The contract is to set up a second 450 megawatt Meghnaghat Power Plant and the favoured consortium is pushed by UAE-based trading company Belhasa and comprises Orion Power Company of Bangladesh.

To pre-qualify in the bidding for this plant, in September 2003 the consortium showed Nissho Iwai Corporation, an experienced Japanese power company, as its lead sponsor, PDB sources said. But, five months earlier, in April 2003, Nissho had merged with another company called Nichimen Holdings and turned into Sojitz, according to documents of Sojitz Corporation.

Nissho's experience in setting up combined cycle power plants in different countries helped the consortium to qualify in the bid in which a total of four parties participated, sources said. A Malaysian company, Malakoff Berhad, also pre-qualified in the bidding.

Though the tender document dictates that "at least 35 percent of the total equity shall be provided by the Lead Sponsor," Nisso did not make any such commitment.

In the next phase, the final bid proposal, the Belhasa consortium showed Nissho Iwai as the project's financial adviser, not lead sponsor.

But the tender document says, "Should the lead sponsor... decide to change the participants within the pre-qualified consortium, it may so do only with prior approval from the BPDB."

At this point, instead of rejecting the Belhasa consortium as technically non-responsive, the power board sought the ministry's clearance. The ministry sent back the proposal for re-evaluation.

During the re-evaluation, the Belhasa consortium replaced Nisso with a German company Steag AG as the lead sponsor violating tender rules. But the PDB once again accepted such a drastic change.

The power board had sought offers similar to the Meghnaghat Phase One 450mw power plant that was built by American company AES with a 22-year levelised power tariff of 2.79 cents per kilowatt-hour. The power tariff offered by Belhasa is 2.78 cents per kilowatt-hour.

"There is a lack of participation in new power projects because of confusing signals of the government, frequent re-tendering and strong lobbying favouring certain groups. As a result genuine bidders are avoiding Bangladeshi schemes," said an industry insider.

But a PDB high official unwilling to be named defends the Meghnaghat-2 bidding process: "There is nothing wrong in Belhasa's proposal. They comply with our standard."