Govt signs its first public sector power deals

The Power Development Board (PDB) yesterday signed contracts with two Chinese companies for two 150 megawatt public sector power projects, both of which would be implemented by the end of 2011.
Contracts were signed for Chandpur 150 mw gas-fired combined cycle power project with China Chenga Engineering Co (CCEC) and Sylhet 150 mw gas-fired simple cycle power project with Shanghai Electric Group.
Both are the first public sector power contracts signed under the present government, tenders for which were repeatedly floated from the tenure of the previous BNP-led alliance government.
Repeated floating of the tenders has resulted in massive cost escalation.
"It takes time to construct a power plant. We are working on building a number of plants. But we need to speed up the construction," said Finance Minister AMA Muhith who was present at the agreement signing ceremony at the PDB headquarters.
Adviser to the Prime Minister on Energy Dr Towfiq-e-Elahi Chowdhury, Bir Bikram and State Minister for Energy Brig (retd) Enamul Haq were present.
Muhith noted that power generation required natural gas supply, but in the last seven-eight years, there was no government initiative to increase gas production.
"Energy and power is required for development of all sectors of the country. But corruption and bad governance have pushed this sector far behind," the finance minister pointed out.
He added the government wants to make China its development partner in all sectors.
PDB secretary in additional charge Iskander Ali and CCEC Chairman of the board Cao Guang signed the agreement for the Chandpur project and Iskander Ali and Vice President of Shanghai Electric Group Zhu Benian signed the Sylhet project.
The Chandpur project will cost a staggering Tk 1247.72 crore including Tk 902 crore in foreign currency. This combined cycle project would be launched by installing a 100 mw gas-fired turbine at first.
Its additional capacity would be increased by installing a steam turbine that would use the heat of the gas turbine to generate power. As a result, this plant will consume less gas compared to a simple cycle plant.
The CCEC that won the bid for this job last year will launch the gas turbine component in mid-June next year and go for full production by December 31.
Previously, the BNP-led government had awarded the contract for installing the gas turbine component in Chandpur to Chinese company Harbin through a controversial bidding process.
Harbin initially sought a budget of $45 million. But during the caretaker government rule, Harbin wanted to escalate the project price by 10 percent. This led to cancellation of that contract.
The Sylhet 150 mw simple cycle power project will cost Tk 704 crore with the target to commission this plant by September 25, 2011.
The last year's tender for this power project was held amid several glitches that could have disqualified the lowest responsive bidder Shanghai Electric Group.
But PDB pushed it ahead because it was the fifth tender of the project. While each tender was leading to wastage of time, it was also increasing the project cost.