PDB claims $9m from 3 rental power firms
Power Development Board (PDB) has claimed nearly $9 million liquidated damages from three rental power companies that failed to meet project deadline or achieve the guaranteed power generation target.
A top power ministry official said the PDB has already realised around $1 million from Energyprima of Hosaf Group, British company Aggreko and local GBB.
Though inexperienced, Energyprima bagged four rental power contracts last year by showing fake experience. Now it is facing heavy penalty of $7.33 million for delaying two 50-megawatt (MW) three-year rental projects. Aggreko is facing a penalty of $376,000 for delaying its 40MW three-year rental plant in Khulna and GBB is facing a penalty of Tk 4.35 crore in local currency and $640,000 for delaying its 20MW Bogra 15-year rental project.
Energyprima is set to face bigger penalties in February and March when two more of its three-year rental plants would begin commercial operation around eight months behind schedule. Energyprima's 20MW Bogra plant is set to start generating 15MW from February and another 5MW from March. This plant was supposed to come into operation in mid-May last year.
Energyprima will have to pay a penalty of $500 per megawatt per day's delay. Its other project, 50MW Fenchuganj plant, was also supposed to begin operation from May last year. Now it is set to begin commercial operation from February and pay a penalty of the same amount per megawatt per day's delay.
Another local company--Venture Energy Resources--was also supposed to launch 35MW three-year rental power plant in Bhola from May last year. Its schedule has now been set for January. Venture will also have to pay the penalty as per the agreement, the sources said.
THE FLAWED PROJECTS
BOGRA 20MW: PDB signed the Bogra 20MW 15-year rental power project contract with local GBB Power Ltd on September 19, 2006, with the goal to achieve the commercial operation date (COD) within 120 days. But it faced initial delays as the government could not ensure gas supplies.
On June 11, 2007, the power ministry decided that the contract period would be effective from the date of signing the Gas Sales Agreement (GSA). On July 3, 2007, the GBB signed the GSA with West Gas Company.
But the GBB failed to achieve its November 2, 2007, COD deadline and launched the plant on June 17, 2008. Its plant was supposed to have a guaranteed capacity of 19MW but it delivered 18.36MW max.
As per the contract, GBB is supposed to pay a maximum penalty of Tk 4.53 crore--equivalent to three months' rental payment--for the delay in project implementation and another $640,000 as liquidated damages for failing to deliver the guaranteed capacity.
The PDB served the company a notice demanding liquidated damages in 15 more days but the company did not comply.
In this situation on December 1, the PDB board decided to deduct the penalty money from GBB in 20 instalments from the monthly invoices for GBB. The PDB already deducted the first instalment of the penalty from GBB's October billing.
KUMARGAON 50MW: The PDB signed the Kumargaon 50MW three-year rental contract with local Energyprima on January 16, 2007, with 120 days deadline for achieving COD. Energyprima achieved COD 68 days late and also failed to achieve dependable power generation capacity of 47.93MW, falling short by 2MW.
As per the contract, the company is supposed to pay a penalty at the rate of $500 per megawatt for 68 days' delay. The penalty totals at $1.7 million plus another one million dollar for not achieving the dependable capacity.
The PDB issued a $2.73 million liquidated damages notice which Energyprima refused to pay. Accordingly the PDB board decided on December 1 to deduct the penalty in 10 instalments from the company's monthly invoices.
The first instalment of this penalty worth $273,200 has been deducted from Kumargaon plant's November invoice.
SHAHJIBAZAR 50MW: Energyprima signed the Shahjibazar deal with PDB on January 16, 2007, but failed to achieve the COD in 120 days. The project came online 181 days behind schedule and the dependable capacity is 0.33MW lower.
This delay and capacity flaw require Energyprima to pay $4.6 million penalty to the PDB. As per a request, the PDB decided to deduct this sum in eight instalments from its invoices and has deducted the first instalment from the November invoice.
KHULNA 40 MW: The PDB signed the Khulna 40MW three-year rental contract with British company Aggreko International Projects on January 28, 2007, with 120 days' deadline for COD.
Aggreko achieved COD 15 days behind schedule on June 12 and achieved dependable capacity 0.152MW less than the target 39.84MW.
The delay and flawed dependable capacity earn a total penalty of $376,000. The PDB served the company with a notice. Of this, Aggreko paid $76,000 for its flawed dependable capacity but it did not pay for the delay. The PDB decided to deduct the remaining sum in 10 instalments from the monthly invoices and has deducted the first instalment from the November invoice.
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