The prime minister yesterday approved a Petrobangla proposal to award a $ 52.7 million contact to US company Chevron to install a gas compressor station to improve gas flow pressure in the Gas Transmission Company Ltd (GTCL) system under a Production Sharing Contract (PSC).

The approval was given amid a number of contradictions, including that the GTCL is not a party to the PSC and that earlier the Petrobangla chairman had a GTCL tender for the compressor cancelled to award the deal to Chevron. He has been pursuing Chevron to install the compressor station at Muchai on GTCL's pipeline.

This project would also be a unique example where a PSC operator like Chevron would hold a stake in a national gas transmission system without any clear legal framework to support it, experts noted. This is also an unsolicited deal.

Energy Secretary Mohammad Mohsin told the press that since the tender was cancelled, a retender would take at least another two years time. But as Chevron's compressor can be installed within 18 to 20 months, it would be helpful to improve gas pressure quickly.

The secretary however added that by next year, the GTCL will be able to float a tender for two other compressors under financing from Asian Development Bank(ADB).

Chevron will be given the work order within one month, he added. The $52.7 million investment for this compressor will be recovered from the Chevron-operated gas fields in Block-12.

The Prime Minister's Office (PMO) had earlier sought Petrobangla Chairman M Muktadir Ali's explanation on a host of issues relating to the gas compressor scheme, including why the GTCL's tender for compressors was cancelled and whether he

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had taken into cognisance 16 technical questions raised by a GTCL consultant.

’Fhcchairinan seAr asmoky' response tWo weeks ago explaining the Chevron deal, and seeking the prime minister's permission for awarding the job to Chevron under the PSC. Under the PSC, Chevron would operate and maintain the compressor and after cost recovery hand it over to Pettobangla, and the GTCL would then operate it ' on behalfof Petrobangla.

Petrobangla's move to award the deal to Chevron raises serious questions because the GTCL board headed by the Petrobangla chairman in May had cancelled the GTCL tender to award contract to Korean company Hyundai to install three compressors under the ADB funding. The GTCL's tender was opened in February, but the Petrobangla chairman had asked Chevron for this job in December last year.

The chairman claims that the GTCL tender was cancelled because Hyundai had given a dozen clarifications on its bid, which were not acceptable. And it had sought extra cost against some machinery, which also was not acceptable as per the tender document. Besides, the Hyundai bid offer was 152 percent higher than the allocated budget.