Unsolicited, 3 times costlier

The Power Development Board (PDB) has decided to award the contract for repair of the sixth unit of Ghorashal power plant through an unsolicited negotiation at $ 69 million, a price three times that in another contract for the same job which failed last year.
In addition, the PDB decided to give the contractor a 10 percent down payment to start doing the job. 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.
The sixth unit of the gas-fired 210 megawatt Ghorashal plant, built by Russain company Technoprompexport, went out of order in July 2010 due to faults of the plant's officials and staff. Its turbine and generator needed replacement.
But this simple solution faced a lot of difficulties in the last 32 months due to repeated interference in PDB's procurement process by an influential quarter, well placed PDB sources said.
At a board meeting in December last year, the PDB decided to award the overhauling and rehabilitation work of the plant to Indian company Swati Energy and Projects Ltd at a cost of $ 69 million. Swati is said to be the regional dealer of the plant turbine's original equipment manufacturer LMZ of Russia.
Swati would complete the rehabilitation work in 15 months after the signing of an agreement, which would be done after the cabinet purchase committee approves the PDB decision. Swati is one of the three bidders that participated in a PDB tender floated in 2011. Back then, Swati offered $70 million for the job while the two Russian companies --Technopromexport (the plant's builder) and Inter Roues-- sought around $27 million to 30 million to repair the plant. But at that time, Technopromexport's lowest offer of $27 million seemed “too high” to the power ministry. So, the tender was cancelled in April 2011.
Then the PDB sought the prime minister's approval for direct purchase from the cancelled tender's lowest bidder
Technoprompexport. This will save time, it argued. On June 8, 2011, Prime Minister Sheikh Hasina signed a decision to award the contract for repair through a direct purchase method.
But instead of carrying out that decision, the ministry directed the PDB for a second restricted tender by including a trading company named IED Holding of Russia. In July last year, the IED Holding was awarded the job at a price of $21 m. But the trading company failed to proceed with the contract and the PDB had to cancel the deal in September.
Again, instead of going for a direct deal with the plant's original manufacturer, the power ministry has started negotiating with Swati. Officials justified the overpriced deal, saying that Swati would provide some new equipment and modernise the plant's vital parts instead of just repairing it.