The IFC of the World Bank group in a letter to the power secretary on August 3 suggested that tenders for Meghnaghat-3 and Sirajganj 450 megawatt Independent Power Projects (IPPs) may be floated in February 2008 with the aim to sign agreements in September the same year.

The Asian Development Bank (ADB) which is technically assisting the government regarding these two projects plans to complete awarding contracts for these by May 2008. The sites, major infrastructures and some tender documents for both the projects are already there for a quick tender.

But arguing that simultaneous tenders for multiple large power projects will not generate bidders interest, the IFC wants to initiate the brand new Bibiyana 450 MW power project from August 15 with the aim to sign agreement by April next year.

The idea of Bibiyana power project is completely new and it emerged after US oil company Chevron developed Bibiyana gas field with a gas processing plant to supply 600 million cubic feet gas per day (mmcfd). As the present gas transmission system does not allow evacuation of a good share of this capacity, the IFC came up with the idea that a 450 MW power plant may be built near the gas field.

The site for this power plant has not yet been marked or procured and there is no power infrastructure to evacuate the power to be generated by the new plant.

Yet, the IFC wants the government to have this power project set up first. It has even pushed the government to hold a "road show" for Bibiyana power project beginning on August 14 at the expense of the government. The first show will take place at Radisson Hotel on the 14th, followed by a show in Dubai on August 15 and another in Singapore on August 17.

Sources said preparations are on to hold this road show though the idea has surprised most officials.

"Road shows are meant for uncertain projects like oil and gas exploration bidding, and not power projects. Power projects have high degree of certainty. And if IFC is so enthusiastic, why doesn't it hold road show itself? Why waste government money?" said an official.

But the IFC gives its own argument. In its August 3 letter, IFC's Chief Investment Officer Denise Leonard says "Having three transactions in the market at the same time is going to create less competition. From our discussions with about 60 regional power companies, we have concluded at this point of time, only 3-6 companies are solidly to moderately interested in Bangladesh's IPP market."

The IFC letter reinforced its argument saying that floating three tenders at the same time will confuse the market.

The letter also said that in the recent past, the country's reputation of transparency has been significantly damaged and it has to be restored. The sector's reputation will not be restored until at least one solidly transparent project is successfully done. It would be better to focus on achieving that goal with one transaction, it said.

But such a claim is contradicted by officials. "Back in 1997-98, we floated both Meghnaghat-1 and Haripur 360 MW power projects plus four barge mount power projects. There had been huge response. In fact some companies like the AES found it comfortable to submit bids in multiple projects," said an official dealing with IPPs.

"Surely if we float Bibiyana project's tender, we can't expect much bids. Bibiyana is far from being ready for tender floating now. But, if we float tenders for Sirajganj and Meghnaghat projects now, we can expect up to 20 participants," he said.

"Once we have the ADB or the IFC technically assisting us in power projects, that should automatically increase bidders' confidence about transparency," another official noted.

"We expect the IFC to assist us fairly. But this seems like the IFC is eager to help Chevron on a priority basis. Our power crisis is getting the low priority here," the official added.

Sirajganj power project would have come up by now. But the Khaleda Zia government cancelled the first successful bid of this project in early 2004 as it was going to Summit Power, which Khaleda considered a company sympathetic to the Awami League.

Follow up bids for this projects were being modified in such a way that certain over-night power companies belonging to the BNP sympathisers might bag the project.

Meghnaghat-3 power project also saw similar dealings by the Khaleda government during 2004-05. The government desperately tried to award contract for this project to an unknown company -- Cadogan-Manning which was basically a shell company of Bashundhara groupthrough unsolicited negotiations.

As these moves failed to yield any result, both the projects were delayed. The caretaker government took a fresh initiative a few months back to place both the projects under the ADB consultancy so that proper bidding can take place where investors would really be interested to participate.