The government in a "controversial move" Sunday instructed the Rural Electrification Board (REB) to sign within three weeks a contract with a Japanese company for the second phase of the 60 MW power plant in Mymensingh.

"The Energy Ministry had to issue such a, controversial instruction to REB under directives from higher authorities", said an official source. Il is part of the government's crash programme to increase power generation. he said

Ironically, the first phase of the 60 MW project, initiated in late 1994. is yet to be completed. “The ministry did not take any

step to complete that project." the source said.

The government has also outlined that the budget for the second phase would be in line with the first phase. "In this case, the countiy will lose about 22 million dollars due to a wrong decision because the price of power plants has gone down drastically since 1994-95". the source said.

Rural Power Company (RPC), a holding company of REB. started the first phase work of the 60 MW plant with Asian Development Bank (ADB) finance after an unusual delay. A Japanese company. Mitsui, started work on the project on

lurn-key basis.

Laie last year, when the two 35 MW power generators were being transported to Mymensingh in a barge, the barge got stuck up in a shoal. The barge has not been salvaged.

Now. the Ministry' has instructed REB that the contract for the second phase of the project should also be signed with Mitsui, keeping the cost in line with the first phase. The negotiations will be held on unsolicited terms, the sources said.

The cost of generators for the first phase was 47 million US dollars.

Another source said that the Power plant

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Power Development Board (PDB) had purchased a power plant of same configuration from a French company at a cost of 25 million dollars, some 22 million dollars less than the price of RPC's generators. PDB is currently installing the generators at Shahjibazar.

"It is true that the total cost of PDB’s Shahjibazar plant will be lower than RPC's My-mensingh project because all infrastructure facilities including transmission lines are already there at Shahjibazar. At Mymensingh, RPC has to develop infrastructure for the project." the source said.

"Moreover, the RPC has no study-on the infrastructure facilities to be built for the second Shase. Yet. the Energy Ministry as confidently instructed REB and RPC to sign the second phase contract with the same company within three weeks." he noted.

The second phase has been scheduled to be completed within 15 months of signing the agreement, the source added.

REB will raise the equity portion of the project’s finance by increasing its shares in the RPC and the number of rural electrification associations, which are its subscribers. The loan portion of the project cost will be arranged through credit from commercial banks or donors.

The government has however emphasised arranging the credit from commercial banks for implementation of the project "urgently".

“This is clearly unfair." commented a source. "A committee with representatives from REB. RPC and PDB was formed earlier to study these projects first. But the study has not yet been completed. The PDB representative in the committee strongly opposed this because the second phase is costlier than any other similar project."