Uncertainty continues to dog the government’s plan to add 383MW of electricity to the national grid from Bibiyana South Power Plant, slated for completion by December this year.
One of the contractors, Isolux Ingenieria SA of Spain has delayed construction of the plant citing a number of reasons, including security-related concerns raised after the Dhaka Attack on July 1.
The Dhaka Tribune has discovered that the company may have other reasons for pulling back from the project – Isolux Ingenieria’s mother company Grupo Isolux Corsan SA filed for Chapter 15 protection in a New York bankruptcy court on July 29.
A 2 billion euro debt-restructuring deal has since been approved by the Madrid Mercantile Court to begin the process of getting the company out of insolvency.
The power plant is the first of its kind being constructed by the Electricity Maintenance and Development Fund, a fund created by money raised through consumers’ electricity bills.
A condition tagged by the Bangladesh Energy Regulatory Commission (BERC) to the 2012 electricity price hike in 2012, required distribution companies to deposit a portion of revenue from electricity bills to be paid into the fund for the development of the power sector.
So far, Tk6,000 crore has been deposited into the specialised fund.
On December 15, 2014, the Power Development Board signed a contract with Isolux Ingenieria SA of Spain and Samsung C and T Corporation of South Korea to construct the 383MW gas-based combined cycle plant in Habiganj.
The joint venture of Isolux and Samsung were to work as an engineering, procurement and construction (EPC) contractor at a contract value of $288.26 million. The project cost was estimated at $322.96 million, while the value of the EPC contract was set at
Isolux Ingenieria SA of Spain and Samsung C and T Corporation of South Korea won the contract to jointly construct the plant, which is being implemented by the state-owned Power Development Board (PDB), under the Ministry of Power, Energy and Mineral Resources.
Isolux, in its communications with the PDB, has explained its failure to work as the result of the company’s security concerns. The company has written to the project director of the power plant expressing disinterest in the job citing security reasons.
The Power Division has asked the PDB to blacklist the company for future projects and is now suggesting moving forward with the project with Samsung C and T as the sole contractor.
The PDB has asked both companies to discuss the issue between themselves and to report to the PDB within a week.
If Samsung C and T does not want to take up the responsibility alone, the PDB will call for fresh tenders for the project.
The power plant’s project director Khorshed Alam told the Dhaka Tribune that Isolux Ingenieria had submitted invoice bills but had refrained from work on the project without valid reason.
“Currently there are no security issues. The government has deployed a sufficient number of Ansar and police to the site, but the company is not coming to work,” he said.
“This has resulted in an unwanted situation. We have money but cannot construct the plant because of failure of this company; nothing could be more disappointing,” Prof M Shamsul Alam, energy affairs adviser to the Consumers Association of Bangladesh (CAB), told the
Power plants take a long time to build, but the situation at Bibiyana South is unique, he said.
He called on the PDB to resolve the issue as quickly as possible.
“I was not informed about this matter. However, I will get information about the project and ask the PDB to complete the construction soon. Negligence with public funds will not be tolerated,” Bangladesh Energy Regulatory Commission acting chairman Md Maksudul Haque told the Dhaka Tribune.
The project’s simple cycle unit was scheduled to come into production in December 2016 and the combined cycle unit in June 2017.
The gas-fired combined cycle power plant project’s total net generation capacity will be 383.51 MW through a combination of simple cycle and combined cycle units.
The electricity production cost in the project will be Tk1.13 per kilowatt hour (kWh) considering the plant factor at 85%, while the power tariff has been estimated to be Tk4.70 per unit. The project’s lifetime has been fixed at
The power plant will consume around 60 mmcfd gas which will be supplied from Bibiyana gas field.