Govt seeks refund, amendments to one-sided Oracle deal

The Bangladesh Data Centre Company Limited (BDCCL) has sought to amend its one-sided agreement with Oracle and demanded a refund of $3.68 million. The government is also investigating allegations against Oracle of transferring official data and documents abroad.

The move came following instructions from Faiz Ahmad Taiyeb, Special Assistant to the Chief Adviser in charge of the Ministry of Posts, Telecommunications and Information Technology. Acting on his directive, BDCCL sent a letter to Oracle, raising objections to several clauses of the “Oracle Cloud Service Agreement” and proposing amendments.

So far, Oracle has not responded to the letter nor indicated any action on the matter.

BDCCL’s current Managing Director (Joint Secretary) Md Taufiq Al Mahmud said, “A letter has been issued to Oracle seeking amendment of that one-sided contract. As per the earlier agreement, arbitration is scheduled to take place in London. If justice is not ensured there, we will move to the courts.”

He added, “The country’s interest is being prioritised and we will undoubtedly safeguard data sovereignty in all respects.”

Faiz Ahmad Taiyeb, Special Assistant to the Chief Adviser, said: “In the name of purchasing cloud credits, an unfair agreement was signed, modelled after capacity charges in the power sector. Under this, the government would have to pay $23.9 million over three years, while the total potential earnings from that cloud facility in three years would not exceed $6 million.”

“Whereas the principle of cloud services is ‘pay as you go’, meaning payment is only for usage, the previous government entered into a deal whereby, whether the service was used or not, $18 million had to be paid. There was no credit forwarding, and despite not owning the hardware, the Bangladesh government still had to bear duty payments,” he pointed out.

Objections to the agreement

Hardware and ownership:
BDCCL noted in its letter that it had to pay an additional $3.68 million in duties and taxes as the “importer of record” for Oracle-owned hardware. The company argued that since Oracle owns the hardware, it should bear this cost and refund the amount.

Oracle also reserved the right to remove the hardware unilaterally if unused for six months. BDCCL has proposed that Oracle must provide written notice and obtain consent before such removal.

Financial and payment terms:
BDCCL identified the annual universal credit structure as essentially a capacity charge. The fixed amounts of $3, $6, and $9 million for the first three years could not be carried forward if unused. Although actual usage ranged only between $0.5 and $0.6 million, the structure exposed the government to significant financial losses.

BDCCL proposed carrying forward unused credits and aligning future charges with market rates. It also called for extending the current 30-day payment term to 90 days, allowing unused credits and excess bills to be adjusted in future payments.

Additionally, the company termed the fixed $6 million annual renewal fee unsustainable and suggested eliminating the minimum credit limit while keeping the 12-month renewal notice period. Instead of a bank guarantee, BDCCL proposed depositing a “renewable pay order” equivalent to 10 per cent of the annual credit as per local financial policy.

Service and contractual conditions:
Currently, Data Recovery Cloud Centre (DRCC) usage is limited to government or majority state-owned organisations. BDCCL argued that this restriction shrinks the market and leaves capacity underutilised. It proposed allowing private sector use while maintaining legal and security standards.

The contract’s tenure is 36 months. BDCCL recommended extending it to five years with a total value of $6 million, including VAT and income tax.

The termination clause was also flagged as imbalanced. Oracle can terminate with two months’ notice, while BDCCL remains committed for 12 months beyond the service expiry. BDCCL proposed equal notice periods of at least 12 months for both parties. It also demanded that additional fees be waived if termination occurs for regulatory compliance reasons such as RoHS.

Governing law:
The current agreement specifies English law and arbitration in London. BDCCL proposed replacing this with Bangladeshi law and arbitration in Dhaka under the Bangladesh International Arbitration Centre (BIAC) rules.

Data retention:
At present, data retention is fixed at 60 days after service termination. BDCCL suggested that this period should be negotiable.