Bangladesh News

Due to inaction of the power ministry, the government by August 15 may lose 22 million dollars of conditional soft loan from the Czechoslovakian government for rehabilitation of two old power plants installed by the Czechs.

These plants — Khulna 60 megawatt and 110 megawatt — built in 1973 and 1984 respectively by a Czech government company Skodaexport, are now generating maximum of 50mw and 85mw respectively.

Both of these plants underwent overhauling in the past and they are scheduled for major rehabilitation in the next year. Sources said by installing new boilers, control systems, and by refurbishing turbines, etc, these plants will get a new lease on life along with full generation capacity.

Following the negotiations that began last year, the Economic Relations Division (ERD) on March 27 signed a memorandum of understanding (MOU) with the Czech government for this loan at a minimal 0.5 percent interest rate with 30 year repayment period and 15 years of grace period.

Acknowledging the Public Procurement Regulation (PPR) 2003 that encourages open tenders in Bangladesh, the Czech government however gave a condition that the rehabilitation will be carried out by Skodaexport, the same company that originally installed the plants.

Afterwards, the ERD, Power Development Board (PDB) and the power ministry carried out follow ups.

However, for the last two months, the power ministry has stopped activities regarding the loan and not responding to letters from the ERD on this matter.

Sources said the power ministry suddenly changed its view regarding the condition tagged by the Czech government that says Skodaexport will do the job.

“A vested interested group misled the state minister for power saying that rehabilitation of these units is not necessary. But this is wrong,” said a source.

The ERD on July 31 gave the power ministry the latest reminder to give its opinion on the long term loan agreement with the Czechoslovakia government by August 3 saying that the Czech government wants to finalise the agreement at the earliest possible date.

The Czech government wrote to Bangladesh that the availability of funds is limited and that is why it wants to sign the agreement quickly.

A PDB source pointed out that the loan might be cancelled if the government fails to respond within August 15 adding that if that happens, it would be very unfortunate for the country since low interest rate loans at favourable terms are rare.

Regarding the selection of Skodaexport, the source pointed out that the ERD initially asked whether the Czechoslovakia government would allow limited international bidding for the job. The Czech government on March 31 responded saying, “The Czech government has already selected Skodaexport Co Ltd, a fully government owned organisation, to be the executor of this project.”

It added that the company is the original supplier for the two plants and it was involved in all major overhauling, maintenance and reconstruction of these units. Besides, the company obtained authorisation from all original equipment manufacturers of turbines, generators and boilers. “Therefore, it rules out any possibility of limited international bidding.”

To comply with the PPR 2003, the ERD then asked the Czech government to provide documents showing how Skodaexport was selected as the lowest bidder for the job. The Czech government provided the ERD with its clarification.

Earlier in May, PDB gave its opinion regarding the loan saying, since the government had already failed to convince the Czech government about a limited tender, it may consider relaxing the criterion.