The Power Division is likely to award Bibyana-1 power project to Kingdom Holding Company owned by Saudi prince Alwaleed Bin Talal Bin Abdulaziz Al Saud in an unsolicited way, officials said.
They said that the company recently submitted a proposal for installation and operation of a combined cycle power plant at Bibyana in Sylhet.
The Saudi company offered around 4 US cents or Tk 3.2 a kilowatt-hour (unit) ($1=Tk80) of electricity at which Bangladesh Power Development Board would buy electricity from the company, a Power Division official told New Age.
He said that The Prime Minister’s Office instructed the Power Division to scrutinise the proposal for setting up a 341-megawatt gas-fired power plant at the location of Bibyana-1 power project as a replacement of its first sponsor Summit Power.
The decision came after Summit had surrendered the project at a meeting with Power Division and Power Development Board on June 18 due to its failure in arranging the finance for implementing the project, a Power Division official said.
Saudi prince Alwaleed expressed his interest in investing in power sector in response to a request from prime minister Sheikh Hasina for more Saudi investment in Bangladesh’s infrastructure, power and energy, tourism and hospitality sectors during his brief visit in Dhaka on June 10.
The Power Division official, however, said that they were worried over the ‘future’ of the project as the Saudi company did not have any experience of installing and operating power plants.
He said that Summit failed to confirm the Power Division with the sources of finance for implementation of the project by February 12, which was the deadline for the task.
Summit was awarded the Bibyana-1 project along with two other projects, one at Bibyana and the other at Meghnaghat, through a bidding process.
On May 12, 2011, PDB signed a power purchase agreement with Summit as per which PDB would buy electricity at 3.322 US cents or Tk 2.66 a unit for 22 years from Bibyana-1 power plant.
But it could not arrange the financing for the projects as initially expected, as the World Bank that had pledged the government Partial Risk Guarantee (PRG) two years ago did not provide it. The PRG makes bank loans easy for the project implementers.
Summit Group chairman Muhammed Aziz Khan, however, claimed that his company would complete the project in due time—June 2013—if the government would hand over the land on which the company would set up the power plant.
‘But if the government would arrange other sponsor for the project we would not stand in the way,’ he said.
A PDB official, however, said that there was no relation between financial closure and handing over the land to the sponsor.
The government was trying to find out a ‘safe’ exit from the contract with Summit for Bibyana-1 project to avoid legal complexities, a Power Division official said.
Summit has arranged finance for implementing a 335MW-power plant at Meghnaghat in Narayanganj but still could not sign any deal with financing institutions for implementing the Bibyana-2 project.