Siddhirganj Power Project
Deal awarded thru' AL leader's influence
Lucky company represented by Abul's family firm
A powerful leader of the ruling Awami League has forced the
Electricity Generation Company of Bangladesh (EGCB) to issue a
notification of award of contract for a large power project to a
Spanish company without resolving first a vital financial issue
involving $ 20 million.
Spanish company Isolux Corsan that won the contract for Siddhirganj
450 megawatt power project wanted the EGCB to bear the cost of
mandatory spare parts worth $ 20 million of the power plant. As per
the tender's condition, the bidder's offer has to include the cost of
mandatory spare parts, which Isolux had not.
However, after last week's notice, Isolux informally told the EGCB on
October 17 that it would bear the spare parts cost, said a top EGCB
source requesting not to be named as he was facing "tremendous
pressure" over the project.
As per rules, before the issuance of such a letter of awarding a
contract, all financial issues must be settled.
Isolux won the project deal by offering $ 341 million for the job with
the World Bank financing it. The WB gave concurrence to Isolux's
selection a few months back although the company fell short in the
experience criterion of the tender.
Communications Minister Syed Abul Hossain's family company Sahco is
representing Isolux in this tender.
This is the second tender of the project. The first one was cancelled
over selection of a bidder-- also represented by Sahco-- that proposed
to use Siemens equipment when the project's financier the WB had
restricted use of Siemens equipment.
This time the problem arose out of the selected bidder's refusal to
bear the cost of mandatory spare parts.
An EGCB official explains, "In its financial offer Isolux had not
specifically mentioned the cost breakdown for mandatory spare parts.
The tender rules allow that if this is not mentioned, it would be
deemed that the price has been included in the overall cost. We have
accordingly notified Isolux."
But after the EGCB conveyed its deduction of the spare parts cost,
Isolux has been saying since May that its offer excluded this cost and
the EGCB must bear it.
As a standoff persisted over the issue, a powerful AL leader called up
the EGCB high-ups insisting that the notice be issued to Isolux
immediately.
In its notice on October 11, the EGCB said it assumed that the
company's price offer is "inclusive of all items of mandatory spare
parts." The letter also mentioned various clauses of the bid documents
that spell out what these spare parts were.
In the evening of October 17, Isolux informally agreed that it would
bear the cost.
A top official pointed out that if the company had refused to bear the
cost, the EGCB would have been unable to sign the deal.
The Daily Star contacted Communications Minister Syed Abul Hossain in
the morning of October 17. But before taking any questions, he said he
would call back. Ever since, he has refrained from responding to phone
calls or messages.
On December 23 last year, two Spanish companies -- Isolux and Cobra--
submitted bids for the project. Cobra, which is an experienced
company, made an offer $40 million lower than that of Isolux. But it
was disqualified on grounds of "incomplete" offer.
Officials said Cobras's errors were due to the short time allowed for
the bidding. The EGCB gave 60 days to submit bids whereas a project of
such size demands three to four months. Cobra and other interested
bidders had sought time extension, which the EGCB refused. As a
result, only two bidders participated in it, and Cobra's offer was
incomplete. On the other hand, Isolux had participated in the first
tender for the same project and was fully prepared for the second
round.
During evaluation of Isolux's bid, it turned out that the company did
not fulfil the experience criterion. The Tender Documents say a bidder
must have the experience of setting up at least one combined cycle
power project of 300 MW which has been commercially running for at
least two years. Isolux's documents showed that it had built a project
in Mexico which had a net capacity of 272 MW and had commercially run
for 21 months.
Despite this shortcoming, the WB relaxed the evaluation criteria and
approved Isloux's bid.
The first tender was floated in January 2009 with a WB condition that
it would not finance the project if any bidder using Siemens equipment
is selected. But the EGCB had picked a Chinese bidder using Siemens
equipment.
http://www.thedailystar.net/newDesign/news-details.php?nid=207652
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