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Bangladesh energy project still on track despite concerns
Progress is “going quite well” as Indonesia plans to expand its energy portfolio into Bangladesh, a member of the South Asian nation’s chamber of commerce and industry has said, amid concerns of a supply shortfall in Indonesia and financial burdens at state-owned oil and gas holding company Pertamina
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span>Progress is “going quite well” as Indonesia plans to expand its energy portfolio into Bangladesh, a member of the South Asian nation’s chamber of commerce and industry has said, amid concerns of a supply shortfall in Indonesia and financial burdens at state-owned oil and gas holding company Pertamina.
Bangladesh has tapped Pertamina’s electricity business subsidiary, PT Pertamina Power Indonesia, to help fulfil a substantial portion of liquefied natural gas (LNG) to meet the country’s growing demand for energy, as it aims to boost its power generation capacity to 24,000 megawatts (MW) by 2021.
Under the US$2 billion deal with the Bangladesh Power Development Board (BPDP), Pertamina Power has agreed to develop a Combined Cycle Gas Turbine (CCGT) independent power plant with an installed capacity of 1,400 MW and a floating, storage and regasification unit (FSRU) in Moheshkhali, Chittagong.
The letter of intent, signed by the two state energy companies earlier in January, also marked a deal for Bangladesh to import as much as 10 million tons of LNG from Indonesia until 2028.
“This project is being built [for the commercial operation date] for 2023 and it is going quite well,” said Mohammed Riyadh Ali, the director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), in a recent interview in Dhaka, Bangladesh.
“The government already approved and already signed [the go-ahead] recently. The board [BPDP] has also been to Indonesia.”
The power plant, once connected to the FSRU developed by local conglomerate Summit Power, was expected to add as much as 5 percent of the country’s demand for LNG to the national grid, said Ali.
It is also expected to handle LNG imports from countries like Indonesia, with the ability to regasify and add 500 million cubic feet per day of natural gas to the grid.
Under the deal, Indonesia will supply 10 million metric tons over the span of 10 years, the Indonesia-Bangladesh Chamber of Commerce and Industry (IBCCI) president said.
Pertamina Power Indonesia president director Ginanjar, who signed the memorandum of understanding with the BPDP in Dhaka during President Joko “Jokowi” Widodo’s visit, insisted that the continuation of the project still awaited the recommendation and approval of the Bangladesh government. He said the project itself had yet to secure funding.
“We are aiming to reach financial closing [FC] in 2019. The funding will likely come from a consortium of lenders,” he told The Jakarta Post on Tuesday, adding that construction would likely begin next year or 2020.
The statement from Bangladesh came just months after local reports quoted sources at the Bangladesh Power, Energy and Mineral Resources Ministry and state-owned Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) as saying that Dhaka was scrutinizing the deal due to reportedly dwindling gas reserves in Indonesia and a major overhaul at Pertamina.
Pertamina’s former chief executive, Elia Massa Manik, was sacked by the government in April after just over a year at the helm along with several members of Pertamina’s board of directors, for various reasons, such as failing to prevent fuel scarcity and the oil spill incident in Balikpapan, East Kalimantan, in which a company employee was named a suspect by the police.
Together with Pakistan and India, Bangladesh is making South Asia a hotspot for LNG demand, attracting investment from gas producers and power plant builders after years of the country being considered an energy backwater.
The trend aligns with Indonesia’s push for more trade and investments in nontraditional markets, a move championed by Jokowi’s economy-heavy foreign policy.
“Bangladesh selected Indonesia to be its partner for the supply of LNG. As you know, Bontang [in East Kalimantan] and many other places in Indonesia have LNG, and it is a very short distance from Bontang to our Chittagong-Moheshkhali [facility], so it will be ideal if we bring LNG from Indonesia,” Ali said on Monday.
