The government has canceled the contract for the construction of the second terminal for the conversion of liquefied natural gas (LNG) (FSRU) with Summit. Recently, the Summit Group requested the interim government to reconsider the cancellation of the agreement. This information is known from a report by Energy Intel, a company working on energy.

On October 7, the Bangladesh Oil, Gas and Mineral Resources Corporation (Petrobangla) canceled Summit Group’s second liquefied natural gas (LNG) conversion terminal construction contract at Maheshkhali in Cox’s Bazar. In the letter of Petrobangla sent to the summit, it is said that the energy and mineral resources department of the interim government has taken such action due to violation of some terms of the agreement. This includes non-deposit of performance guarantee money within the stipulated time.

However, Summit LNG Terminal-2 Company (SLNG-2), a subsidiary of Summit Group, said it had not breached any of the conditions mentioned in the agreement with Petrobangla for the FSRU project at Cox’s Bazar’s Maheshkhali. The group said these conditions were important to the conclusion of the agreement and were satisfactory.

On October 7, Petrobangla informed the Summit LNG Terminal-2 Company that it was supposed to give a ‘performance bond’ related to this project by June 28. But the project was shelved after Summit failed to deposit that bond. A ‘performance bond’ is taken from the concerned institution to ensure that the contractual commitments are financially fulfilled.

However, Summit Group claimed that June 28 was a Friday and as banking operations were closed on that day, the ‘performance bond’ was submitted on the next working day and Petrobangla also confirmed its receipt. Lawyers for the Summit LNG project confirmed that there had been no breach of contract. They also claimed that Petrobangla did not notify them of the breach within the 30-day period of the agreement, thereby delaying the fulfillment of any essential condition deemed to have been accepted.

Summit is the largest private investor in the energy sector of Bangladesh. The group urged the government to honor the terms of the agreement and take equitable steps to protect investors’ rights.

Earlier, Summit Group proposed a FSRU (Floating Storage and Regasification Unit) project on October 11, 2021. The initiative was taken as part of the previous government’s strategic shift away from coal-fired power generation to cleaner natural gas. Subsequently, an agreement was signed on June 14, 2023, after two long years of discussions on technical and other contractual issues. In addition, a long-term sale-purchase agreement is executed. Under which 1.5 million LNG will be supplied every year from October 2026.

To meet the initial conditions of the contract, SLNG-2 has committed an investment of about USD 15 million, which is necessary to implement the country’s third FSRU project. The summit group strongly requested the government to reconsider the decision and urged to ensure the progress of the project.