The recent controversy on Chevron deal and the follow up political rumblings surrounding the PM’s son and her energy advisor on one side and Amar Desh editor on the other side has captivated nation’s attention for the last few weeks. While we debate how freedom of speech is being used to trash political opponents, or how political thuggery is trying to gag free speech, the very important issue of a specific corruption allegation is getting crowded out.

 Let’s keep Mr Sajib Wajed or Mr Mahmudur Rahman out of the issue. Mahmudur rahman is making full use of the victimhood, and his showmanship on this issue is ugly. And Mr Wajed is also dragged in this issue unnecessarily or prematurely. It is an unfortunate fact of life for the children of politicians of Bangladesh and beyond that they are always under close scrutiny and often victim of rampant character assassination attempts.

 However, leaving these individuals aside, we are still left with a specific corruption allegation that has merit enough to demand further discussion and scrutiny. Amar Desh reports a specific corruption report with copies of leaked official correspondence.

The specifics of the corruption allegation are self revealing. A $52 million job was allocated to Chevron without required transparency that includes a tender process. And while protesting the report, PM’s energy advisor repeatedly misrepresented facts. While he said there was no bid in three tenders, the fact is that the Government cancelled earlier lowest bid from Korean Company Hyundai only to award the job to Chevron. He also lied about his agenda for the US trip.

Instead of relying on Amar Desh, let’s turn to the premiere newspaper of Bangladesh, the Daily Star.    The Daily Star printed at least seven reports on this specific issue. (Interestingly, while Amar Desh report is based on government documents, the Daily Star series report, as usual, is based on unnamed sources.  But let’s leave this aside, as no one would accuse the Daily Star of partisan hatred of the current government, or Mr Mahfuz Anam, its editor, of ugly showmanship.

On April 11 2009, the Daily Star warned that a compressor station for gas distribution pipeline was being planned to be awarded to Chevron which would “… unduly give Chevron the authority to control major chunk of the country’s gas distribution system. This will definitely create a number of serious legal complications over the authority and ownership of the compressor station and the distribution pipeline” .

Another follow up report published on June 21 2009 quotes a gas transmission expert: “Even if we accept the idea of pumping PSC investment in compressor, I say Muchai gets no priority for a compressor station now. Because of high volume of gas produced by Chevron, the gas pressure at Muchai and onwards is 1024 pressure per inch (PSI). This pressure will stay for a couple of years at this point. But we need a compressor at Ashuganj where the pressure drops to 700-800psi. A number of new plants are being set up close to the Ashuganj pipeline system. Then why prioritise Muchai now?”

The same report also quotes another official: “Petrobangla’s extreme reliance on foreign investment in the gas sector has already created a precarious situation for the national exchequer. The cost of gas is now very high because foreign companies are producing more gas than the national companies which have been denied adequate funds for their healthy growth”.

 

On August 02 2009, based on undisclosed sources, a piece reports that: ” …Petrobangla continues to hammer hurriedly awarding US oil company Chevron the contract for an over-priced gas compressor station project in the Gas Transmission Company Ltd (GTCL) system through a questionable process by totally sidelining a host of technical and financial questions raised by a GTCL consultant.”

The report also quotes a GTCL consultant: “Chevron has not yet submitted its detailed technical and price proposals for Muchai station. An energy ministry approval would actually give Chevron a go-ahead without scrutinising what the GTCL is buying.”

