Rental power scheme in Ctg draws 6 bids
Six local and foreign power companies yesterday submitted attractive bids in the tender for a 50-megawatt three-year rental power scheme in Chittagong that the government wants to bring online before June next year.
Participated by three local and three foreign companies, the bid drew some attractive price offers ranging between US 3.5 cents to 5.5 cents per kilowatt-hour, sources say. Because of flexibility of plant installation, rental power tariffs are typically costlier than tariff of the conventional power plants.
The Power Cell of the power ministry sought proposal for this 50mw plant in Sikalbaha which can be expanded to 100mw capacity in future.
The Cell kept the fuel option for this project open due to ongoing gas crisis in the country. Bidders are allowed to propose both diesel-based and High Sulphur Fuel Oil (HSFO)-based power plants.
This rental power bid was conceived in the context of chronic power crisis in the industrial port city of Chittagong that has been affecting the country's development.
"The tariff offers will be scrutinised by the tender evaluation committee of the Power Cell over the next two weeks," says a source. "The contract is likely to be signed by November or December," he adds.
The local bidders are Desh Energy Ltd, Golden Horizon Ltd and Precision Energy Ltd, while the foreign bidders are Alstom Power of the US, Aggreko International of the UK and Royce Power Engineering Ltd of Hong Kong.
Of them, Desh Energy and Aggreko are already involved with the existing rental power projects.
Four of the six companies have proposed using diesel to generate power and two proposed using HSFO, which is a cheap but low quality and environmentally hostile oil by-product.
The country does not have any HSFO plant, though it has a number of diesel-fired plants.
"The price of HSFO is almost half of diesel. But to eliminate environmental hazards of HSFO, the power plant must have a processing plant and take other precautions. Plus the price of diesel power generators is much lower than the HSFO generators," explains a source.
The sources point out that among those bidding for a diesel-fired plant, Alstom offered a monthly kilowatt-hour tariff of $25.55, Aggreko $23, Golden Horizon Ltd $21.72 and Precision Energy Ltd $25.75.
Offering HSFO-fired plant, Desh Energy Ltd proposed $16 and Royce Power $17.81 for monthly kilowatt-hour.
"These offers need to be evaluated against other offers in the bid [like reference fuel price or operation and maintenance price etc] to understand which is the lowest best bid," an official points out.
Based on its negative experience with novice companies, the Power Cell's bidding criterion for this project has been modified to ensure competence and seriousness of the bidder. The last bid signed deals for 300mw power, but only one-third of them came online.
"We are hoping that this time the Cell will be able to pick the best bidders. The Sikalbaha bid document asks bidders to prove that they have power plant equipment ready in their stock to be supplied for this project," said the official.
The last bids allowed bidders to qualify using fake claims of possessing plant equipment. This allowed inexperienced 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 plus prove that it has the plant equipment in stock for the project.
However, the bid terms grossly extend project implementation time. Whereas the past rental bids sought 120 days project implementation time, it has been extended to 180 days. Sources say this was done because all of the past rental power bidders including Aggreko could not complete their projects within 120 days.
"But we now have the experience. We now know that one of the reasons for the delay is lack of readiness of project land. We also know that the Sikalbaha project site is ready and it should not take more than 120 days to install a rental power project," noted an official.
"If we allow 180 days for project implementation, we could have gone for a small Independent Power Project [IPP] which would have been a little cheaper," he added.
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.
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, though it succeeded in launching a 50mw plant in Kumargaon two months behind schedule on July 23.
The Power Development Board served Energy Prima with a notice to terminate the contract, slapped a fine of $1.7 million and sought extension of bank guarantees against its projects. Till date, Energy Prima has not extended the bank guarantees.
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.
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