Summit Group urges govt to reverse decision to terminate FSRU project

Summit Group has said that they didn't breach any conditions precedent (CPs) of the agreement signed with Petrobangla to build its second Floating Storage and Regasification Unit (FSRU) project and urged the government to reverse the decision of termination of the agreement.

Today, in a press statement, Summit LNG Terminal II Co Ltd (SLNG II), a unit of Summit Group, said that they received a notice from Petrobangla on October 7 notifying the termination of the project situated at Moheshkhali in Cox's Bazar.

They said that the termination notice mentioned the SLNG II did not submit the performance bond within 90 days as stipulated, by June 28 2024. "But the date fell on a Friday (not a banking day in Bangladesh), the performance bond was delivered on the next possible working day, with acknowledgement by Petrobangla."

"Our lawyers have confirmed that SLNG II had not breached any CPs of the agreements. Even if any CP was delayed, Petrobangla did not notify SLNG II within the agreed 30-day window and had therefore deemed the CP as accepted."

Mentioning that Summit Group is the largest private sector investor in Bangladesh's energy sector with a proven track record of developing long-term infrastructure projects, they urged the government to uphold the sanctity of contracts and to ensure that investors' rights are protected and treated fairly and equitably.

The statement said the government made a strategic decision to transition from coal-fired power generation to natural gas, a cleaner energy source in late 2020. Following the decision, Summit Group submitted a proposal October 11, 2021 to implement a FSRU on a Build, Own, Operate, and Transfer (BOOT) basis.

The proposal was approved on June 14, 2023, followed by two years of extensive negotiations and consultations with international law firms to address the contractual and technical challenges.

Summit, Petrobangla and Rupantarita Prakritik Gas Company Limited (RPGCL) had finalised the Terminal Use Agreement (TUA) and Implementation Agreement (IA) on October 12, 2023 which was vetted and approved by the Cabinet Committee on December 12, 2023.

Later, the TUA and IA was signed on March 30, 2024. In addition, they have signed a long-term Sale and Purchase Agreement (SPA) to supply 1.5 million tonnes of LNG per year, starting in October 2026.

"To fulfil the initial conditions precedent (CPs) of the agreements, SLNG II has committed to invest approximately $15 million to implement the country's third FSRU," reads the Summit press release.