The site of the project is not identified by the Power System Master Plan (PSMP) and so is not connected by any gas transmission pipeline to feed 90 million cubic feet per day (mmcfd) gas to the proposed power plant. There is no plan to develop any pipeline there in future.

Gas supply authorities believe that the new project will only worsen the current gas supply and distribution shortfall.

The plant aims to start operation in 2005, but Petrobangla officials doubt the deadline. Even if the plant manages to get gas supply, it would affect gas supplies to other power plants.

Petrobangla officials said they were not aware of such a power scheme till last month. The project is also not being implemented in consultation with the Power Development Board (PDB).

The Savar project will cost Tk 1,000 crore and the Germans promised to contribute more than one-forth of the cost -- 40.2 million euro in grant. The German financing organisation, KfW, will bear one-fourth of the cost through commercial loans on the condition that Lahmayer would be made the maintenance and management operator.

Lahmayer is responsible for the operation and maintenance of the RPC's Mymensingh plant. It is estimated that the annual charges by Lahmayer and its Bangladesh partners are $ 6 million higher than the charges taken by operators of other power plants of similar sizes.

The RPC has sought gas connection to the plant site two months ago.

"The plant will need 90 mmcfd of gas at a high pressure of 400 bar. We do not have any appropriate network there to supply gas at such a pressure and our ability is a maximum of 150 bar," said a Petrobangla source. "If the RPC had chosen its site approved by the master plan, it would have been easy to arrange gas supply."

RPC sources said unlike the existing 140MW Mymensingh power plants, the Savar plant will not sell electricity to the PDB. Instead, it will sell power directly to four co-operatives of the Rural Electrification Board (REB) called Palli Bidyut Samity (PBS).

The PDB incurs a loss of about Tk 1 crore a month, as it has been forced to sign an agreement with the RPC to purchase electricity from the Mymensingh plant at a very high price.

In fiscal 2002, the PDB bought power from Mymensingh at Tk 2.15 an unit and sold the same to the REB at Tk 1.84 per unit. The PDB purchases Tk 6-7 crore of electricity per month from the RPC.

The agreement was signed bypassing the cabinet purchase committee in a gross violation of the government rules and regulations.