Power Ministry seeks Law Ministry opinion on Chandpur project
Sunday, 15 July 2007
After failing to reach a final decision on the 100 MW Chandpur power plant project, the Power Ministry has sought legal opinion of the Law Ministry in this connection, reports UNB.
The Power Ministry move would cause further delay in deciding the fate of the project, official sources said.
According to the sources, the Power Ministry sent a file to the Law Ministry a week back seeking clear opinion on different aspects of the 100 MW Chandpur power plant project.
The Power Ministry was in dilemma over the hiring of a Chinese firm as the contractor for the project, as the firm has declined to enter a deal because of cost-overrun due to inordinate delays.
The sources said after completion of the tendering process, the Power Development Board (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 PDB also issued the Notification of Award (NOA) on January 26 last year, but failed to sign an agreement within the stipulated time frame under the Public Procurement Regulations (PPR) 2003.
As per PPR 2003, any implementing agency has to sign the contract with the selected contractor within 21 days from the issuance of the NOA.
The PDB officials claimed that they failed to sign the contract within the stipulated timeframe because of the delay in getting necessary approval of the ECNEC (Executive Committee of National Economic Council). They said the Planning Ministry also took more than a year to give its green signal.
The sources, however, said the delay was actually caused due to the unwillingness of a section of PDB officials in signing the contract with the contractor for unknown reasons.
Recently, PDB invited Harbin to sign the contract, but the company refused to do so, arguing that due to an inordinate delay by about 16 months, the cost of the equipment in the international market has significantly gone up.
The Chinese contractor set a condition that they could sign the contract only if the project cost is raised to US$ 66 million in place of earlier $45 million on grounds of price escalation in the international market.
The sources said the latest condition of the contractor placed PDB in a dilemma as the PPR 2003 does not permit such enhanced project cost. On the other hand, if the PDB goes for re-tendering of the project, the entire process will take another about one and a half years and also increase the project cost due to worldwide price-escalation.
In a recent development, PDB referred the issue to the Power Ministry for a final decision. But instead of giving its decision, the Power Ministry forwarded the matter to the Law Ministry seeking a legal opinion.
Industry insiders said the case of 100 MW Chandpur project could be a good instance for anybody to understand as to how and why the power projects were being delayed in the implementation stages.
As per the Power System Master Plan, the Chandpur power plant was to be implemented three years back, but the authorities invited tender for the project in July 2004.
The Power Ministry move would cause further delay in deciding the fate of the project, official sources said.
According to the sources, the Power Ministry sent a file to the Law Ministry a week back seeking clear opinion on different aspects of the 100 MW Chandpur power plant project.
The Power Ministry was in dilemma over the hiring of a Chinese firm as the contractor for the project, as the firm has declined to enter a deal because of cost-overrun due to inordinate delays.
The sources said after completion of the tendering process, the Power Development Board (PDB) awarded the contract to the lowest bidder, Chinese Harbin Power Engineering (HPE), to develop the project at a cost of US$ 45 million.
The PDB also issued the Notification of Award (NOA) on January 26 last year, but failed to sign an agreement within the stipulated time frame under the Public Procurement Regulations (PPR) 2003.
As per PPR 2003, any implementing agency has to sign the contract with the selected contractor within 21 days from the issuance of the NOA.
The PDB officials claimed that they failed to sign the contract within the stipulated timeframe because of the delay in getting necessary approval of the ECNEC (Executive Committee of National Economic Council). They said the Planning Ministry also took more than a year to give its green signal.
The sources, however, said the delay was actually caused due to the unwillingness of a section of PDB officials in signing the contract with the contractor for unknown reasons.
Recently, PDB invited Harbin to sign the contract, but the company refused to do so, arguing that due to an inordinate delay by about 16 months, the cost of the equipment in the international market has significantly gone up.
The Chinese contractor set a condition that they could sign the contract only if the project cost is raised to US$ 66 million in place of earlier $45 million on grounds of price escalation in the international market.
The sources said the latest condition of the contractor placed PDB in a dilemma as the PPR 2003 does not permit such enhanced project cost. On the other hand, if the PDB goes for re-tendering of the project, the entire process will take another about one and a half years and also increase the project cost due to worldwide price-escalation.
In a recent development, PDB referred the issue to the Power Ministry for a final decision. But instead of giving its decision, the Power Ministry forwarded the matter to the Law Ministry seeking a legal opinion.
Industry insiders said the case of 100 MW Chandpur project could be a good instance for anybody to understand as to how and why the power projects were being delayed in the implementation stages.
As per the Power System Master Plan, the Chandpur power plant was to be implemented three years back, but the authorities invited tender for the project in July 2004.