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Download PDF Under pressure from pre-qualified foreign power companies bidding for Bibiyana power project, the power ministry is considering some measures to make the project friendlier to them.
The measures include the government giving ‘partial risk guarantee’ for the 450MW power project the same way it did in the past for Haripur and Meghnaghat power projects, and waving the bidders’ obligation to offload 30 percent of the project’s shares on the share market.
Earlier last month, the Power Cell extended the deadline for submitting bids for Bibiyana 450 MW power project by a month, from June 11 to July 15, under pressure from two US bidders.
Guided by an advice from International Finance Corporation (IFC) of the World Bank, the Power Cell already made the bid exclusive for foreign companies by arbitrarily disqualifying a Bangladeshi company, Summit.
The project now has three bidders — Chevron of the US, which operates Bibiyana gas field, AES of the US as well, and a Malaysian-Korean consortium led by Powertek.
The power ministry at a meeting on April 30 discussed that for both Meghnaghat and Haripur private power projects, the World Bank and the Asian Development Bank (ADB) had given partial risk guarantee, against which the Economic Relations Division (ERD) provided a counter guarantee.
The meeting then decided if the World Bank agrees to give such a guarantee for Bibiyana power project, the power ministry will ask the finance ministry to give its opinion on the matter.
The meeting chaired by a special assistant to the chief adviser also discussed a Securities and Exchange Commission (SEC) framed law that demands making public 30 percent of shares of a company within six months of investing over Tk 40 crore as paid up capital.
The power secretary said the law would discourage power sector investors and therefore the SEC should be requested to provide a waiver for them.
Other decisions taken at the meeting include acquiring 1.7 acres of land to install a gas supply pipeline for the power plant, while the government already acquired 37 acres of land for the project.
Since the government decided to push forward some large power projects last year, IFC of the World Bank put pressure on the government to prioritise Bibiyana power project over all other projects, prompting the government to do so.
The government move surprised all power sector players, since Bibiyana power project had no allocated land or power infrastructure to begin with, while Sirajganj and Meghnaghat-3 power projects had the primary infrastructures ready.
Bibiyana gas field was discovered in 1998 by a US company, Unocal, which was later acquired by Chevron. Since the discovery, Unocal was pushing for exporting Bibiyana’s gas, saying there was not enough market for gas in Bangladesh.
However, as a gas crisis in the country started to emerge, Chevron developed the field from 2004, and from last year started supplying about 240 million cubic feet of gas a day (mmcfd), while its supplying capacity is more than 500 mmcfd.
A lack of gas supply pipeline would not allow Chevron to supply in its full capacity until 2010, making it so eager to have Bibiyana power project that the company itself participated in the bid.
Chevron is known for participating in power tenders very selectively, and this is its first such bidding in Bangladesh.
Meanwhile, the Power Cell upheld its decision to exclude Summit Industrial and Mercantile Corporation from biddings for Bibiyana and Sirajganj power projects, responding to an appeal from the company for reconsidering its inclusion.
Summit felt that it had been unjustly pushed out of the competition by an arbitrary evaluation by IFC. IFC calculated the net value of Summit at only 35 million US dollars, while the auditor’s report submitted to the Power Cell put the figure at 120 million dollars. The auditor SF Ahmed & Co was nominated by the Power Cell itself.
However on April 27, the Power Cell upheld IFC’s evaluation by presenting a certificate by Acnabin, a chartered accounting firm, stating that Summit’s net worth is 32.75 million dollars, athough Acnabin was not on the list of auditors of the Power Cell for the bid.
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