According to Daily Star’s sources the report raised the following important points,

  1. The cost-recoverable Chevron’s Muchai station’s actual cost would be much higher than $ 52.7 m because this cost does not include two years’ operation and maintenance cost or that of spare parts.
  2. The sources also raised questions whether Petrobangla could bypass the cabinet’s approval for imposing a cost of $ 52.7 m for a GTCL project outside a PSC area just by making an interpretation of a PSC clause in favour of it.
  3. GTCL sources questions were also raised in the report “… where is the mechanism to see if it is a fair price? Where is the competition and transparency?”
  4. Petrobangla’s move to award the deal to Chevron raises further questions because the GTCL board headed by the Petrobangla chairman in May had cancelled a GTCL tender to award contract to Korean company Hyundai to install three compressors with Asian Development Board (ADB) funding.
  5. “Gas supply through this pipeline can be increased by 50- 60 million cubic feet a day (mmcfd) by augmenting production in these fields, even without installing compressor,” says a pipeline expert. “By installing compressor, the pipeline will be able to increase only 9 mmcfd gas.”
  6. The above were also stated in the report of an independent consultant hired by the ADB.
  7. It was also mentioned that PetroBangla improperly cancelled Hyundai’s initial bid.

Then another report on August 30 announces that: “The PMO sought the project files and explanation following a report in The Daily Star revealing this fact.” The report continues: “As the prime minister sought explanation from Petrobangla chairman why he was so eager to award US company Chevron a $52.7 million contract to install a gas compressor station over the Gas Transmission Company Ltd (GTCL) system by cancelling an open tender, the chairman gave a smoky response last week…..While seeking the energy ministry’s approval late last month for allowing installation of Chevron’s compressor station over GTCL system, Muktadir ( PatroBangla Chairman) concealed the fact that Chevron had not clarified the 16 technical questions. …Petrobangla’s move to award the deal to Chevron poses serious questions because the GTCL board headed by the Petrobangla chairman cancelled in May the GTCL tender to award Korean company Hyundai a contract to install three compressors under an Asian Development Bank (ADB) fund.”

Something must have transpired during the time when the file was in PM’s office. Either PM and her advisors took an executive decision to go for the Chevron contract bypassing the cabinet purchase commitee ( On the ground that it was advance of block 12 PSC money) to expedite the process or Chevron must have made an offer to the advisor which he could not refuse.

 

The follow up report on this issue on September 09 states that: “The prime minister yesterday approved a Petrobangla proposal to award a $ 52.7 million contract 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).”

Even in this report it is suggested that : “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. 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.” According to the report, ” 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.”

According to another report on 27 October: ” No sooner had the government changed Petrobangla chairman earlier this month than Petrobangla raised questions whether installing a costly gas compressor station for Gas Transmission Company Ltd (GTCL) by US company Chevron has any justification. “

Quoting a PetroBangla official, this report asks: “with the recent increase of gas supply from different gas fields of Chevron, the flow pressure has already reached 1050 PSIG. Therefore, why should Chevron be allowed to install such a costly device and get that money out of gas production and sales from block 12?” .

The report again stresses that: “It is a sharp contrast to Petrobangla’s earlier position. Its past chairman M Muktadir Ali had cancelled an open tender of the GTCL for the same project; and strongly recommended awarding the job to Chevron under a Production Sharing Contract (PSC) for block 12. But the GTCL is not a party to the PSC, thereby leaving a lot of legal issues for the future.”

The report adds that: “…Chevron’s compressor station project cost is actually $12 million higher than the cost proposed by Hyundai at Muchai point in the GTCL tender that was cancelled… This is also an unsolicited deal that is also the first of its kind in the public sector gas transmission system, which should be a monopoly of the GTCL.

According to Daily Star’s sources, PM’s approval of the Chevron contract made many related official very uncomfortable. It reports: “… following the PM’s approval of Chevron’s project, Petrobangla invited GTCL’s experts several times to attend Petrobangla-Chevron Joint Management Committee (JMC) meeting on setting up the compressor station. But these officials declined saying that they did not want to be part of the controversy.

Although the same reporter reporting all these loved to connect all the vices that took place during BNP’s 2001-2006 rule to PM’s son Tarique Rahman, this time, suddenly he becomes mum. No further investigation why sudden change in mind of PM office, why so much push for Chevron!

There is enough here to demand an investigation.  This is not about Sajeeb Wajed or Mahmudur Rahman.  This is much bigger than these individuals.  And we do the nation a huge disservice by clouding the message here.