Foul play alleged in tender

The Power Development Board (PDB) has violated its rules in technically qualifying a Japanese bidder and disqualifying five Chinese co-bidders in a tender for setting up the 450 megawatt phase three Bibiyana gas-fired combined cycle power plant in public sector.
Japanese company Marubeni was selected last month although it did not submit an authenticated or notarised end-user certificate of experience. The tender rules demand that if such certificates are not provided, the bid will be disqualified under a rejection clause.
The PDB tender evaluation committee also sought 38 clarifications from Marubeni. Issues relating to at least four of these clarifications should have been considered under the rejection clause, well-placed PDB sources said..
At the same time, the tender committee gave no such scope to any other co-bidders and disqualified their bids under the rejection clause. These bidders' proposals lacked authenticated certificates just like Marubeni's, the sources said.
The PDB board approved late last month the committee's recommendation to award the job to Marubeni and the power ministry okayed the board's decision.
Last week, the PDB opened the price offer of Marubeni that proposed to bring finances from Japan Bank of International Cooperation (JBIC).
Admitting that Marubeni's bid papers lacked authenticated certificate, PDB Chairman Alamgir Kabir told The Daily Star that the tender evaluation committee enjoys the power to take subjective decisions independently, and the board can only question the rationality of such decisions.
He went on, “The committee members said they have cross-checked the certificate (that lacked authentication) from Marubeni's website. They convinced the board about their decision and we forwarded it to the power ministry.”
The committee should have cross-checked the certificates of the Chinese bidders from their websites, Alamgir said.
An official noted that by choosing just one Japanese bidder, the PDB is left with just one option -- to consider Marubeni's financial proposal that includes the financier's terms for interest and loan repayment period.
Defending the PDB evaluation, another source said Marubeni's offer was $ 342 million with per kilowatt power generation cost being $856. Compared to any other recent tender prices received by the PDB, this was very low. All other power tenders sought the lowest per kilowatt price of over $900.
“Marubeni has brought in finances from the JBIC, which charges the lowest interest rate since it is a non-commercial state bank. But the Chinese companies have brought in finances from commercial banks,” he added.
Another source however said two Chinese companies had proposed lending from two state banks -- State Bank of China and China Development Bank -- which also charge interest rates as low as that by JBIC. A source close to a Chinese bidder said its price offer was less than $300 million.
A PDB official mentioned that by putting their bid shortcomings under the rejection clause, no Chinese company was given the scope to clarify those, but Marubeni was given the scope to clarify issues that fell under the same clause.
For instance, in its bid proposal Marubeni stated that it wanted to discuss liquidated damage option of the PDB. But this is a non-negotiable issue. It also mentioned the power plant's partial heat rate as a reference. But the bid rules demanded Marubeni “guarantees” the heat rate. The heat rate directly influences the project's actual cost.
In another issue, Marubeni proposed to provide gas booster and compressor “equivalent” to that manufactured by Atlas Copco of US or German origin or Man Turbo of German origin. The tender specially required these brands.
Marubeni also proposed to develop this plant by using its newly developed but unproven power generator of MHI 701F4. But it provided the certificate for MHI 701F, which is a proven model of the same series. The tender terms demand a proven model.
This tender controversy is similar to last year's tender for a 450 MW power project in Haripur, floated by the Electricity Generation Company of Bangladesh (EGCB). The EGCB had similarly disqualified a Japanese bidder and qualified only Marubeni that proposed to use its unproven 701F4 generator.
Contacted by The Daily Star back then, the EGCB vaguely defended its selection by saying it would not accept anything unproven. But in reality, it had accepted the same technology.