Four independent power producers (IPPs) may soon lose their contracts with the government because they have not mobilised the funds needed to set up the plants, which were to generate 368MW electricity, energy officials said.
“We have already sought the permission of the Power Division to cancel the deals for four power plants because the project owners have failed to meet the financial closing date,” a director of the state-owned Power Development Board (PDB) told the Dhaka Tribune yesterday.
The failure to make a financial closing essentially means that the project owners have not raised the funds required to build the plants, much less own and operate them – as they were expected to under the Build, Own, Operate (BOO) scheme.
A 108MW power plant planned for Gabtoli, Dhaka was to be built by Dhaka North Utility Company Limited.
A 108MW power plant was planned for Basila, Keraniganj and was to be built by Dhaka West Power Plant Limited.
According to their website, Dhaka North Utility Company Limited and Dhaka West Power Plant Limited are both sister concerns of Maisha Group.
A smaller unit – 52.20MW – was slated for Bhairab, Kishoreganj, to be built by a consortium of Aitken Spence Plc & Alliance Holdings Limited.
A 100MW wind-based power plant at Anwara, Chittagong was to be built by a consortium of PIA Group LLC and Bangladesh Alternative Energy System Ltd (BAES).
“After the approval of the Power Division, the IPP Cell under the PDB will serve final notices to the IPPs to cancel their contracts,” he said.
A PDB official said that PIA-BAES, owners of the wind energy power plant, deferred several deadlines to fulfil the conditions set out in the letter of intent (LOI) issued by the PDB on December 12, 2013.
The PDB recently sent a letter to the Power Division secretary seeking permission to cancel the LOI for the consortium to construct a 100MW power plant at Anwara in Chittagong.
The PIA-BAES consortium was scheduled to accept the LOI in 15 days after the issuance and deposit of a $1 million bank guarantee.
On November 14, 2013 the cabinet committee on government purchase approved a PDB proposal to allow PIA-BAES to set up the power plant and sell electricity to the PDB for 20 years on a no-electricity-no-payment basis, according to the letter.
The 50MW power plant at Bhairab in Kishoreganj, a furnace oil-fired power plant, was slated to be set up by the private sector, with the PDB purchasing electricity from the plant under a 15-year contract.
The other two power plant projects, at Basila and at Gabtoli in the capital, with a planned 108MW capacity each, were to sell power to PDB under 15-year contracts.
According to the contracts, the Dhaka North Power Company Limited and Dhaka West Power Plant Limited plants were scheduled to start commercial operations on October 10, 2012.
But the plants are far from producing power because they do not exist. The troubled IPP owners have not yet made their financial closings, leaving the future of the proposed power generation in uncertainty and prompting the PDB to cancel the move.
