The government starts negotiation with an American com-Bany over setting up of the leghnaghat 300-450-megawatt power plant tomorrow, allegedly compromising over the quality of machinery mentioned in the original tender documents.

Allegation is also there that the negotiation with the company — AES Transpower Private Ltd. — would amount to missing a chance to get the plant installed at a lower cost, offered by another company when quality of machinery was being compromised.

Besides, the negotiation is going to be held allegedly in violation of the international competitive bidding rules, risking the image of the counUy.

The proposed power plant, a USS 280 million project, is scheduled to be completed in June 2000. Asian Development Bank is supposed to finance the project partly — USS 40 million in loans and USS 10 million in equity.

However, a total of five in-

ternational companies responded to a government invitation in June 1997 and all of them proved technically qualified' for the job. Of the five, the US-based AES eventually emerged as the lowest bidder.

Apart from offering the lowest price for power during the commercial operation period of the plant, the AES agreed to the government condition that it would supply power free of cost for an initial operation period of 10 months.

In its technical proposal, the company also responded positively to the government condition that it would use the gas turbines, the main machinery of a power plant, made of the German company ABB. or equal' quality equipment. Although. the company used the phrase equal' quality in its documents, the model of the turbine it quoted was GT13 E2 — a type which is exclusively produced by the ABB. It gave the government a clear impression that the AES had quoted price based on the ABB's turbines.

According to PDB experts.

there is stiff no -equal" to the ABB made gas turbine in the world. Besides, the AES is yet to clarify what it means by the equal type.

When the Issue was referred to the Cabinet Committee on purchase in February this year, the AES offer got the approval. But the committee resolved that there should be no ambiguity while negotiating with the AES'.

The committee clearly asked the Power Development Board that it had to negotiate with the AES on the following conditions:

1. The 10-month Initial Operation Period (IOP) cannot be reduced. During the period, the AES has to supply power, as promised in the tenaer documents. free of cost.

2. The AES has to use plant and machinery made by ABB.

The PDB duly informed the AES of the Cabinet committee decisions and the conditions.

In reply. AES told the PDB on in March that it would supply PDB estimated 1.395,632.250 kilowatt hour

power free of cost.

But the company requested to reconsider’ the condition relating to the manufacturing company of the gas turbine.

Stressing on the phrase ABB or equal', the AES pleaded that it be allowed to use turbines other than the ABB's.

It also argued that the government. according to the basis of Request For Proposal, is to purchase power, not any specific machinery.

The AES further said that 'if forced to buy equipment from any monopoly source", meaning ABB. it would "not be able to oiler the tariff" it had proposed earlier.

Besides, it came up with a fresh demand of advancing the originally proposed Commer-cial Operation Date.

The PDB found the reply Inconsistent with the purchase committee recommendations and considered the AES position to be unsatisfactory. The PDB wrote to the company again, which 'reaffirmed' its previous position in response.

PDB. at its board meeting.

decided to refer the Issue to the ministry for taking a correct decision'.

The ministry of power, energy and mineral resources referred the matter again to the Cabinet committee, with a note of secretary Tawfiq-e-Elahi Chowhdury supporting the AES arguments.

The Secretary’s note that secured the approval of the state minister for power, energy and mineral resources Just echoed the AES argument that said that the main objective of the government was to purchase power, not the machinery and equipment.

The Secretary also suggested to accept the fresh AES proposal to advance the commercial operation date, "if the company meets another condition of supplying power free of cost during the initial operation period".

The purchase committee on May 27 revised its previous decision. made on February 3, in favour of the AES. Earlier, at the outset the meeting, a minister - who is not a member of the

committee — dramatically entered into the meeting room to abuse the PDB officials for their ■failure to start negotiation with the AES". Some members of the Cabinet committee confirmed the incident.

Meanwhile. Marubeni corporation. the second lowest bidder, wrote to Prime Minister Sheikh Hasfna on June 4 alleging that the purchase committee had accepted AES’s proposal by relaxing the conditionalities against AES's deviation, "which is a direct violation of International Competitive bid-ding(ICB) rules/ RFP Conditions".

The Marubeni also said that that it was ready to "offer tariff equal to or even lower than the rate offered by the AES — if allowed to apply same conditions (i.e advancing COD/reducing IOP 10 months and altering the type of Gas Turbines) as adopted by AES. by violating RFP conditions of Megnaghat.

The Marubeni Is yet to get any response from the Prime Minister's office.