Bangladesh’s Non-Operational Oil Pipeline Faces a $31m Cost Dispute
A dispute over taxes and VAT has pushed the proposed five-year operating contract for Bangladesh’s long-delayed Single Point Mooring facility from $128 million to $159 million, according to UNB.
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In a Nutshell
- According to a report by UNB, the government risks paying an additional $31 million after taxes and VAT were added to Indonesian firm PT Pertamina Trans Kontinental’s $128 million bid.
- The tender required bidders to include applicable taxes and charges in their quoted prices. A BPC official confirmed that taxes and VAT were added, saying the decision followed a consultant’s advice on procurement rules.
- The Daily Star previously reported the $128 million as Pertamina’s base offer, with taxes and VAT taking the five-year contract total to about $159 million.
- The SPM has remained commercially idle for more than two years despite being handed over to BPC in 2024. UNB reports that trial operations have failed more than once.
- Designed to transfer fuel directly from large tankers to shore, the facility is expected to reduce unloading time from around 11 days to 48 hours and cut reliance on smaller lightering vessels.
Context
Bangladesh’s first Single Point Mooring facility in Maheshkhali was built to move imported crude oil and diesel from large tankers through pipelines to storage tanks and onward to refineries. The Tk 8,298 crore project includes a 220-kilometre pipeline network and storage capacity of 240,000 tonnes.
The facility has yet to begin commercial operations. UNB reports that the operator contract’s value rose from $128 million to $159 million after taxes and VAT were added, and questions whether that complied with tender terms. The Daily Star’s September report described $128 million as the base offer before taxes, with the final total reaching nearly $1,950 crore. The difference between the reports makes the contract documents and procurement decision central to the dispute. The delay is also notable because the crude pipeline was designed alongside Eastern Refinery’s planned expansion, which remains years away.
Why It Matters
The contract dispute is about more than a $31 million difference. The Single Point Mooring (SPM) project has not yet delivered the fuel-handling savings that were used to support it. Bangladesh still pays for lightering operations and repays loans for the project. The Daily Star reported that BPC expects annual savings of Tk 700–800 crore once the system begins operating.
It also raises questions about the government’s plan to improve investment and project delivery. Invest Bangladesh’s 180-day plan focuses on faster and more accountable projects. When a large project faces a dispute over tax payments, transparency and proper implementation become as important as announcing new projects. For the public, the main question is whether the facility starts working and delivers real savings for the money already spent.
What We Think
Clear explanation, using documents, is crucial from BPC’s end whether taxes were included in the winning bid. A public contract is not to be left a $31 million question unanswered.
Bangladesh has already spent a large amount on a facility that is not yet operating. Appointing an operator, may perhaps be useful only if the SPM starts working, reduces fuel-handling costs and delivers the savings promised to the public.