PDB now opts for unsolicited deal
Within a week of local company Summit's withdrawal from the deal for Bibiyana phase-1 power project, the Power Development Board (PDB) is seeking the power ministry's clearance on whether the same job could be awarded to a Japanese-Korean joint venture on the basis of unsolicited negotiation.
On June 18, Summit gave up the deal for Bibiyana 341 megawatt gas-fired plant that it won last year by quoting a very low power price of around Tk 2.6 per kilowatt hour. But, as the company could not arrange finance for the project within a specified deadline, it agreed to a government proposal to give up the job so that the project could be implemented by some other means.
“Acting on the verbal instructions of the energy adviser to the prime minister, the PDB sought the power ministry's clearance on awarding the deal to Marubeni-Hyundai,” said a highly placed source.
In recent times, the Japanese-Korean joint venture was awarded deals for two power projects in Haripur and for Bibiyana phase -3. But in both the cases, the tender authorities resorted to controversial measures to eliminate competitors.
Sources said a young and powerful lawyer-lawmaker from the ruling Awami League is lobbying for the joint venture.
This is the first time under the present government, the PDB is recommending deal for a large power project on the basis of unsolicited negotiation.
The PDB on Sunday suggested asking the joint venture to arrange “buyer's credit” from the Japan Bank for International Cooperation (JBIC) in the same financial model as that for Bibiyana phase-3 contract. In buyer's credit, the PDB gives sovereign guarantee and the contractor brings in the loan.
On June 20, Marubeni-Hyundai joint venture was issued notification of award to set up 399-MW Bibiyana-3 plant.
In recent months, the PDB succeeded in attracting many bidders in open tender for large power projects under the buyer's credit formula.
When Summit agreed to withdraw from this project earlier this month, officials said the government would opt for several options-- it may go for a buyers' credit formula where interested bidders will arrange the funding, or it may go for state-to-state deal with some Middle East investors or even go for negotiations with the second lowest bidder of the original tender in which Summit won the contract.
But the private power project has suddenly become a subject of unsolicited deal as in the cases of short-term rental power projects. “And this is happening because of political lobbying,” said the source.
A top PDB official, who declined to be named, said, “We are doing this to save time. But we have not taken any decision.”
He added, “The government is looking at different options. There are three-four options. But we have not decided which is the best one. It may even be an open tender. The point is we have to deliver.”
Asked if the government supported big deals on the basis of unsolicited negotiation where questions of political favour and corruption would always be raised, the official said, “We always prefer transparent deal. We can't say who is behind this deal.”
But this is not the first time Marubeni-Hyundai is being secured with large power deals.
In February, the PDB violated its rules in technically qualifying Marubeni-Hyundai and disqualified five Chinese co-bidders in the Bibiyana -3 project. The joint venture was selected although it did not submit an authenticated or notarized end-user certificate of experience.
The tender rule demands that if such certificates are not provided, the bid will be disqualified under a “Rejection Clause”. The PDB also sought 38 clarifications from Marubeni in order to qualify. At the same time, it gave no such chance to any other co-bidders and disqualified their bids under the rejection clause.
Similarly, following two years of inept handling of a 360 MW power project in Haripur, the Electricity Generation Company of Bangladesh (Egcb) awarded the contract to Marubeni-Hyundai by technically disqualifying another Japanese bidder -- Sumitomo -- which is no less a reputed company than Marubeni.
The EGCB also violated its tender terms of not allowing use of any unproven technology by allowing Marubeni-Hyundai to use an unproven generator.
The Haripur project is being funded by Japan International Cooperation Agency (JICA), with which Sumitomo had lodged complaints of foul play in the tender.
The Marubeni-Hyundai joint venture is also competing in another large power project in Ghorashal where it is most likely to bring in Japanese finance.