Project nightmare

The government is incurring a loss of around Tk 5.65 crore every month as a 14-month project to reopen the country's lone state-owned chemical factory could not be implemented in more than four years.

The loss has been nearly Tk 82 crore since May last year, when the Tk 115 crore project to restart Chittagong Chemical Complex (CCC) in Sitakunda was extended for the second time.

Worse still, no light could be seen at the end of the tunnel as yet, thanks to a Chinese company's failure to get the plant going again and the authorities' negligence in this regard.

The authorities concerned have calculated the loss of one year only from May 2016. The project has overrun by nearly three years. Loss incurred during the rest of the period has not been calculated officially yet.

But CCC officials said the factory was facing a production loss of Tk 16 lakh every day.

Putting the net loss of every month at around Tk 5.65 crore, the officials alleged that irregularities have plagued the project since its inception.

Against this backdrop, the Anti-Corruption Commission has opened an investigation into the matter. In a letter on June 14, the graft watchdog asked the Bangladesh Chemical Industries Corporation (BCIC) to turn in all relevant project documents.

The factory was closed in December 2002 as it had been incurring a loss of about Tk 15 crore every year. Taken up in April 2013, the project was due to end in December 2014.

The BCIC gave the job to “inexperienced” Wuhan Anyang Science & Technology Co Ltd (WASTCL). It had even paid the Chinese company about Tk 86 crore in bills and “undue” benefits, like advance payment and loan.

Now after four years, the WASTCL failing to restart the plant has stopped working at the project site since June 18 for a second time. It came after the project was extended for the second time.

“As per the contract agreement terms, you cannot stop the commissioning job, and leave site without completing commissioning and PGTR [performance guarantee test run] at this stage because we have already paid you 77.50 percent payment which is Tk 86.12 crore,” CCC Managing Director Bidyut Kumar Biswas said in a letter to CEO of WASTCL Li Guoan on May 24.   

He wrote the letter as the Chinese company stopped working at the site after failing to complete the PGTR.

“You cannot keep the plant shutdown and cannot leave site without handover of the project,” Bidyut said.

Now the Chinese company again demanded the remaining payment to resume work. In the meantime, most of the Chinese officials left the CCC site keeping the plant completely shutdown.

 In this situation, it has become completely uncertain if the plant would be in operation again, said several CCC officials speculating that the WASTCL would never be able to do so as it had no experience of taking up such a big project.

The plant authorities and the Chinese company are now busy trading blames and seeking compensations.

Both sides also threatened to take legal actions against each other if demands of the respective sides were not fulfilled urgently.

Going one step forward, the WASTCL even threatened to leave Bangladesh for China without completing successful PGTR.

The CCC and the company have been exchanging a number of letters, blaming each other for the work delay, seeking compensations and warning legal actions against each other since January this year, according to documents and letters from both sides.

The ministry of industries and BCIC high-ups held a joint meeting with the Chinese company on June 7.

The WASTCL had agreed to start the PGTR and set several conditions, including increasing gas supply pressure, nonstop five-day 33kv power supply from June 8, availability of qualified manpower, raw materials and financial support to the company during the production period.  

But all efforts went in vain as the company again stopped the work on June 18 and left the site on “personal grounds”.  

In this situation, the ministry and the BCIC high ups seem helpless.

TRADING BLAME

The WASTCL in several letters to the CCC since January blamed low power supply, gas pressure and problems with the gas engine generator as the main reasons behind the failure to start the test run.

It said since September last year, they started production 25 times, 18 of which were hampered due to power supply problems, according to the company's May 6 letter to the CCC.

The Chinese company claimed that it had completed its work in January. It demanded release of the rest 25 percent payment of Tk 25 crore along with Tk 60 lakh as bank interest and Tk 84 lakh it paid as VAT and tax.

Furthermore, the company sought compensation for its 32 staffs' salaries, and management costs Tk 13.82 crore for 180 days from May 15 to November 11 last year and Tk 6.48 crore for February to May 6 and employees' air tickets worth Tk 4.80 crore.

Urging the CCC authorities to pay high attention to their requests, the company threatened to report to the Chinese embassy in Dhaka and China Export Credit Insurance Company Ltd if the requests were not fulfilled.

They also threatened to stop all work at the site and return to China.

Refuting allegations of power and gas supply problems, the CCC in a letter to the WASTCL on May 24 said the Chinese company did not properly solve 10 mechanical problems to start the Performance Guarantee Test Run (PGTR).

The WASTCL was running the factory violating Standard Operation Procedure (SOP), it said, denying that production was hampered 18 times due to power supply problem.

“Most of the previous times production was hampered due to GEG synchronization failure as a locally-made GEG synchronization panel was installed by [WASTCL] instead of Caterpillar Synchronization panel,” he said.

“The project has to be completed in 14 months, but you could not complete it even in 48 months,” CCC Managing Director Bidyut said in a letter to the Chinese company.

In another letter to the WASTCL Chief Executive Office Li Guoan, Bidyut said, “Please be noted that without PGTR before handover, there is no scope of payment of the rest amount [final bill]…

“You are further requested to start the plant immediately to perform PGTR. Otherwise we have no other way than to take legal actions as per the contract,” read the letter to the Chinese Company.

Contacted, Bidyut told The Daily Star recently that the company did PGTR once but failed. They would do that again soon, he added.

Meanwhile, the BCIC held fresh meetings with officials from the CCC and the Chinese company in Dhaka in the last two days.

During the meeting, the Chinese company said it would not resume work without the rest of the payment while the CCC and the BCIC insisted that the company would carry out the PGTR, said BCIC Director (planning and implementation) Lutfor Rahman, who looks after the project.