Vol. 5 Num 1046 Sat. May 12, 2007  
Front Page

Rental power project in Bogra may be retained

The Power Division is going to request the government's purchase committee to revoke its decision on cancellation of a 20 megawatt rental power project in Bogra to avert possible hassles of litigation.

The Cabinet Purchase Committee last month cancelled all the seven proposed rental power-plant projects--two of them already under process of implementation--on charges of gross irregularities in the bidding.

The seven projects were undertaken by the immediate-past BNP-led alliance government to alleviate an endemic power crisis in the country.

The purchase committee of the then BNP government had also approved two of the seven projects--20MW Bogra and 50MW Fenchuganj projects--and the Power Development Board (PDB) signed contracts accordingly with two private sponsors for their timely implementation.

When the Power Division communicated to the PDB the purchase committee's decision of cancelling the projects and asked for re-tendering them, it informed the Power Division about some possible problems in cancelling the projects.

Sources said the PDB informed the ministry that since it had entered into deals with the sponsors for the projects, there is an "obligation on part of the government to comply with the contract".

The PDB also said if it unilaterally cancelled the project without any valid reason, it might have to face litigation that might cause huge financial loss for the government as well.

It pointed out that one of the sponsors--GBB Ltd, which got the contract of the 20MW Bogra project--has already started implementing the project through procuring its equipment.

In the meantime, a high-level taskforce on power sector recently cleared the 20MW Bogra project saying they did not find any major flaw in the project.

After such development the Power Division decided to request the Cabinet Purchase Committee to backtrack on the decision regarding the Bogra scheme, sources said.

Industry-insiders, however, doubt if the purchase committee can retract now. They said if the committee backed out, it would be a precedent in the history of the power sector. "Once the Cabinet Purchase Committee takes a decision, it never backs out," said one of them.