12:00 AM, November 10, 2012 / LAST MODIFIED: 12:00 AM, November 10, 2012

Ghorashal Power Plant Repair

Ministry pushes for costly deal

Cost to rise if the unsolicited deal is finalised

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Sharier Khan

To repair urgently the sixth unit of Ghorashal power plant that went out of order in July 2010, the power ministry is negotiating an unsolicited deal with an Indian company with a price tag three times that in a contract for the same work which failed two months ago.
The sixth unit of the gas-fired 210-megawatt plant, built by Russain company Technoprompexport, went bust due to faults of the plant's officials and staff. The plant's turbine and generator needed replacement.
The Power Development Board floated a restricted tender for urgent repair of the plant that produced power at a cheap cost, and two Russian companies and an Indian company participated in the bid. The Russian companies -- Technopromexport (the plant's builder) and Inter Roues -- sought around $27 million to $30 million and the Indian company-- Swati – sought $70 million for the job.
As the prices seemed too high and offers flawed, the authorities in April last year cancelled the tender. The PDB sought the prime minister's approval for direct purchase from the cancelled tender's lowest bidder Technoprompexport. This will save time, the PDB argued.
On June 8 last year, Prime Minister Sheikh Hasina signed a decision to award the repair work through a direct purchase method.
But instead of carrying out that decision, the power ministry directed the PDB for a second restricted tender by including a trading company named IED Holding of Russia.
After a year, the IED Holding was awarded the job in July this year at a price of Tk 187 crore or around $21 million.
But as the contractor is just a trading company, it could not furnish an authorisation letter from the original equipment manufacturer as per its agreement with the government. As a result, the PDB had to cancel the deal in late September.
Soon afterwards, instead of going for a direct deal with the plant's original manufacturer, the power ministry has started negotiating with Indian company Swati that made a fresh unsolicited offer of $68 million. Following negotiations, Swati said mid-October that it would arrange the plant's equipment from Power Machines of Russia.
Swati said it would reduce its price offer by $1 million only if the PDB gives it 10 percent of the contract price as advance.
This kind of advance was banned many years ago to prevent corruption. On the contrary, the contractor usually provides a performance guarantee of 10 percent of its offered price.
An official tried to justify the overpriced deal saying that Swati would provide some new equipment and modernise the plant's vital parts instead of just repairing it.
Meanwhile, Technopromexport sent a letter to the power ministry on October 24 giving it a reminder about its techno-economic proposals submitted twice in 2011 and 2012. It reiterated its interest in doing the repair work of the plant.
As per different proposals, the repair work would take around two years to complete.
Since the Ghorashal unit six went out of operation, the PDB was left with the natural gas being supplied to that plant for power generation. It took a separate initiative late last year and amended an existing contract with British rental power company Aggreko to convert its diesel-fired 145 MW plant into a gas-fired one. This is saving the PDB a huge cost for diesel import, while utilising the available gas. The deal with Aggreko will expire in late next year.

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