In early October, the committee approved an unsolicited proposal of Westmont to set up the gas-fired barge-mounted power plant in Baghabari.

Westmont proposal sounded very attractive since it said it could set up the plant in only six months and that it would charge only US$ 2.79 cents per unit of power for 20 years.

The purchase committee gave certain terms and condition that the payment for power purchase will be made in local currency, Westmont will submit a $1.5 million bond and it will be liable to pay $10,000 a day for any delay in the implementation of the project.

Westmont is now persuading the PDB and the power division of the energy ministry to allow it to provide $5,00000 bond. It has also convinced the PDB that in case of delay of the project, it will pay only $1,000 demurrage instead of $10,000 a day.

In addition, Westmont and its politically-backed lobbies say that it will not accept power purchase payment in local currency. Rather it wants to be paid in dollars.

It is expected that such a contract between the PDB and Westmont will be finalised within the next two weeks keeping the purchase committee in the dark, sources said.

Industry insiders reveal that Westmont's proposal actually bases on mobilising and installing a 10-year-old unused power unit.

Malaysia's Sabah Shipyard, once owned by the proprietors of Westmont, built a 90 MW barge-mounted power unit in 1994. It was supposed to be installed in the Philippines, but it never materialised due to technical glitches in the unit.

Industry insiders say this unit is being modified for installation at Baghabari.

"There is no record of any independent private power (IPP) company that can install a plant within six months of the contract. It is only possible when it has a plant ready for mobilisation," said a source.

"And there is no instance in Bangladesh where an IPP has installed an old unit."

Westmont is currently operating a 90 MW barge-mounted power plant for over three years. It submitted the proposal for the 130 MW plant earlier this year.

The power ministry scrutinised its proposal and observed, as per the private sector power generation policy that all independent private power projects should be built on the basis of competitive bidding.

But the ministry feels that the proposal has several positive aspects like lower tariff and absence of any liability of the government.

It justified the unsolicited project terming it an 'expansion' of the main plant.

It points out that the government policy has room for unsolicited proposal that mentions: "In the event of a sponsor chosen on the basis of an unsolicited proposal, similar provisions on performance guarantees and specified time period for financial closure will apply."