The power ministry's move will cause further delay in deciding the fate of the project, official sources said.

According to the sources, the ministry sent a file to the law ministry a week ago seeking clear opinion on different aspects of the 100MW Chandpur power plant.

The ministry was in dilemma over hiring of a Chinese firm as the contractor for the project, as the firm declined to enter into a deal because of cost-overrun due to inordinate delays.

The sources said after completion of the tender process, the PDB awarded the contract to the lowest bidder, Chinese Harbin Power Engineering (HPE), to develop the project at a cost of $ 45 million.

The PDB also issued the Notification of Award (NOA) on January 26 last year, but failed to sign an agreement within the stipulated timeframe under the Public Procurement Regulations (PPR) 2003.

As per PPR 2003, any implementing agency has to sign the contract with the selected contractor within 21 days from the issuance of the NOA. The PDB officials claimed that they failed to sign the contract within the stipulated timeframe because of the delay in getting necessary approval of the Ecnec (Executive Committee of National Economic Council). They said the planning ministry also took more than a year to give its green signal.

The sources, however, said the delay was actually caused due to the unwillingness of a section of PDB officials in signing the contract with the contractor for unknown reasons.

Recently, PDB invited Harbin to sign the contract, but the company refused to do so, arguing that due to an inordinate delay by about 16 months, the cost of the equipment on the international market has significantly gone up.

The Chinese contractor set a condition that they can sign the contract only if the project cost is raised to $ 66 million in place of earlier $ 45 million on grounds of price escalation on the international market.

The sources said the latest condition of the contractor placed PDB in a dilemma, as the PPR 2003 does not permit such enhanced project cost. On the other hand, if the PDB goes for re-tendering of the project, the entire process will take another about one and a half years and also increase the project cost due to worldwide price-escalation.

In a recent development, PDB referred the issue to the power ministry for a final decision. But instead of giving its decision, the power ministry forwarded the matter to the Law Ministry seeking a legal opinion.