Govt to miss June deadline as inept bidders chosen

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The caretaker government’s bid to have 260 megawatt (MW) of rental power before June is missing the deadline due to selection of bidders who do not qualify for such fast-pace projects.

On January 15, the Power Development Board (PDB) signed six rental power deals totalling 220MW with local Energy Prima, Venture Energy Resources and US company Alstom and on January 28, signed another deal for 40MW rental power with British Aggreko.

As per the agreements, six of these power projects are supposed to start power generation from May 15 and the seventh from May 28. Now it appears that all of the first six power schemes are missing their deadline. The progress of the seventh power deal is also uncertain.

A shell company of Hosaf Group, Energy Prima, never had any experience in building any power stations including any rental power schemes, which are different from conventional ones. Energy Prima was awarded four out of six projects, even though it did not produce documents, as required, showing it had experience in at least 20MW rental power generation in the last three years.

Owned by Moazzem Hossain, brother of former BNP lawmaker Mosharraf Hossain of Feni, Energy Prima claimed it had partnership with a Russian power company. But the Russian company never appeared in the field. Sources said Moazzem, accused in a corruption case filed by the Anti-corruption Commission (ACC), bagged the deal using his political connections.

The Proposal Evaluation Committee (PEC) of the Power Cell accepted Energy Prima’s bid ignoring a number of serious questions. Energy Prima was a joint venture of Russian Geo-Spectrum Group, Energy Prima and Hosaf Meter Industry when the bids were submitted but the legal documents of this joint venture were not registered under the Companies Act. Energy Prima and Hosaf Meter are both owned by Moazzem Hossain. Energy Prima’s business has been shown as “local agent”, without explaining who it represents and how it is related to the power sector. Geo-Spectrum on the other hand is a Russian power plant manufacturer and not a rental power developer.

During a meeting with the PDB yesterday, representatives of Energy Prima said of its four projects it might be able to launch a 50MW plant in Kumargaon in late May, and launch another 50MW plant in Shahjibazar in mid June. The remaining 70MW may be added in July.

Strangely enough, the PDB seemed to have taken this delay very lightly. At the meeting, the Energy Prima representative also appeared to be relaxed about the failure to meet the deadline.

However, the energy ministry is insisting on the $500 per day per MW compensation a contractor has to pay to the PDB for failing to launch power plants within 120 days.

This means Energy Prima should be paying $85,000 a day from May 15 for failing to meet the deadline. This may gradually reduce when it brings its power plants online one by one.

But Energy Prima is not the lone defaulter. Awarded a 30MW power project in Bhola, Venture Energy Resources also lack the experience in building any power plants.

“So far they mobilised almost nothing at the Bhola plant site,” said a source, adding, “It is most likely that this contract will fail completely.”

The sixth bid winner Alstom did not even try to proceed with its contract to set up a 20MW power unit in Bheramara. Sources said the PDB has already cashed Alstom’s bank guarantee submitted against the contract.

The seventh bid winner Aggreko, which is globally known as a rental power developer, made some progress with its 40MW scheme in Khulna. However, PDB sources could not confirm if Aggreko would be able to launch its plant from May 28.

All of these plants are supposed to operate on a three-year contract as a short-term measure to minimise the load-shedding scenario.

The price of this power will be costlier than that generated by conventional power plants. In January, the energy secretary convinced the caretaker government’s cabinet to approve these costly bids arguing that the power will be delivered within 120 days and the value of having this power is much higher.

“But now we are ready to accept the fact that we will not get timely power supply,” said a source.

The government last month awarded a 50MW rental power deal in Ashuganj to Green Power, another inexperienced company that competed in the rental power bid earlier.

The Power Cell floated the rental power bids in October, drawing 13 offers from five companies in seven locations. On November 19, the cell held another tender to draw offer for the eighth location and received two more such offers.

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