Sirajganj power project set to be revived

PDB primarily accepts Summit proposal on the 450MW project cancelled by BNP-led govt

Sharier KhanThe Power Development Board has primarily accepted a proposal of leading local power company Summit to revive the 450-megawatt Sirajganj power project, which the last BNP-led alliance government had cancelled in 2004 without any explanation.

Reviewing Summit’s proposal, the PDB said Summit had modified its past proposal. Except for one or two issues in this modification, the PDB believes Summit’s proposal is acceptable. Technical details on this proposal may be finalised when a contract between the PDB and Summit is signed.

The Sirajganj power project was the first public-private partnership power scheme when its tender was floated in October, 2002. The PDB would have had 40 percent stake in this project.

The PDB sent its review of the Summit proposal to the power ministry two weeks ago. The power ministry has primarily opined that there was a gas crisis in Sirajganj and the PDB should ask Summit to implement this project by installing a “dual-fuel” system without changing the power tariff.

However, installing a dual-fuel system that enables a power plant to run on both gas and petroleum fuel, increases power plant cost between 10 and 20 percent.

Summit had submitted the revised proposal in October last to the prime minister expressing its willingness to build this gas-fired plant in partnership with the PDB, offering its original 22-year-levelised power tariff of US 2.78 cents per kilowatt-hour.

This tariff offer is at par with the AES Meghnaghat project, which is considered having one of the world’s lowest tariff.

The price offer, equivalent to only Tk 1.94 per unit, pleased the authorities as all recent power-tariff offers in different tenders have hovered between Tk 2.6 and Tk 14.

A top PDB official notes, “If they can deliver power from this plant at this price, this will be simply be very positive for us.”

“We believe the on-going global recession provides a window of opportunity for Bangladesh and also to Summit to be able to implement this project at such low tariff,” said Summit chief Aziz Khan.

Aziz implies that the machinery cost for power plants has decreased due to the recession. But some experts say machinery price had gone down in 2007-08 but prices are soaring again.

As a single bidder, Summit had won a bid to build this plant when the tender process was completed in November, 2003. The-then cabinet purchase committee had approved it in March, 2004.

But the-then prime minister Khaleda Zia had cancelled the bid in mid 2004. After that the Power Cell of the power ministry had re-tendered this project but failed to bag any practical offer in the last six years.

In this context, Summit expressed to the prime minister its interest to revive the project in the light of the cancelled bid. When it was forwarded to the PDB, the power board sought some clarifications and Summit gave its explanations.

Summit’s proposal outlines a few changes. The first change is changing the power plant configuration to 350-450MW instead of the 450MW.

Regarding this, the PDB observed that when the first tender was floated, there was no power plant at Sirajganj. Presently a tender has been floated to set up a 150MW plant there. In this context, PDB opined that Summit’s proposal of 350MW plant could be accepted. This would not affect the power tariff as it is calculated on the basis of per kilowatt-hour, not on the total power production capacity.

Summit also proposed to change some machinery configuration. The PDB noted that risk of changing this configuration was on Summit. If such change affected power generation, Summit would be liable to pay compensation. At the same time, the new configuration was more energy efficient and it would save gas.