Irregularities aplenty

Forty-five months have gone by but the 14 months' project to restart the Chittagong Chemical Complex (CCC) is yet to be finished and it is costing the state dearly.

For the last seven months, the lone state-owned chemical factory in Sitakunda has been incurring Tk 16 lakh in production loss every day, all because a Chinese firm failed to get the factory going again.

On top of this, the CCC has been paying Tk 1.14 crore in salaries every month to its largely idle officials and staff posted there.

The factory was closed in December 2002 as it was incurring loss of about Tk 15 crore every year. In April 2013, a Tk 115 crore project was launched to restart the factory. The project was initially due to end in December 2014. 

Bangladesh Chemical Industries Corporation (BCIC) gave the job to inexperienced Chinese company Wuhan Anyang Science & Technology Co Ltd (WASTCL).

It had even paid the company about Tk 86 crore in bills and undue benefits, like advance payment and loan. Sources claimed that government officials got kickbacks for facilitating these.

Failing to restart the factory after repeated attempts between January 13 and 19, the company wrote to the BCIC that all its staff were leaving Bangladesh to celebrate the Chinese New Year on January 24 and promised to return in mid February with an aim to restart the factory in March.

The managing director of the CCC Bidyut Kumar Biswas responded to the WASTCL letter saying, “Although about 3 (three) days have already been passed from the last GEG failure still you are not going to re-start the Plants which is not acceptable at all [sic].”

PILING LOSSES

Expecting completion of the project, BCIC transferred 234 skilled engineers, technicians and operators to the CCC in June last year.

With the factory yet not operational, the CCC is facing financial loss as it has to pay the salaries and allowances of staff, most of whom are practically sitting idle, according to a letter of the CCC managing director to the Chinese company in October.

“The last CCC's restarting work completion date was 31 May 2016. But you failed to do that. Therefore, after that day CCC is bearing an overall production loss of Tk 16,06,500 per day which is calculated on the basis of everyday production of all products,” wrote Lutfar Rahman, the then managing director of CCC.

This means the CCC has so far incurred production loss of about Tk 25 crore. If the loss is calculated from the day the factory was originally supposed to restart, it would be over Tk 14o crore.

The delay in project completion is also forcing the CCC to pay a huge amount in interest on the Tk 115 crore loan it took out to pay for the project, Lutfar added in the letter to WASTCL.

A CCC committee, led by its additional chief chemist Israil Ahmed, in April last year projected that the CCC would incur a loss of about Tk 15.25 crore annually if it went for full production after the factory resumed operation.

The question arises as to why the factory is being reopened using taxpayers' money if it is to incur losses again?

WHY REVIVE CCC?

Prime Minister Sheikh Hasina gave consent to restarting the factory at a meeting with the BCIC officials in April 2009 when they pressed for restoring the CCC. She also instructed them to probe why the CCC was closed in 2002.

The then industries minister Dilip Barua visited the CCC site 12 days later and inaugurated the factory restarting project.

Later in 2009, a BCIC committee with the chairman of the Board of Investment as its chief was formed to review the feasibility of restarting the factory and find out why it was closed in 2002. A couple of sub-committees were also formed.

The committees opined that the project could be profitable, about Tk 4 crore a year, if the government injected Tk 80 crore for factory modernisation.

The committees in their final report recommended that the government should go for the project.

THE COMPANY

Chinese company WASTCL tried to go for Performance Guarantee Test Run between January 13 and 19 but failed to do so.

Every time it tried the test run, it either failed or its performance was poor. The quality of the chemicals produced was also well below par, according to CCC documents.

As the company failed to implement the project, the BCIC itself is now saying that the company had no experience and was not capable of implementing such a project.

“It's an immature company. The selection was wrong,” said BCIC Chairman Mohammad Iqbal, who was not in charge of the BCIC then.

Mentioning limited financial capability, the company sought financial cooperation from the BCIC on many occasions. 

The BCIC gave WASTCL Tk 3 crore in advance last year and lent Tk 50 lakh this month violating the public procurement regulations. The BCIC had to even amend its contract with the company to give the money.

WASTCL sought another loan of Tk 1 crore this month.

The BCIC chairman first gave verbal directives to officials concerned to pay advance money to the Chinese company. He approved the advance payment on September 23, 2015.

There are allegations that BCIC officials got financial benefits from the company by providing it undue benefits.

Asked about them, the BCIC chairman denied taking any financial benefits and said he gave the money with the consent of the ministry, either with “written or verbal” instructions, and taking the opinion of the officials concerned.

The BCIC chairman said he was embarrassed by the project, which was taken up before he was given charge of the BCIC, and the allegations about his brother's involvement in the project.

Li Guoan, CEO of WASTCL, in a letter to the BCIC chairman in October, 2016, thanked the chairman for his clear and positive attitude towards the project with his strong support and encouragement at key moments.

Even though the company failed to implement the project, the BCIC has not obtained any compensation from the company or taken any action for failing to meet different criteria of the contract.

Transparency International Bangladesh Executive Director Iftekharuzzaman told The Daily Star last night, “This is a blatant example of utter disregard to public interest for narrow group advantage at the expense of taxpayers. If the government is genuinely interested in exploring the possibility of converting this white elephant into a viable production unit, it should solicit independent expert opinion to determine its fate.

“Those responsible for making unauthorised payments to the Chinese company violating the due process should be held accountable.

“The issue also brings into focus the risk Bangladesh is taking these days by relying indiscriminately on Chinese companies which are known to be high in the category of susceptibility to corruption in international business.”