Bangladesh is paying for oil pipeline it can’t use

The single point mooring (SPM) system, a giant pipeline built to unload oil from big ships in the Bay of Bengal and pipe it to onshore storage facilities, has been sitting idle for more than two years because no operator has been appointed.

Meanwhile, loan repayments for the SPM project have begun. The Bangladesh Petroleum Corporation (BPC) has repaid Tk 3,077 crore, and the next instalment of Tk 690 crore is due by December.

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The 18-month guarantee period for fixing technical faults has also expired.

The delay alone has cost an estimated Tk 1,000 crore to Tk 1,200 crore in lost savings. The single point mooring was meant to cut transport costs and shorten the 11-day process of unloading a large tanker to just hours.

The Tk 8,298 crore project is the first integrated offshore-onshore oil storage and transport system in Bangladesh. BPC began building it in Maheshkhali of Cox’s Bazar in August 2018 to replace the slow and costly oil unloading onto lighterage vessels from larger tankers.

The SPM lets large tankers moor at a floating buoy offshore and pump crude oil and diesel straight into subsea pipelines. That cuts unloading time to about 48 hours.

The project has a floating buoy and two parallel 110km pipelines across the seabed and land, one for crude oil and one for diesel. They lead to six tanks at Kalamarchara in Maheshkhali, three for each fuel. Other pipelines carry the fuel to Eastern Refinery Limited (ERL) in Chattogram.

The project was financed by Chinese concessional loans under the Belt and Road Initiative, along with government and BPC funding, and constructed by China Petroleum Pipeline Engineering Company Limited (CPPEC).

The system was also intended to strengthen energy security by enabling Bangladesh to store larger reserves of crude oil and refined fuel and reduce exposure to global supply-chain disruptions.

However, the country is yet to reap the project’s benefits, although it was completed in March 2024 after four deadline extensions, pushing the cost from about Tk 5,000 crore to Tk 8,298 crore.

Commissioning and trial operations began that month, with crude oil and diesel successfully unloaded from deep-sea vessels and transported through pipelines to Eastern Refinery.

TWO YEARS WITHOUT REGULAR OPERATIONS

BPC issued a Taking Over Certificate to CPPEC in August 2024, but has yet to appoint an operator. BPC sources said the delay was partly caused by the failure to appoint one before construction was completed. BPC initially discussed handing operation and maintenance to CPPEC, but the process stalled after the political changeover in mid-2024.

The corporation floated its first international tender in April 2025. Although one bidder was technically eligible, its offer was 51 percent above BPC’s estimate, leading to cancellation.

The government later considered a government-to-government arrangement and targeted March 2026 to start operations, but that deadline also passed.

BPC floated a second international tender on December 19, 2025, later extending the deadline to February 17, 2026. Eleven companies bought tender documents, but only three submitted bids: Indonesia’s PT Pertamina Trans Kontinental, CPPEC and Hong Kong-based Hilong Marine Engineering (Hong Kong) Limited.

ILF Consulting Engineers of Abu Dhabi assisted BPC in evaluating the bids.

BPC documents show that PT Pertamina Trans Kontinental has been proposed to operate the facility for five years. Its base offer is $128 million. Including income tax and VAT, the total contract value is $159.135 million, or around Tk 1,946 crore at Bangladesh Bank’s exchange rate of Tk 122.30 per dollar on February 17, 2026.

In July, former BPC chairman Md Rezanur Rahman sent a proposal to the Energy and Mineral Resources Division seeking approval to appoint the company.

The evaluation committee found PT Pertamina Trans Kontinental technically qualified and the lowest financial bidder, but BPC has yet to issue a work order.

BPC Chairman Md Rafiqul Islam told reporters at the corporation’s Chattogram headquarters on September 15 that the appointment was “almost final” and would be completed soon.

GUARANTEE EXPIRES EVEN BEFORE START

Due to the delay in operator appointment, CPPEC’s 18-month defect-liability period expired in August this year, although the SPM has yet to begin its operations.

BPC will now have to bear repair costs for defects and equipment failures that would previously have been covered by CPPEC.

With the SPM still idle, BPC continues using the old lighterage system while paying for a new facility that has yet to deliver its projected savings.

BPC initially estimated annual savings of Tk 700 to Tk 800 crore, but based on current crude oil and diesel volumes, now expects Tk 500 to Tk 600 crore. The two-year delay has already cost an estimated Tk 1,000 to Tk 1,200 crore in potential savings, while the actual financial cost is higher as BPC still transfers oil from large vessels to smaller tankers at sea.

Prof M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh (CAB), called for an investigation into why the SPM has not been operationalised despite the large public investment and for those responsible to be identified in official records.

“The financial loss caused by the delay in unloading oil must also be assessed,” he told The Daily Star.

“The cost of any defects that could have been covered under the contractor’s 18-month guarantee should also be calculated and recovered from those responsible,” he added.

OPERATOR APPOINTMENT TO BE FINALISED SOON

The process of appointing an operator for the SPM system has reached its final stage, and the proposal is expected to be placed before the Cabinet Committee on Government Purchase shortly, according to Monir Hossain Chowdhury, joint secretary of the Energy and Mineral Resources Division, who oversees fuel issues.

Another official familiar with the process said the proposal could be placed before the committee as early as its next meeting.

BPC officials said Indonesian state-owned energy company Pertamina has been selected as the bidder under the latest process to operate and maintain the SPM.

According to them, Pertamina’s latest offer is around $128 million for five years.

“The offer this time is around $128 million, and the proposed contract period is five years,” a BPC official said.