Prime minister cancels purchase of Energy Division’s survey vessel

Prime Minister Sheikh Hasina has cancelled the purchase of an expensive research vessel for use in the Bay of Bengal to do seismic exploration and geological and oceanographic studies. The prime minister is also the minister in-charge of the Ministry of Power, Energy and Mineral Resources. On October 15, Director SM Tarikul Islam of the Prime Minister’s Office (PMO) sent a letter to the Energy and Mineral Resources Division (EMRD) secretary stating that the prime minister has ordered the cancellation of the purchase of a multi-role offshore survey and research vessel. If needed, surveys can be carried out by renting survey vessels, the letter said. Following this letter, the EMRD sent a letter on October 23 ordering the chairman of state-owned Bangladesh Oil, Gas and Mineral Corporation, known as Petrobangla, to abstain from buying the vessel. The government has already lost about Tk40 crore on this project. Early this year, under orders from EMRD, Petrobangla began the process of acquiring a multi-role offshore survey and research vessel that is under construction or has been newly constructed but not used, or used for not more than five years, within a budget of approximately Tk1,200 crore. The “highly advanced” ship would have been acquired under the Speedy Supply of Power and Energy (Special Provision) Act 2010, which is generally applied to purchases that are of immediate need and enjoys various immunities, including avoiding government tenders. The Dhaka Tribune inquired about the justifications of making such a costly purchase, and found that while a research vessel might be useful in the hands of Geological Survey of Bangladesh or the National Maritime Institute, for Petrobangla it would be a burden. Experts said Petrobangla did not even have the capacity to assess the results of the seismic surveys that would be carried out with this vessel. Nevertheless Petrobangla had already moved forward with the EMRD’s orders. Petrobangla company Bapex has already signed an agreement with German consultancy firm Technolog Services to oversee the ship procurement process, in a deal worth Tk25 crore. A total of Tk38 crore including tax and VAT now has to be paid by Bapex to the firm. Energy Division officials seeking anonymity said the government was losing this massive sum of money because the project was undertaken in this unplanned manner. “These sort of malpractices repeatedly harm the government’s long-term energy security visions,” the official said. On October 3, Petrobangla received the request for proposals (RfPs) from four international firms interested in supplying the research vessel. EMRD’s decision to buy the ship follows three years of multiple failed attempts to appoint an international firm to carry out 2D multi-client seismic surveys for offshore hydrocarbon hunt. In August last year, the Cabinet Committee on Economic Affairs sent back for a second time the relevant proposal to the EMRD for further review of its tender process about selecting a firm for the job. The decision dismantled plans to appoint an international seismic survey firm to start its job within the dry season of early 2017. The EMRD had sent a summary to the cabinet committee to go ahead with the signing of a deal with TGS-NOPEC and Schlumberger, a Norwegian-US joint venture, to conduct a 2D multi-client seismic survey of the country’s offshore areas. The cabinet committee formed a high-powered five-member committee headed by Law Minister Anisul Huq to do the review job, an EMRD official said. The committee sent a report to the Energy Division, which has not forwarded the report to the cabinet yet.

Why the purchase may have been canceled

When the request proposal was sent to selected ship builders or owners to purchase the vessel, it stipulated options to buy eight-year old vessels, but in the Expressions of Interest (EoIs) it was said that five-year old vessels could be bought. There was no planning for maintenance and operational activities of the vessel after purchase. Another impractical decision was setting only a 12-month time limit to buy the vessel. A deputy secretary of the Energy and Mineral Resources Division said requesting anonymity that the decision to buy the vessel was rushed. “There was pressure from the Energy Division secretary. There was even a dispute between the EMRD secretary and the head of the evaluation committee for the purchase and Dhaka University Oceanography Professor Md Kawser Ahmed,” the official said. The committee was not allowed to preserve a copy of its evaluation report after submitting it to the EMRD. Moreover, the EMRD also did not inform the committee that it had already sought RfPs from the companies shortlisted. The vessel was originally supposed to be bought by the state-run Geological Survey of Bangladesh (GSB). Energy and Mineral Resources Secretary Nazimuddin Chowdhury could not be reached over phone for comments.