BD govt turns down WB proposal on small power plant projects

Released on = April 8, 2006, 10:18 am

Press Release Author = Patricia Ovemarrie, News2006

Industry = Media

Press Release Summary = The Bangladesh government recently declined to accept a
World Bank (WB) proposal to allow foreign companies along with local ones to set up
small power plants (SPPs).

Press Release Body = The Bangladesh government recently declined to accept a World
Bank (WB) proposal to allow foreign companies along with local ones to set up small
power plants (SPPs).
WB Country Director Christine Wallich in a letter early last week requested the
power division to include foreign investors to take part in the bidding for SPPs,
slated for local private entrepreneurs.
However, Minister of State for Power Iqbal Hassan Mahmud, in a reply sent last
Thursday expressed the government\'s inability to accept the WB suggestion.
\"There is no scope for the inclusion of foreign companies in the SPPs because as per
independent power producer (IPP) rules we have to facilitate the local investors\",
Mahmud said while talking to the FE Friday.
He also said the SPPs have been initiated to encourage the local entrepreneurs to
make investment in the power sector.
Wallich, in her letter said that the Bank might withdraw its future lending to the
country\'s power sector, if the government failed to comply with its proposal.
Recently, the WB assured the government of its financial assistance for the
installation of two power units in Siddhirganj each having 150 megawatt (MW)
capacity and yet another one at Sikalbaha with the same generation capacity.
The WB official in her letter also expressed deep concern over the tendering process
being followed in the case of power projects.
Power Ministry sources expressed the fear that WB might have brought all those
issues with a view to avoiding financial assistance to any power projects in the
The WB felt that the power division should accept bids from both local and foreign
companies for SPPs for the sake of transparency in their implementation.
Mahmud, however, said the division has been maintaining transparency in the bidding
process in accordance with the IPP rules.
The WB also urged the power division to ensure transparency in the evaluation of
bids for SPPs.
The WB would release its fresh credit to power sector soon, if the government could
ensure transparency and participation of foreign companies in the bidding process
for the SPPs, the letter said.
Earlier, the WB suggested the government to ensure transparency in the bidding for
barge-mounted power plants and SPPs. Otherwise, the WB warned that its future credit
to the power sector might not be forthcoming.
The decision to set up SPPs in the backdrop of mounting power shortage in the
country was taken two years back. But due to bureaucratic delays and interference by
influential quarters, no SPP could be implemented.
Under the programme, local private entrepreneurs will be allowed to set up 10 small
power plants, each having capacity between 10MW and 30 MW.
Of which, two will be established at Feni and one each at Comilla, Mirer Sharai,
Rupganj, Ullapara, Narsingdi, Maona, Tangail and Habiganj.
The WB agreed to provide financial assistance to the SPPs under Build- Own- Operate
(BOO) method.
Some 73 local firms have already submitted bids for first phase of this project. Out
of those, 40 have been short-listed.

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