A PDB official said a lobby led by an Awami League lawmaker with good influence on the government has pushed the PDB for the deal.

The entire financing of the project will come from a Japanese debt-relief fund.

"This business lobby wants the PDB to award the deal to a Japanese company that he (the MP) represents," said the official who wished anonymity.

Under the scheme, the contractor will refurbish three 33.5mw old generators of the Haripur plant at a cost of Tk 100 crore. The contractor will also install a 10 megawatt initial power generator involving Tk 10 crore, which will be used only to start up the main plant.

"The PDB built the Baghabari 100mw power plant in 2001 at a cost of Tk 128 crore," pointed out the PDB official.

Power industry sources said given the present cost scenario, a brand new 100mw plant will cost around Tk 150 crore to set up. "But as the Haripur plant site has already been developed along with necessary infrastructures, it may cost a bit lower than that," said an executive of a power company.

This plant is earmarked to retire completely in 2008 in line with the government's Power System Master Plan (PSMP).

Rehabilitating the project will hardly add a few more years to its life span, the official said, "this is just a waste of a good Tk 110 crore from the debt relief fund."

This is not the first time this business lobby has pushed the PDB to take initiative to spend money in the name of the Haripur power plant, according to sources. The PDB floated a tender in 1999, when the Awami League was in office, to expand the plant's capacity by 109mw by spending Tk 416 crore from a Japanese fund. The expansion project was originally conceived in 1991 and had become irrelevant by 1999.

This process went on even after the change of government although a Japanese study stated that it is much more cost effective to undertake a new project instead of going for the expansion.

Three bidders -- Marubeni, Mitsubishi and Mitsui -- turned up at the PDB tender for the expansion. At one point, allegations were raised that the project's consultant, Mott Macdonald, had taken the side of Marubeni. The local agent of Mitsubishi is also the agent of Mott Macdoland.

In 2002, the government had to give up on the expansion project due to scathing criticism, including those from the Economic Relations Division (ERD).

Sources said the same agent is now pushing for the latest deal.

However, a PDB high official defended, however, the process. "There are very few power companies interested in pursuing new power projects in Bangladesh." Without going into the reason for the 'loss of interest' of the power companies, he said, "We think the rehabilitation project is doable."