Energy & Power

Special Report
New Power: Cancellation Culture How Log

Mollah Amzad Hossain

Example of sacrificing life for electricity must be a rare incident in the world’s history. But, Bangladesh remains the exception. The people of such an exceptional country had expected that the situation would be different after such a sacrifice and the government would take effective steps after such a painful event. But reality is just opposite. The then BNP-Jamaat led alliance government did nothing at that time and they are now out of office for last seven months. No initiative was visible over last seven months even! Although the present government has taken decision on one 240 MW power station which was in the pipeline, no other projects saw any progress so far. Setting up of power plants is being delayed for the same puzzle ground of the past.

Officials working for different local and international power production companies informed that many US and European power production firms are refraining from taking part in tender bidding in Bangladesh due to re-tender culture. Although tender procedure finds proper paper and document, it delays and decision making process become time consuming. Many time re-tender is called although the first tender procedure gathers adequate proposal. For the same reason, the Chinese and Indian companies taking part in the tender process are also increasing their price.

The entrepreneurs had thought that the system would change after taking over office by the caretaker government. But some subsequent incidents gave birth of more frustration. New light of hope was sighted when the incumbent caretaker government made quick work order for the Shiddhirganj 240 MW power plant, which was lying idle for long due to indecision by the previous government. But the light has disappeared as the proposal for renting small power plants and setting up of small power plants in private sector was cancelled.

No one would disagree that the previous five year political regime has shown many puzzles over tender of setting up of power stations. Much talked about event of such a puzzle was setting up of a 450 MW power plant at Sirajganj by PDB and Summit Group, which had crossed every stage but was cancelled at the prime Minister’s Office. Debate on whether any irregularities were there over the project is not the issue. But it was proved that the decision of cancellation was wrong and not a single entrepreneur could be identified yet for the project. The time for submitting tender in the third phase expires this month. But mystery shrouds whether it could be possible to make it successful as the Power Cell has started new game. Allegation is there that some of the officials at the power cell are trying to award the assignment to a company of their desire.

The previous BNP-Jamaat alliance government had shown optimum failure in increasing power generation in its five year regime, but had started a political game to set up small power plants and initiate plan for rental power station. Power Development Board said 260 MW power production would be increased if electricity is purchased from seven rental power stations. They are selected entrepreneur Ornett for Fenchuganj 50 MW, GBB Limited for Bogra 20 MW, United and Neptune JV for Shahjibazar 80 MW, Summit for the Kumargaon 20 MW and Hossaf CMEC Power Generation Company for Noapara Shikolbaha 50 MW and Feni 20 MW, Baraobkunda 20 MW.

However, the government has taken decision to set up GBB’s 20 MW power plant at Bogra which was earlier cancelled. Preparations are now ongoing for pre-evaluation of technical qualifications for Sirajganj 450 MW.

After cancellation of proposal for setting up small power plants by the government, private entrepreneur PHP Group informed the government that they would not buy tender because of financial losses they had faced in the past in doing so. A director of the firm told Energy & Power that the government has changed but we are remaining the same. “It will be very tough for the private entrepreneurs to tackle the financial losses if the issue remains pending again and again,” he said.

Agreements were signed for some of these projects and some were left. The incumbent caretaker government has cancelled these considering irregularities and malpractices selection. But the question is the government has asked for tender to set up power stations and entrepreneurs have responded that. However there is no doubt that political consideration received priority for such a selection. But the business firms had to invest a lot of money to participate in the tender.

Investigation shows that one of the businessmen had invested Tk 1 crore to ensure that he gets the job before he went for signing agreement. Another businessman had paid advance for getting approval for the power plant. On this backdrop, there is no doubt that the firms are facing financial crisis. Those who are involved for such irregularities must be brought to book and renegotiation should take place so that power production could increase and the businessmen could avoid losses. It could also help remove lack of confidence that was traditionally there in the sector.

At the fag end of its tenure, BNP-Jamaat alliance government had asked the Power cell to select entrepreneurs to set up 20-30 MW power plants. They first asked for tender for evaluation of technical qualifications. Then they asked for financial offer from the selected firms who passed the technical sides. After evaluation, the proposals were sent to the advisory cabinet purchase committee for approval. But it was returned on the ground of incomplete nature. The next meeting of the advisory committee on purchase cancelled the proposals and asked for re-tender.

“It is injustice. We submitted our proposal following government rule. But it was cancelled. We have spent our money. Who would compensate that?” said one of the entrepreneurs. Sources said each entrepreneur had spent on n average Tk 11-20 lakh for submission of the tender.

Energy & Power investigated how much money was spent for establishing a larger power station. For a European company, the preparation time is 10 weeks for submitting a proposal. According to such an estimate, Euro 40,000 is spent to prepare a package proposal for a machine with turbine. If it is EPC, the cost stands at Euro 60,000. Apart, there is interest for bid bond fixed by the government. The papers and documents, which need to be included with the proposal requires Tk 30,000 for copying and filing.

However, site survey is required before going for a tender bidding, especially the environmental survey for water and air in the area of proposed power plant. Then comes clarification meeting and most of all bid submission and its follow up. It requires a huge investment. If possibility of getting the work order becomes visible, the producer needs to book slot from the firms who will make the turbine. At least Euro 1.5 million is required for such a booking. So if the decision-making period is delayed, the bidders face huge losses. Sometimes the making decisions require two to three years when the price of raw materials short up and financial investment is increased. Considering all these, European companies do not take part in the bidding in Bangladesh. On the other hand, the Chinese and Indian companies, which are participating in the bidding, they show their expenditure higher because of delay.

Investigation shows that if one wants to set up a power station like other countries of the world, the whole process of issuing work order must be completed by nine weeks after receiving the tender bid. Here three weeks for bid evaluation, two weeks for clarification, two weeks for clarification evaluation, one week for final selection and one week for issuing work order.

Again we can follow India and become free from hassles of lot of related document. It can reduce time for evaluation. For example, fuel/gas compressor, generator transformer, generator circuit breaker, heat recovery system generator, condenser, cooling system are required for a power plant. If a level of documentation is maintained, those who will come up with proposals would not require new document for each tender. If anyone from outside participates in the tender, they would only require submission of these above mentioned document. If such a system could be followed, lot of hassles and pressure of work would have been reduced.

However, successful system of evaluating tender exists in Bangladesh. A system is followed for evaluating tender by the Bangladesh Telephone and Telegraph Board. After opening the tender, all the documents are kept at a room and the evaluation committee members would work there. The documents would be well protected there. They would come up with recommendation after completing the task in 21 days. It reduces the chance of malpractices. In power sector, there have been incidents of changing tender document many times.

Those who involved in the sector believe that every one has lost confidence on the power sector as it has created anarchic situation over setting up of power stations. But such confidence must be brought back if Bangladesh really wants to meet the demand of power for its people. Adopting proper system and using less time for issuing work order can make a big difference. We think such a step can reduce cost of setting up power plants. An example is also there. Keeping it in mind that the caretaker government would take decision in proper time, the proposal for Shikalbaha 150 MW power station was offered US $ 67 million while the rate was US $ 87 million previously.