Bangladesh News

Most of the new power generation initiatives for a total of 2,600 megawatt are facing long delays and uncertainty mainly due to interference from different quarters and indecision of the implementing agencies.

The Power Development Board’s (PDB’s) bid to award eight costly diesel and heavy fuel oil (HFO)-fired rental power contracts within last month has already failed.

A set of recommendations for awarding five out of eight of these contracts was sent to the Cabinet Purchase Committee earlier this month twice, but the committee declined to consider approval of these. The recommendations will be placed before the committee again tomorrow.

This means the government’s goal of easing power crisis in the next irrigation period would be severely compromised. The PDB had opted for these rental power projects of 530 MW capacity so that half of them can be launched by March next year to ensure power supply for irrigation.

“Whether this bid fails or not, this is the last time PDB is going to float tender for rental power projects,” said a PDB top official, frustrated at its failure to ensure a tender process free from questions and different lobbies’ pressure to award the contracts to certain groups.

Under pressure from the higher authorities and business groups, the PDB had relaxed bidding criteria to make way for firms without proven experience.

The October 29 tender drew many offers, with bidders having no proven records making the lowest bids. The PDB tender committee made its recommendations about five project sites amid pressure from lobbies and disagreements with many officials, but it could not decide anything on three sites till date.

The tender committee recommended awarding contracts for Bheramara 100 MW diesel-fired and Noapara 100 MW HFO-fired plants to the country’s furniture giant Otobi, Thakurgaon 50 MW diesel and Jamalpur 30 MW HFO plants to top battery manufacturer Rahimafrooz and Barisal 50 MW HFO plant to new local company Coastal Saba.

The committee did not take any decision on Syedpur 50 MW and Katakhali 100 MW diesel-fired plants where local power company Asian Entech had made the lowest bid. Asian Entech is partnering with Otobi in the Bibiyana 450 MW power project, and the company was awarded contract for 55 MW HFO-fired rental project in Sikalbaha by the previous caretaker government. But the Sikalbaha plant remains incomplete, and five months behind schedule.

The committee also could not decide anything about Madanganj 100 MW HFO plant although it had invited local leading power company Summit for post-bidding negotiations.

Sources said despite the tender committee’s recommendations, high officials of the power division and PDB remain divided over whether awarding rental power contracts to new bidders would produce any positive results. Besides, officials have raised questions about the authenticity of some bid documents submitted by the recommended lowest bidders.

In the past, local firms Energyprima, GBB and Venture Energy had bagged rental power contracts using not-verified documents of their past experience and ownership of plant equipment. All of them failed to meet project deadline.

UNCERTAINTY OVER OTHER POWER PROJECTS
But it is not just the rental power projects which have become uncertain. All except 10 power projects with 830 MW capacity remain uncertain. Tender for these 10 projects was floated on November 12 and has remained within deadline. The response was poor which would probably lead to fresh tender for at least two out of the 10 plants. The PDB tender committee continues to evaluate these.

The other tenders facing unusual delays due to outside pressure or tender authorities’ incapability are Bibiyana 450 MW plant under the Power Cell, two 150 MW plants in Siddhirganj and a 360 MW plant in Haripur under the Electricity Generation Company of Bangladesh (EGCB), and Khulna 150 MW and Sirajganj 150 MW plants under the Northwest Power Generation Company (NWPGC).

The Bibiyana tender saw its failure back in 2008 as it drew no competition. Fresh tender was floated in April this year and it took five months for the Power Cell to select suitable bidders. The selected bidders are Malaysian YTL Power, a consortium of local Summit Mercantile Corporation (lead bidder) and GE Energy of USA, consortium Meiya Power of Hong Kong (lead bidder) and local Shasha Denims, and consortium CMEC (lead bidder) and Shenzen Shenwan Power of China and Asian Entech and Otobi ltd of Bangladesh.

Much of this time was wasted as the power ministry wanted the World Bank (WB) to provide consultancy after the tender was floated, and the WB initially said it would be involved only if the tender was floated from the scratch.

The next stage for this tender was preparing a request for proposal (RFP) for the bidders.

It took the Power Cell three months to prepare the RFP in consultation with the WB. The RFP was submitted recently, but the WB now wants to review the pre-qualification (PQ). This might delay the tender further.

In the tender for Tk 1,665 crore Japan International Cooperation Agency (Jica)-financed 360 MW Haripur power project, allegations of manipulation to award the contract to a certain bidder loom large.

The project’s implementing authorities EGCB in October this year prepared the PQ documents to find suitable bidders for it. But the PQ documents have been allegedly modified in such a way that they do not match other standard PQ documents used in the country.

Sources said the EGCB’s PQ is allowing bids with power generator without any proven record of its performance. There is no precedence of allowing use of such generator in Bangladesh.

Besides, the EGCB has broadened the range of power generation for bidders. Usually bidders are asked to offer power generators with a capacity of 10 percent more or less than asked for (in this case 360MW plus or minus 10 percent) but the EGCB increased the range to 15 percent.

This means a bidder can offer power generation of around 300 MW or 410 MW in this tender. Sources said only one Japanese power company, which has developed a new generation power generator but has no proven record of its (generator) performance, meets this criterion. Again, a powerful ruling party man is lobbying for this power company in this tender.

But these modifications have made the Jica unhappy. It has raised specific questions regarding these two criteria. The EGCB’s answer, sources said, has not satisfied it. Nevertheless, the bid criterion has now been modified.

The EGCB is also struggling with its 300 MW project in Siddhirganj with the WB’s financing, the tender for which was floated in April.

The WB imposed a condition that as the bank is investigating corruption charges against leading power generator maker Siemens, it will not entertain bids based on Siemens equipment till the end of 2010. Most of the eight bidders have dropped their offers using Siemens equipment.

Again, the same powerful ruling party man has been influencing the EGCB to award the tender to Gammons Sadelmi, which become bankrupt recently.

Against this backdrop, the EGCB sent the WB a set of recommendations regarding this project for its approval. The EGCB wants to award the deal to Gammons Sadelmi as the lowest responsive bidder.

But on the EGCB’s recommendations, the WB said on December 15 that all the bids had deviated from the bidding guideline. It (WB) rejected Gammons Sadelmi’s bid and asked the EGCB to re-evaluate the bids keeping in mind that bids using Siemens equipment will not be entertained.

With financing from the Asian Development Bank (ADB), the NWPGC had floated tenders for the Sirajganj 150 MW plant and Khulna 150 MW plant earlier this year. It took many months to pre-qualify bidders for both the projects.

Only recently, the NWPGC qualified Chinese companies Shanghai Electric and Shandong and Spanish companies Cobra and Isolex for the Khulna project. It also qualified Shandong, Cobra, Chinese CMC and Indian Bhel for the Sirajgang project last week. The ADB will now scruitinise the selections.

“In all cases, the implementing authorities have demonstrated lack of ability to spearhead these tenders properly. They are either bowing down to pressure from lobbies or simply they don’t have the commitment to push the power projects urgently,” says a high official, expressing his frustration.

Meanwhile, old and new power projects with more than 800 MW capacity are now under implementation.

The present government has so far given final approval to two power projects having 300 MW capacity.