'We will remain conscious so similar problems cannot recur in future'
The state-owned Power Development Board (PDB) is still to appoint a contractor to build the Kaptai solar power plant, five years after the Executive Committee of National Economic Council (Ecnec) approved the project.
The prolonged setback has apparently resulted from indecisiveness over determining the production capacity, and a failure to comply with terms stipulated by the project’s lead financier, the Asian Development Bank.
Ecnec, on May 2, 2012, nodded the 7.4 megawatt (MW) facility. The first of its kind in Bangladesh, the plant will supply power to the national grid when it is finally constructed alongside the Kaptai Hydro Power Station in Rangamati.
PDB Chairman Khaled Mahmud conceded, however, that the project has become been mired in a procedural quandary. “We will remain conscious so similar problems cannot recur in future.”
“Usually, projects approved by the Ecnec get priority over other projects and are implemented relatively quickly,” the source said, seeking anonymity. “The opposite of what is expected happened in relation to this project due mainly to the authorities’ indecision”.
Initially, it was decided that the plant would have a 5MW production capacity. But, following a discussion with a consultant on June 4, 2014, the PDB brought changes to its plan and decided to raise it by 2.4MW.
As the project costs rose due to the increase in the capacity, the PDB in August 2015 sent its revised cost plan to the Project Evaluation Committee under the Planning Commission for its approval, but the committee declined to endorse it.
Although the PDB has now completed the financial and technical assessments in line with the revised plans and sent them to the Power Division – which will in turn forward the reports to the cabinet’s purchase committee for its endorsement – a contractor is still to be appointed.
Tender stuck in quagmire
On July 21, 2015, following the cabinet’s approval for purchasing the necessary equipment, the PDB sent a notification of award to TSK Electrónica y Electricidad SA, a Spanish engineering and industrial construction company selected for the project.
As per the draft agreement, TSK was required to pay custom duties and Value Added Tax (VAT). Before finalising the deal, the company, however, demanded the PDB pay the custom duties and VAT.
Terming the demand irrational as well as contradictory to conditions stipulated in tender documents, the PDB refused to agree on this, causing a delay in the agreement signing.
Later, citing the delay as a reason, the state-run organisation on March 3, 2016 cancelled the award notification and asked the project’s director to encash the performance guarantee.
But, a PDB condition stated that the performance guarantee could only be encashed if a deal was signed between them.
The authorities later formed a three-member committee to probe the matter and take actions against officials responsible for preparing a conditional deal for the project.
A fresh tender for the project was then floated on August 8, 2016.
The protracted delays with the Kaptai solar power plant are part of a broader malaise: the government has inked agreements to build more such facilities in a bid to reduce the country’s dependency on fossil fuel, but none of these have yet seen the light of day.
Experts say tariffs for solar power plants could have been estimated years ago had the Kaptai project been implemented on time.