PDB in dilemma as Chinese Harbin averse to Chandpur power project

FE Team | Published: June 24, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

The Power Development Board (PDB) is in a dilemma over hiring a foreign firm to build a 100-megawatts (MW) power plant as the contractor of the project is now averse to entering into the deal because of a cost-overrun following delays, reports UNB.
According to official sources, after completion of the tendering process, the PDB awarded the contract to the lowest bidder, Chinese Harbin Power Engineering (HPE), to develop the project at a cost of US$ 45 million. The power board also issued the Notification of Award (NOA) on January 26, 2006.
As per Public Procurement Regulations (PPR) 2003, the implementing agency, PDB, was to sign contract with the selected contractor within 21 days from the issuance of the NOA.
But, despite repeated appeal from the HPE, the PDB failed to strike the contract within the stipulated timeframe for delays in getting approval of the ECNEC (Executive Committee of National Economic Council). The Ministry of Planning took more than a year to give the go.
Recently, PDB invited the HPE to sign the contract, but the company refused to do so, arguing that due to an undue delay by about 16 months, the cost of the equipment on the international market has significantly gone up. It (HPE) has also argued that through this delay, the clause 28 of the PPR 2003 has been breached.
In response to the invitation, the HPE offered an escalation of the project cost to US$ 66 million in place of earlier US$ 45 million in view of the price enhancement on the international market in the 16 months.
The foreign firm also informed the PDB that unless the cost of the project is enhanced, it would be impossible for them to sign the contract at the previous cost of US$ 45 million.
Sources said the latest offer put PDB on the horns of a dilemma, because its hands are tied with the law. If the PDB signs the contract, it has to enhance the project cost, which the PPR 2003 does not permit.
On the other hand, if the PDB goes for re-tendering the project, the whole process will again take about one and a half years and also enhance the project cost due to the worldwide price escalation.
In a recent development, PDB refused to agree to the raised project cost. In response, HPE communicated its unwillingness to sign the contract at the previous offer and urged the PDB to give back its performance guarantee (PG).
When contacted, Acting PDB Chairman Khijir Khan told the news agency that his organisation would give the final decision to the Chinese firm by this week.
The tender for the 100-MW Chandpur power plant was invited in July 2004. But the project was yet to be awarded to the contractor because of bureaucratic tangles and indecision on part of government policymakers, which ate up three years while the country kept reeling from a nagging power crisis.