3,42,000 a day or a 20-year deal at $3,29,000 a day.
The charge under a 15-year agreement will include $2,46,000 fixed fee, $59,000 operational fee and $37,000 port service fee.
CNEE quoted the daily fee due to changes in the market following the recent war in the Middle East, uncertainty over energy supplies and higher shipbuilding-material costs, growing global demand for FSRUs, as well as scheduling constraints, including the requirement to deliver the terminal within 18 months of signing the contract.
The circumstances cited by CNEE could justify a higher rate than Bangladesh currently pays for regasification, but without a more detailed assessment or study, it would not be possible to determine how much higher the rate should reasonably be, said the negotiation committee’s report.
The rush comes as the Chinese state-owned engineering firm said the FSRU could be commissioned by September-October 2028 provided the letter of intent is issued by July 2026 and project agreements are signed by September 2026, according to the proposal seen by The Daily Star.
Subsequently, the Cabinet Committee on Economic Affairs on July 28 approved in principle the proposal from CNEE, which also said it was “willing to supply long term LNG to Bangladesh”.
The following day, the seven-member negotiation committee was formed with representatives from the Energy and Mineral Resources Division, RPGCL, BUET, Bangladesh Investment Development Authority (BIDA) and Legislative and Parliamentary Affairs Division. The committee was headed by Petrobangla Chairman Md Abdul Mannan.
Asked about the committee’s recommendation for agreeing to CNEE’s final offer, Mannan declined to make any comment.
The proposed government-to-government (G2G) arrangement is being processed under Section 68 of the Public Procurement Act, 2006, and Rules 99(2) and 107(2) of the Public Procurement Rules, 2025.
Energy expert Mohammad Tamim questioned the justification for the proposed regasification fee, saying the government should scrutinise both the price and the implementation timeframe before proceeding.
“If the previous ones were cheaper, why should we now go for a new one at a higher price? I don’t see the justification,” he said.
The committee’s report, which was seen by The Daily Star, shows that CNEE’s price came down in several stages during negotiations. Its initial proposal for a 1,74,000-cubic-metre FSRU under a 15-year contract was $3,54,174 a day.
CNEE, whose sister concern operates the Payra power plant, offered two options: a 1,74,000-cubic-metre FSRU using a vessel built in 2016 or a 1,65,000-cubic-metre FSRU using a 2008-built vessel.
The committee found advantages in the larger vessel: greater storage would allow larger LNG cargoes, including more types of LNG carriers, to berth and unload, giving Petrobangla greater operational flexibility.
“Larger cargoes could also generate economies of scale and potentially reduce LNG import costs by around $0.05-$0.10 per million British thermal units (MMBtu),” it said.
The committee also said a relatively newer FSRU could require less maintenance time, potentially improving reliability and availability.
It noted that the contract could potentially be extended by another five to 10 years through renewal, helping maintain operational continuity if Bangladesh continued to need the facility.
The committee calculated the value of Petrobangla’s payment obligation for the 15-year option at $1.002 billion, equivalent to Tk 12,324 crore, at a 12 percent discount rate.
The proposed 18-month implementation timeframe should also be examined carefully, said Tamim, a former dean of BUET’s Faculty of Chemical and Materials Engineering.
CNEE’s website shows the company has no prior experience in FSRU development.
Even if CNEE already has a suitable LNG carrier available and all financial arrangements are completed, completing the conversion and bringing the FSRU into operation within 18 months would be difficult, according to Tamim.
“Only if they already have the carrier in hand might 18 months be possible, but even then, it is very unlikely,” he said, adding that such projects would normally require around 24 months or more.
The timeline involves more than preparing the vessel itself, said Tamim, currently the vice-chancellor of Independent University of Bangladesh.
“The work is not only about the vessel. There is the area where it will be installed, geological surveys, wave analysis and many other types of work. Those take time.”
On the negotiation committee’s observation that some increase in the prevailing regasification fee could be justified under current circumstances but that it could not determine the reasonable extent of that increase without further assessment, Tamim said an independent review should be commissioned.
“There are many companies around the world that work on FSRUs, and there are consultants who do this kind of assessment. It can be assessed by such a consultant or a third party.”
Given the size and duration of the proposed investment, the cost of commissioning such an assessment should not be an obstacle.
“We are going to spend so much money on this project. Even if it costs $1 million, $2 million or $3 million to carry out the assessment, it can be done.”
Tamim also raised concerns about the absence of competition in the process, noting that the CNEE project is being negotiated without competitive bidding.
“From that perspective, I think it should definitely be looked into and renegotiated,” he said.
Iqbal Hassan Mahmood, the minister for power, energy and mineral resources, is currently hospitalised. Anindya Islam Amit, the state minister for power, energy and mineral resources, could not be reached for comments despite repeated attempts through phone calls and messages.
The decision to add another FSRU came amid a deepening LNG supply crisis.
QatarEnergy, Bangladesh’s largest LNG supplier, halved its scheduled deliveries for 2026 after the Middle East war disrupted shipments through the Strait of Hormuz.
Bangladesh received no cargo loaded from Qatar’s Ras Laffan terminal after the war began on February 28, forcing Dhaka to turn increasingly to costly spot market purchases.
The combination of higher prices and growing dependence on imported LNG is putting growing pressure on public finances, with the energy ministry now projecting LNG subsidies could reach Tk 40,000 crore this fiscal year, up from Tk 14,500 crore last year.
The vulnerability was compounded at home when Excelerate Energy’s FSRU went offline following a July 21 incident, cutting half of the total LNG supply from the grid.
