Power Cell seeks better bidders for rental power
Despite disappointing experience in fast-track rental power projects, the Power Cell is again floating a tender for a 50-MW rental power scheme in Chittagong by modifying the bidders' criterion with the hope of attracting better bidders.
With almost no project in hand to fight the ever-increasing power crisis, the Cell chose this rental scheme to ease the power constraints in the port city where industrialisation is currently being compromised. This oil-fired 50mw plant in Shikalbaha will be later expanded to 100mw capacity.
Weaknesses in the bidder selection criterion had previously allowed influential quarters to lobby for novice power companies like Energy Prima of the Hosaf Group, causing the government to fail in its fast track rental power schemes.
This time the Cell modified the documents for the Sikalbaha bid that would be closed in mid-October. But sources say while these modifications seek better quality bidders, some of them are questionable.
"The Cell should address these if it really wants competent bidders who will deliver power, not penalty money," says a source.
The sources say the bid document for the Sikalbaha project asks bidders to prove they have power plant equipment ready in their stock to be supplied particularly for this project.
The last bids allowed bidders to qualify using fake claims of possessing plant equipment. This allowed companies like Energy Prima to simply claim that they have plant equipment ready to be installed. But when the contract was signed, they failed to present these machines in time.
The bid document for the Sikalbaha project also says in case of a joint venture, the lead bidder must have 51 percent stake in the venture and prove that it has the plant equipment in stock.
While these clauses might ensure genuine bidders, the bid terms grossly extend project implementation time. Whereas the past rental bids sought 120 days for project implementation, it has been extended to 180 days.
"This naturally raises question -- why should we then go for rental power projects? If we allow 180 days for such projects, we can have small independent power projects [IPPs]," comments an official.
"Rental powers are costlier than IPPs because they are set up and dismantled quickly. Besides, our experience shows that if we provide too much lead time, it gives contractors enough time to manipulate the system for their own benefits."
As there had been a lot of disagreements over project sites, the tender document for the Sikalbaha project specifies it.
"But the Cell should have really considered handing over a prepared project site instead of just specifying the location. All project delays have been caused by unprepared sites that are not suitable for installation of heavy machinery," quips the official.
The bid documents also kept a fuel provision that protects a corrupt practice of fuel oil theft.
"There are allegations that a section of unscrupulous employees of Power Development Board [PDB] and Bangladesh Petroleum Corporation [BPC] systematically steal huge oil from the government storage tanks," says a source.
Recently, British company Aggreko has lodged a complaint with PDB in this regard.
The bid document says, "Liquid fuel will be measured by dip stick method or by any other mutually agreed method."
Sources say the oil theft happens because PDB and BPC officially measure oil quantity using a "dip stick" in large tanks instead of using metering devises.
"One millimetre difference in measure may mean a shortfall of 220 litres. But when measured by the dip stick, several inches of differences is overlooked," says an official.
In addition, the bid document says the fuel oil delivery point would be PDB's oil storages instead of the outbound oil supply line. "This again ensures comfort of the oil thieves and will either deprive the rental power contractor or make the contractor join the gang of thieves," he adds.
"To have genuine bidders, the government first blacklist contractors that won bids by lying and making promises that they could not deliver. The government must also streamline the customs procedures so that power companies can quickly import spares," he notes.
WOES OF RENTAL POWER
The Cell had awarded a number of small 15-year rental power deals from 2006, but only one of those came into operation as all of these deals went to incompetent and novice companies.
In January, the Cell went for a three-year rental scheme and awarded four deals equivalent to 170mw capacity to Energy Prima, one 33mw deal to another novice consortium of Venture Energy Resources, one 40mw deal to British company Aggreko and another 50mw deal to US company Alstom.
These companies were supposed to launch their plants within May.
Inexperienced Energy Prima was favoured because of Hosaf Chief Moazzem Hossain's political connection. Brother of former BNP parliamentarian from Feni, Moazzem is an accused in the Barapukuria coalmine graft case filed by the Anti Corruption Commission.
However, Alstom did not pursue its project. Aggreko launched its Khulna 40mw project 12 days behind deadline, while Venture Energy completely failed and Energy Prima grossly failed.
Energy Prima however launched a 50mw plant in Kumargaon two months behind schedule on July 23. It has announced that it will launch its Shajibazar 50mw plant in phases from September 23 to 30 on test -- four months behind schedule. Its two other plants are yet to be launched.
Sources say after a long delay, PDB slapped a fine of $1.7 million on Energy Prima and was asked to extend bank guarantees against its projects.
The PDB also slapped a fine on Aggreko for 12 days delay and another fine on GBB for delays in implementing a 15-year rental power scheme in Bogra.
At a recent meeting the power secretary blasted Moazzem Hossain for the repeated failure of Energy Prima to keep the deadline.
Moazzem was defended at the meeting by Annisul Haq, president of the Federation of the Chamber of Commerce and Industry (FBCCI). Sources say Hossain has involved Haq recently with him to exert influence on the authorities.
"I have financial stakes in the Kumargaon power projects. I got involved in rental power project only six months ago by taking over Desh Energy [which is partnering with Energy Prima], " Haq told The Daily Star.
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