Dispute over 'dispute settlement' makes foreign investors wary
Naim-Ul-Karim | Monday, 9 June 2008
The government's plan to install eight new power plants to generate 1,800 megawatts of electricity might suffer a blow as foreign investors concerned are not agreeable to a condition relating to dispute settlement.
The power ministry incorporated a condition in the 'Initially issued Transaction Document (ITD) for setting up a 450 megawatt power plant at Bibiyana' that any dispute will be settled in Bangladesh in line with the country's Arbitration Act-2001.
Foreign investors said it is an international practice that place of arbitration to resolve any dispute should be at a neutral place or third country rather the country where the investment takes place and also from where the investor is originated.
"No foreign investor will come forward to invest in Bangladesh in presence of such an unfavourable condition," said a senior official of a multinational company.
The government is concerned about the foreign investors' objection to settling disputed issue in Bangladesh instead of any third country, a senior official said.
Special Aid to the Chief Adviser M Tamim told the FE on Sunday that "It can be negotiated and we could find a way out."
Officials said decision of three global giants--Chevron, Powertech and AES--which were pre-qualified for submission of bid to win work order for setting up a 450 MW power plant at Bibiyana, has now become uncertain due to inclusion of the condition in the ITD.
"We will not submit our bids to win work order for setting the power plant unless there is agreement that any future dispute would be settled in a third country," a senior official of one of the companies said, requesting for anonymity.
It is under active consideration of the power ministry to negotiate with the foreign investors, a senior official said, adding there is an option in the Arbitration Act-2001 that the place of arbitration could be decided through mutual discussion to woo new investment.
He said new investment in power generation would not be a problem as the multilateral lending agencies such as the World Bank and the Asian Development Bank have agreed to finance the projects to improve nagging power situation in the country.
Countrywide electricity generation is now hovering around 3300 MW with a daily shortfall of about 1500 MW.
Earlier, Power secretary M Fouzul Kabir Khan said: "We will sign agreements with firms for installing two big and six medium-scale power plants by 2008,"
He said the plants will together produce 1800 megawatts (MW) electricity and would go a long way in ensuring smooth power supply in the next three years.
The eight planned power plants include Bibiyana 450 MW, Sirajganj 450 MW, Shikalbaha 150 MW, Chandpur 150 MW, Khulna 150 MW, Sirajganj 150 MW and two peaking power plants at Shiddhirganj having the capacity of 150 MW each.
The power ministry incorporated a condition in the 'Initially issued Transaction Document (ITD) for setting up a 450 megawatt power plant at Bibiyana' that any dispute will be settled in Bangladesh in line with the country's Arbitration Act-2001.
Foreign investors said it is an international practice that place of arbitration to resolve any dispute should be at a neutral place or third country rather the country where the investment takes place and also from where the investor is originated.
"No foreign investor will come forward to invest in Bangladesh in presence of such an unfavourable condition," said a senior official of a multinational company.
The government is concerned about the foreign investors' objection to settling disputed issue in Bangladesh instead of any third country, a senior official said.
Special Aid to the Chief Adviser M Tamim told the FE on Sunday that "It can be negotiated and we could find a way out."
Officials said decision of three global giants--Chevron, Powertech and AES--which were pre-qualified for submission of bid to win work order for setting up a 450 MW power plant at Bibiyana, has now become uncertain due to inclusion of the condition in the ITD.
"We will not submit our bids to win work order for setting the power plant unless there is agreement that any future dispute would be settled in a third country," a senior official of one of the companies said, requesting for anonymity.
It is under active consideration of the power ministry to negotiate with the foreign investors, a senior official said, adding there is an option in the Arbitration Act-2001 that the place of arbitration could be decided through mutual discussion to woo new investment.
He said new investment in power generation would not be a problem as the multilateral lending agencies such as the World Bank and the Asian Development Bank have agreed to finance the projects to improve nagging power situation in the country.
Countrywide electricity generation is now hovering around 3300 MW with a daily shortfall of about 1500 MW.
Earlier, Power secretary M Fouzul Kabir Khan said: "We will sign agreements with firms for installing two big and six medium-scale power plants by 2008,"
He said the plants will together produce 1800 megawatts (MW) electricity and would go a long way in ensuring smooth power supply in the next three years.
The eight planned power plants include Bibiyana 450 MW, Sirajganj 450 MW, Shikalbaha 150 MW, Chandpur 150 MW, Khulna 150 MW, Sirajganj 150 MW and two peaking power plants at Shiddhirganj having the capacity of 150 MW each.