Six power deals get go-ahead

The government continues to award power project contracts on the basis of unsolicited negotiations under the Special Act for Speedy Supply of Power and Energy, 2010, although the country is no longer reeling from electricity shortage.

Interestingly, though the negotiations under this law were supposed to be speedy, these actually took longer than those in the normal tendering.

Yesterday, the cabinet committee on purchase approved awarding six power project contracts, five of these on the basis of unsolicited negotiations that started two years ago.

Three of these five projects are fuel oil-based which is very costly for the nation, one is a dual fuel-based (either gas or fuel oil) and the other is a solar power project.

The lone project that saw competitive bidding is a 210-megawatt "re-powering" project in Ghorashal, where an old power unit will be refurbished with new technology with financing from the World Bank. China Energy Engineering Group and Guangdong Power will jointly implement the project at a cost of Tk 1,544 crore.

The cabinet committee also approved changing a lead bidder of a 149MW fuel oil-based power project in Kaliakoir. The project has been stalled for the last three years due to legal complications. The original lead bidder, a Sri Lankan company, is now being replaced by Summit, a local company.

The new projects that were approved yesterday are the United 300MW fuel oil-based Anwara power project, Acorn 100MW Julda fuel oil-based power project, Precision Energy Patia 100MW, 225MW dual fuel-based Bhola power project to be implemented by India's Shapoorji Pallonji Infrastructure Capital Company, and 30MW Solar Power Project by Intraco CNG & Juli New Energy.

This solar power project will be implemented in Gangachara upazila of Rangpur.

The Special Act for Speedy Supply of Power and Energy, 2010 was promulgated in the context of huge load shedding back in 2010 with the intent to urgently shorten the tender processing time to quickly award rental power projects. The act was renewed in 2014.

NOT SO 'SPEEDY'

In March 2014, United Enterprises & Co proposed to build a 500MW fuel-oil based power plant in Anwara of Chittagong with its own finance, on own land and under own management.

The Power Development Board in May that year decided to reconfigure the project at 300MW, and place it for an unsolicited deal under the special act for speedy power supply.

But the "speedy" project was never really speedy.

The Prime Minister's Office gave it the go-ahead in December 2014 along with the proposals related to the projects proposed by the Precision Energy and the Acorn.

A technical committee reviewed the proposal and the company's technical and financial capabilities, and cleared it in February last year. Then the PDB held some meetings with the last one in January this year.

The Acorn submitted its proposal in March 2014 to build the Julda power plant in Chittagong. This proposal too travelled around various desks before being approved yesterday.

The Precision's proposal to build the Patia power plant was submitted in May 2014. It took almost two years for the proposal to get the final approval.

Ironically, the whole process -- from submission of the Letter of Intent (LOI) to awarding a contract -- usually takes less than a year in case of normal tendering of projects.

As for the price of electricity, the United will charge 18.37 cents per kilowatt hour (kWh), the Precision 18.37 cents/kWh and the Acorn 18.37 cents/kWh. The rates were fixed for a 15-year period through the unsolicited negotiations.

BHOLA PLANT

The Shapoorji Pallonji Infrastructure Capital Company of India has been seeking a power project from mid-2014 on the basis of unsolicited negotiations.

At first, it proposed to transfer an installed but unused power plant from Uttarkhand in India to Sirajganj. Then early last year, it started hammering on installing the plant in Bhola.

In September last year, it changed the proposal in favour of a brand-new 225MW dual fuel-powered plant that could either run on gas or on imported petroleum.

The Shapoorji also proposed to build this plant with its own funding. As per an unsolicited negotiation, the company will be selling electricity at 3.98 cents/kWh if it's produced by using gas, and 16.96 cents/kWh if produced by burning fuel oil.

The Indian company suggested using gas from the Shahbazpur field.

However, the gas field is already falling short in desired production and cannot produce enough to run the new power plant.

An existing 200MW plant, which began power generation last year and uses gas from the Shahbazpur field, is now producing only 50-60MW electricity as the field has not been producing enough gas since September-October last year.

The existing plant requires 30 million cubic feet per day (mmcfd) gas from the Shahbazpur field. The proposed plant would require a similar quantity.

But the gas field, which is disconnected from the national gas network because of its location, is presently producing only 17-18 mmcfd.

CHANGE OF LEAD BIDDER

Kaliakoir 149MW HFO/Gas-fired project was proposed by a consortium of Aitken Spence of Sri Lanka and Alliance Holdings of Bangladesh in August 2011. It proposed a levelised tariff of 6.46 cents/kWh for 15 years.

Bangladesh Telecommunications Company Limited was supposed to allocate land for the project from its Talibabad Satelite Centre at Kaliakoir in Gazipur. But the land could not be handed over in time and the plant could not be built.

The PDB then asked the consortium to extend the bid security or face encashment.

This led the company to go for litigation in 2012 and the LOI could not be cancelled.

Last year, the consortium declined to carry out the project and told the PDB that the Summit was interested as the lead bidder.

The Summit submitted its LOI and proposed to acquire land on its own and build necessary infrastructure.

After taking legal opinions in this regard, the PDB in December last year decided to propose that the government may approve the change of lead bidder so that the existing bidders withdraw the on-going litigation.

Meanwhile, the Sri Lankan company certified transfer of its share [64 percent] in the consortium to the Summit.