Harbin Set to Get Chandpur Power Project
Legal flaws, hidden costs in PDB's draft deal
Sharier Khan
The draft contract for 150 megawatt Chandpur Power Project that Power Development Board (PDB) is set to sign next week with Chinese company Harbin contains hundreds of legal loopholes and hidden costs of $15.56 million, sources said. As in the case of Tongi power plant built by Harbin, the contract documents this time dropped 4,448 spare parts of 476 categories from Harbin's original offer. The documents resemble those of Tk 360 crore 80 MW Tongi power plant, which tripped over 75 times in one year setting a record of bad performance. "In other words, PDB is all set to sign and procure a junk like Tongi power plant," said one source. Experts who have scrutinised the draft contract said the documents hid a cost of $15.56 million in Harbin's bid. This means the company's original bid of $41 million will actually impose a cost of over $56 million on the PDB during the implementation period. The PDB had selected Harbin's bid as the lowest through an arbitrary process, triggering another Chinese bidder --CMEC -- to lodge formal complaints with the Implementation, Monitoring, Evaluation Department (IMED) of the government. The IMED dismissed Harbin's bid as it found gross violation of rules in it and asked the PDB to negotiate with the CMEC. But an influential lobby behind Harbin, which helped it bag the Tongi project and 90 MW Fenchuganj power project using political connections and sidekicks, succeeded in making the policymakers brush aside the IMED verdict. The PDB justified its flawed selection on the pretext of Harbin being the drastically lowest bidder. Its offer appeared to be about $11 million lower than that of CMEC. But the contract documents give a true picture of Harbin's deal and explains how Harbin comes up as the so-called lowest bidder every time. "The documents fail to provide essential information on equipment to be supplied such as the names of manufacturers and country of origin," said an expert who has reviewed the contract document. "By withholding information and deferring such critical issues using terms like 'later' in the contract documents, Harbin is making the PDB fall prey to its trap of signing an agreement with serious legal and contractual loopholes. A term like 'later' would be exploited by Harbin in supplying equipment of its own choice and of poor standard," he added. The statements in the documents reflect the connivance between Harbin and a section of unscrupulous PDB officials to legitimise the flawed bid on the pretext of low price while keeping provisions for supplying inferior products. The PDB in a statement on the Chandpur project identified at least more than a hundred types of essential spare parts of different categories, numbering at least 500, that are missing. The PDB estimate puts the price of the missing parts around $ 5.5 million. The actual number of missing spare parts however increases dramatically up to 4,448 on an analysis of the PDB's statement and technical evaluation of the Chandpur project, the sources pointed out. For instance, Harbin did not mention either the capacity or the origin of the compressor in the contract documents. This has a significant impact on the price. The company used the same trick in Tongi plant and supplied compressor of lower capacity and unidentified origin, and cheated the PDB of about Tk 20 crore. Harbin also did not mention the names and origin of the manufacturers of air-filters. It had installed poor quality air-filters in Tongi plant, which had been causing frequent closures. The Chinese company also refrained from giving the name and origin of the manufacturer of transformer, a vital and expensive equipment for a power plant, and which can cause maximum outage due to its poor quality. A prime example of inefficiency, poor machinery and corruption, Tongi plant was shut down for more than 2,933 hours between August 24 last year and April this year. In terms of money, this made the PDB incur a loss of over Tk 40 crore for being unable to sell power from the plant during this period. Of all the sub-standard equipment installed by the company, the PDB has singled out an inappropriate Gas Booster Compressor (GBC) as the major cause of the problem. But the company would not change these faulty machinery, neither would the PDB penalise it. The Cabinet Purchase Committee on January 1 approved the Chandpur bid of Harbin in violation of the Public Procurement Regulation (PPR) 2003 that upheld the IMED's authority to give a verdict through an independent review committee over any procurement in case of a dispute. The Chandpur issue is the only one that was formally reviewed by the IMED's committee as per the PPR. Meanwhile, following the purchase committee meeting, its Chairman Finance Minister M Saifur Rahman told the press, "The company (Harbin) that got the deal will do it for Tk 86 crore less than the next bidder. Why would we pay more?" Harbin has been receiving unusual favours from the alliance government all along. In its second deal for the 90 MW Fenchuganj plant, the company got an exceptional treatment from the purchase body that allowed it around Tk 50 crore or 10 percent advance down payment for implementing the project. The government had restricted such down payments from 2003 and Harbin is the only exception in this regard. The business lobby backing Harbin admitted to The Daily Star how they spent money generously behind a section of officials, including those of the PDB and the power ministry, and also some policymakers and influential politicians at the 'alternative centre of power' of the government.
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