Complexities over contract for Ashuganj plant

Dhaka: Complexities have arisen over the signing of an agreement between the Power Development Board and a joint venture company for installation of a costly 50 MW short-term rental power plant at Ashuganj as the company wants changes in the agreement which has already been initialled by the parties.

The PDB and the joint venture of Green Power, Concord-Pragati of Bangladesh and Neva AB of Sweden were scheduled to sign the contract on Sunday, but the PDB has deferred the date after the joint venture wanted to install one 60 MW generator instead of two 30 MW units.

Sources in PDB said that as per the draft initialled by the PDB and the joint venture, the company was supposed install two 30 MW generators, but it recently told the board that it had not found two readymade 30 MW generators in the international market but did find one 60 MW generator.

The company wants to set up the 60 MW plant as it has not found any 50 MW generator in the market, and PDB has no problem in allowing the company to set up a 60 MW plant although it will purchase only 50 MW according to the contract.

The government’s purchase committee on March 2 approved the selection of the joint venture for installation of the readymade plant on build-own-operate basis for three years. The joint venture is supposed to charge 4.78 cents for per unit of electricity after the plant is installed in 120 days after the signing of the agreement.

PDB sources, however, said that they were reluctant to change the draft agreement in regard to two units as they felt that a one-unit plant would be ‘unreliable’ and ‘fuel inefficient’. ‘Besides, it is a clear violation of the agreement which has been initialled,’ said a source.

The PDB’s board will take a decision on the matter next week. Sources in the Power Cell said that a committee on the rental power plant issue, headed by Power Cell’s director-general and comprised of power officials including representatives of the PDB, will discuss further the demand of the company.
The Power Cell, the research and planning wing of the Power Division, completed the tender procedure and is handling the agreement issue.

A Power Cell official, however, claimed that there should be no problem in having the one-unit plant installed as the PDB was purchasing not the power plant but only electricity for three years. ‘If the company cannot supply electricity, it will pay the penalty. Besides, in the contract the fuel efficiency issue is clearly stated. If it cannot maintain a certain level of fuel efficiency, it will also have to pay for that,’ he said.
‘We don’t have to sign the contract, but that will not help us to increase electricity generation on an emergency basis’ he said.

He said that the rental plant committee would send recommendations to the Power Division to enable it to take a good decision.

PDB officials, however, said that the main reason for installation of a power plant should be to get electricity, not to realise penalties.