CHATTOGRAM, Aug 29: The proposal for signing MOU (Memorandum Of Understanding) with the S Alam Group for construction of the second unit of Eastern Refinery (ERL) under the Public Private Partnership at an estimated cost of Taka 40,000 crore has been rejected by the government.
According to a reliable source, the state-owned Bangladesh Petroleum Corporation (BPC) submitted a final report of the MOU to the Ministry of Energy and Mineral resources earlier.
The Ministry of Energy sent the report to the Law Ministry for legal opinion in this respect, sources said.
But the Law Ministry sent it back to Energy Ministry rejecting the proposal, sources said.
Meanwhile, the S Alam Group had submitted a MOU for signing to BPC. With the submission of proposal from S Alam group in this regard, the BPC had constituted a seven-member committee on February 14 last headed by Md Khalid Ahmed, Director for operations of BPC. Presently Engineer Anupam Barua, Director Operations of BPC is leading the Committee.
The seven-member committee comprising three BPC officials, three ERL officials and the managing director of Padma Oil is now to take a negotiable status for the proposal of S Alam Group for construction of the second unit of ERL.
Negotiations will be completed after completing the technical and financial analysis, the modality of the joint venture, the management strategy and the equity portion.
The industrial conglomerate S Alam Group sent a proposal to the Prime Minister's Office in October last year to build the second unit of ERL under a joint venture on an 80-20 equity basis on the land owned by ERL in Chattogram.
S Alam group also sent a draft letter of intent to the energy ministry on January 29 last.
On the basis of S ALam Group's proposal, the energy division on February 5, wrote to the Bangladesh Petroleum Corporation, the parent company of ERL, informing it about the decision resulting in the formation of a seven member committee.
Earlier the BPC had prepared a Development Project proposal (DPP) for construction of the second unit of ERL that was submitted for approval by the Executive Committee of National Economic Council (ECNEC).
The total cost of the second unit of ERL has been increased to Taka 23,736 crore from earlier amount of around Taka 23,059 crore in the fresh DPP. As a result, the cost of the project has increased around Taka 677 crore in the revised DPP framed by the BPC.
