• Tuesday, Sep 25, 2018
  • Last Update : 05:16 pm

Khulna power plant in limbo as Chinese constructors fail to provide funds

  • Published at 11:32 pm June 20th, 2018
power-plant
File Photo

'The authorities will be asked to take final action against the Chinese bidder once the deadline had passed'

The construction of a 330MW power plant in Khulna has been put in jeopardy as the Chinese consortium contracted for the build has failed to deliver the necessary funds.

With no progress made on the project, the contract signed only 18 months ago by the government and Chinese firms Harbin Electric International Co Ltd (HEI) and Jiangsu Etern Co Ltd now faces termination.

Of the project’s total cost of $400 million, the consortium was supposed to provide 85% of the cost through Chinese Exim Bank. The remaining amount would be financed by the Government of Bangladesh.

However, in the 19 months since the contract was signed, the consortium only managed to prepare a draft loan agreement, which the Bangladesh government sent back to the bank after approving it with some amendments.

According to official sources, the issue of the Chinese consortium’s failure was widely discussed in a review meeting of the Power Division presided over last month by the state minister for power and energy, Nasrul Hamid.

The meeting resolved to cancel the contract with Harbin Electric International Co Ltd (HEI) and Jiangsu Etern Co Ltd if they failed to arrange the promised loan from the Chinese Exim Bank within two months.

Following the decision, the state-owned Power Development Board (PDB) sent a letter to the Chinese consortium on 10 June, giving them 10 days to arrange the funds.

“So far, we don’t have any information that suggests that the Harbin- Jiangsu consortium will be able to make the financial closing by June 20,” Project Director Jotirmoy Halder said.

“The authorities will be asked to take final action against the Chinese bidder once the deadline had passed.”

On Wednesday marked the final day for the Chinese consortium to come good on the contract, which was signed on November 17, 2016.

Under the agreed terms, the plant’s simple cycle unit was to be set up within 15 months, and its combined cycle unit within 30 months.