Uncertainty over selection of bidder for Bibiyana power plant persists

FE ReportbrThe power ministry is now in a dilemma over selecting the lone bidder, Powertek consortium, for setting up the Bibiyana 450 megawatt (MW) power plant due to the demand for higher tariff and frequent change in stances by the latter, officials said.brThe ministry, for the first time, has sought comments from the ministries of law and finance and constituted a committee to scrutinise the legal aspects of the company's conditional offer and the issue of higher tariffs, said a senior power ministry official.brThe Powertek consortium comprising Malaysian Powertek and Korean Kepco offered a tariff rate to sell electricity at 4.53 US cents (Tk 3.15) per kilowatt-hour (kWh) to the government from the proposed Bibiyana power plant project.brThe tariff is nearly 100 per cent more than that of the latest independent power producer (IPP) AES Haripur 360 MW power plant. The AES charges a 22-year levelised tariff of 2.72 US cents per kWh. The tariff is also Tk 0.75 per kWh higher than the average tariff rates offered by the proposed small power plants (SPPs).brBut the gas price for the Bibiyana 450 MW power plant and the AES Haripur 360 MW power plant is the same, which is around US$ 2 per unit (1,000 cubic feet).brIf the Powertek consortium's tariff offer is accepted the company would be able to make windfall profit, said a power division official.brBesides, the SPPs are more convenient for the government as the tariff rates offered by them are lower and payable in local currency, he added.brIn its bid, the Powertek consortium imposed a condition that the government will have to pay up to US$ 15 million for canceling the project before its financial closure though it refused to accept any responsibility for delay in financial closure on its part.brBut as per the request for proposal (RfP) document the financial closure, that is to arrange financing, is the sole responsibility of the bidder, the power ministry official said.brRelating to the Powertek's conditional bid the law ministry opined that the condition mentioned by the consortium was a deviation from the Rules 98 (5) and (6) of the Public Procurement Regulations, 2008.brIf this condition is accepted, the tender documents would have be modified in such a way that would prompt other competing bidders to raise questions about the entire bidding process, the law ministry noted.brThe ministry also opined that had the government announced that it would be responsible for $15 million worth of risk, many other companies would have submitted bids ensuring more competition.brThe Powertek consortium, however, withdrew its condition recently backtracking from its previous stand.brThe company responding to Power Cell's query to clarify its conditional offer stated on July 30 The consortium wishes to emphasise that its responses to requests for clarification on its proposal are not intended to, and not in any way amend, vary, modify or alter the terms of its proposal.brThe letter signed by vice president of Powertek project Mun Sang Yip was copied to Siemens, Kepco and International Finance Corporation (IFC).brBesides, the power evaluation committee of the power ministry earlier opined that the Powertek consortium's bid would be responsive only if the condition was accepted.brTerming the conditional bid from the Powertek as 'unprecedented' the power secretary Dr M Fouzul Kabir Khan said the five-member committee headed by Member, distribution of Bangladesh Power Development Board (BPDB) Alamgir Kabir would submit its report by next week.brThe Powertek's offer along with the committee's observation would be placed before the purchase committee for approval, he added.br