The power ministry has okayed the bid of Malaysian-Korean consortium Powertek for the 450 megawatt (MW) Bibiyana power project that quotes almost double the power tariff of past large private power projects.
Following recommendation of the tender evaluation committee of the Power Cell and another committee headed by the Power Development Board (PDB) expert Alamgir Kabir, the ministry has prepared the bid to be sent to the cabinet for its approval.
Powertek offered a 22-year flat tariff of 4.53 cents per kilowatt hour (a unit), which is in stark contrast against the 1998 AES Haripur 360MW power plant that charges a tariff of 2.72 cents per unit. In taka, Powertek's offer stands at Tk 3.15 per unit while other developers now implementing small power projects seek a price of Tk 2.28 to Tk 2.79 per unit.
Both the committees observed that Powertek's high tariff was justified since the cost of building a power plant has doubled in the last 10 years.
Sources said the PDB committee reviewed the price factor using power sector trend studies by the World Bank and the Wall Street Journal and also information shared by vendors.
"The power prices have gone up since the Meghnaghat-Haripur power projects were signed. Since 2000 and especially since 2004, the cost of implementing a power project has simply doubled," said a source.
"The Meghnaghat 450MW project was completed at a cost of $300 million. In case of the Bibiyana project, the cost would be around $640 million including $40 million for land acquiring and gas pipeline cost that was not required for Meghnaghat project," he added.
Whereas the Haripur or Meghnaghat project's per kilowatt cost was $550, the cost for the Bibiyana project would exceed $1,200.
However, Aziz Khan--chief of Summit Group that was controversially dropped out from the Bibiyana bid--says that his company could have done the same project for a price at least 15 percent lower.
Talking to The Daily Star over phone from Singapore yesterday, he said, "We are unfortunate that the Power Cell and the government did not qualify us. Given the opportunity we would have been able to implement such a project with at least 15 percent less electricity price per unit, which amounts to more than Tk 1,000 crore during the 22-year contract period."
Aziz Khan added it was not entirely true that the international price of power is that high. "Such an opinion is outdated. Quite to the contrary, the whole world is entering into recession and equipment prices are falling."
The Bibiyana tender initially attracted pre-qualification bids from AES, Chevron, Powertek, Kepco, Summit and Malaysian YTL late last year. Summit was conditionally selected at first, but then in January it was arbitrarily disqualified and YTL was also disqualified. Previously qualified for the Sirajganj 450MW power project, Summit repeatedly requested the cell to reconsider but it was ignored.
Soon after the pre-qualification, Powertek and Kepco announced its consortium and AES announced its withdrawal. Finally when the bid submission date arrived in July, Powertek appeared as the lone bidder.