World power giants eye govt projects

The government's initiative of a large number of power projects has stirred both local and international investors as well as the world's leading power generation equipment manufacturers, industry insiders say.
The insiders say power generator manufacturers in the US, Europe, Australia, New Zealand and other countries are keenly observing the developments in local power sector that is now seriously aiming at installation of over 6,000 mw power using different types of technology in next few years.
A part of these power projects will be rental power, which is temporary in nature.
Representatives of many international power companies are now also in the town, sources point out.
"Their interest has mounted as leading donors like the World Bank believe in the government's political will for these power projects as well as the seriousness being demonstrated by the PDB and power ministry in this regard," says an industry insider.
The PDB's recent floating of online tender has also given the impression that things are going in the right direction, he adds.
Meantime, the Power Development Board (PDB) that has gone “impressively” hyperactive with dozens of power projects, has sought the government's approval for three private power projects or Independent Power Projects (IPP).
These are Bibiyana phase-2 450 mw power, Meghnaghat-2 450 mw and Bhola-2 150 mw projects.
A top PDB source says PDB initiated these IPP as the phase-1 of each of these projects are being delayed for one reason or another.
The Bibiyana 450 mw IPP under the Power Cell is proceeding very slowly, the Meghnaghat-2 project was previously cancelled and the first Bhola project being funded by the Islamic Development Bank (IDB) for the PDB is also going very slow.
Besides, there is just adequate gas in the Shahbazpur gas field in Bhola, being developed by Bapex, to support two 150 mw power projects. The PDB would have to develop power grid to evacuate the power from the island to the mainland.
“But if PDB goes go for IPP now, we are confident that these projects can be implemented at a fast pace,” says the top PDB official.
While many have earlier criticised the government's plans for taking up such massive power projects as 'unrealistic', serious investors say these are possible and these are required for the country.
And part of it was reflected at a pre-bid meeting on 530 mw eight rental power projects at the PDB headquarters yesterday where more than 100 representatives of dozen power companies took part.
Many of these companies have sprung up overnight, while many are well established.
The deadline for submission of bid documents for these eight rental power plants is October 22 and already 24 companies have purchased bid documents.
Some bidders told The Daily Star that PDB and the power ministry appeared to be quite serious with these projects and so far their actions have been rebuilding bidders' confidence.
On the other hand, fortune-seeking overnight power companies built by some politically influential people seem unhappy about certain terms and conditions dictated by the PDB-power ministry, they say.
“The pre-bid meeting for the rental power projects yesterday opened with a note from Power Secretary AK Azad that the government is serious about these rental power projects,” said PDB Chairman Alamgir Kabir.
He told the interested bidders, “You are soldiers of these projects, do not expect time extension for project implementation like in the past.”
During the caretaker government rule, more than eight rental power projects were awarded mostly to local companies. Most of them could not launch operation even after a year behind schedule and the defaulting companies even did not pay due penalty. Their contracts also could not be cancelled due to a host of reasons.
“But this time, we have set the criterion that if the bidder awarded with a diesel-based power project fails to meet the project implementation deadline, it will be allowed a delay of 30 days by paying $500 per-megawatt penalty. On the 31st day, its contract will automatically be terminated,” said the PDB chairman.
“In case of a furnace oil-based power project, the contractor will get 90 days penalty period and on the 91st day, its contract will be terminated.”
The diesel-based rental projects will have a three-year contract and the furnace oil-based ones a five-year contract. The diesel projects are Bheramara 100 mw, Katakhali 50 mw, Thakurgaon 50 mw and Syedpur 50 mw.
The furnace oil projects are Noapara 100 mw, Madanganj 100 mw, Jamalpur 30 mw and Barisal 50 mw. The diesel plants will be given 120 days for implementation and the furnace oil plants 270 days.
At yesterday's meeting participated by a large number of local and international bidders, various issues were discussed regarding contract duration, some vital bidding criteria, fuel handling and other issues.
Surprisingly, the meeting was not attended by anyone from the Bangladesh Petroleum Corporation (BPC), which plays the key role in ensuring uninterrupted supply of fuel oil.
The meeting was participated among others by local Energy Prima and GBB, both of which are defaulter rental power project contractors of the caretaker regime.
They argued that PDB must allow 180 days implementation time for diesel plants instead of 120 days.
The PDB chairman responded that the government was willing to pay premium price for these plants so that the irrigation in the next season does not get interrupted. Therefore, there was no scope for flexibility.
The bidders expressed confusion over the PDB's not taking responsibility for the fuel for the rental power projects. Unlike that in the past, PDB is asking bidders to develop their own fuel storage system and ensure minimum 15 days of fuel storage.
The bidders said without cooperation of BPC and PDB, a rental power company could not ensure fuel supply or have fuel storage capacity. “This can never be a responsibility of a power company,” says Summit Power chief Aziz Khan.
Sources say PDB was trying to pass this onus on rental companies as it failed to break a nexus of a section of unscrupulous employees of PDB and BPC which would steal thousands of tonnes of fuel oil from PDB's storage system, making PDB pay for the stolen oil.
The bidders raised this point saying this would create chaos and discourage bidders, resulting in the PDB chief's comment that it would be decided later.
The chairman also said a bidder may submit bids in all the eight projects, but it would not be awarded more than two power projects. The bidder will not be allowed to show the same equipment for different bids it is vying for.
The bidder must own a generator or have a certificate from the manufacturer stating that it has the equipment ready for the specific power project. The PDB will not accept vague certificates like in the past.
Some interested bidders asked the PDB chairman if the land for the project sites could be “leased” to them for “token money” so that they could use the land for collateral to obtain loan.
The PDB chairman ruled it out saying the land belongs to PDB and it will be used for temporary purpose and there was no scope for using PDB's land for a private company's collateral.
“We have had very good response due to the online launching of tenders,” Chairman Alamgir Kabir told The Daily Star.
Talking to The Daily Star, Summit Power chief Aziz Khan went on record about the government's massive plan in the sector, "This plan is right given the demand scenario and the availability of country's gas, coal, foreign exchange reserve and Tk 30,000 crore non-invested money resting with the banks. The country can aim even bigger.”
He said money was not in short supply for the sector. “But Bangladesh's most successful story is with its Private Sector Power Policy. Why is the government sitting with IPPs? The IPPs can bring finances very easily,” he noted.