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HC Injunction Against Audit to Unearth Graft

Govt may lose 60m euro German grant for power

Sharier Khan
Bangladesh is on the verge of losing a German grant of 60 million euro earmarked for two power projects of the Rural Power Company Ltd (RPCL), as a High Court (HC) injunction has stopped a German audit to unearth corruption in die projects.
The deadline for a decision on this grant, which is tagged with a condition of this audit, expires today.
According to the Economic Relations Division (ERD) sources, the government expects Germany to extend the deadline till the sixmonth HC injunction expires in June.
"We have not formally requested
Germany to extend the deadline yet, but we hope this grant will not be cancelled," said an ERD source.
While the government was willing to cooperate with Germany in this regard, a business lobby involved in the corrupdon has so far succeeded in stopping die audit as well as deteriorating die government's relationship with Germany, said an official.
Germany provides grants and loans in health, private sector development, power transmission and solar power.
'Hie business lobby that dominates all affairs, of die RPCL through its German consultant, Lalimayer Bangladesh, apparendy convinced a section of government policymakers
to ditch German aid, be it a grant or loan.
"The RPCL is now resorting to raising funds from the Palli Bidyut Samities (PBS) and has approached the Islamic Development Bank (IDB) to finance two over-priced projects to be awarded to a particular company on a term that will favour the business lobby only," said an RPCL source.
Following a report in The Daily Star in January last year on corruption in the German funded first phase of 450mcgawatt Dhaka North Power Project (DNPP), the German government made an initial review and recommended that an auditor should independendy review the RPCL's project.
It was found that the local agent of Lahmeyer illegally attends the RPCL board meeting and influences decisions.
With cooperation from the ERD, German auditors were all set to visit Dhaka in November-December to review the documents of the DNPP and another German funded RPCL project- the Mymensingh 70mg third phase project.
The RPCL that had been vehemently opposing the audit, at one point announced that it would not use German fund for the project.
As the arrival of the auditors became imminent, one Md Haideruzzaman, claiming himself to be a prospective industrialist, filed a petition at the HC saying that the audit has "made the DNPP uncertain". On November 21, the HC imposed injunction against the audit.
Before the injunction's January deadline came to a close, another petitioner in December obtained a fresh HC injunction for six months. But the ERD informed Germany of this injunction only recently.
Meanwhile, the RPCL secretly went ahead with its own plans to award a contract to Swiss company Alsthom, to set up the first phase 280mg plantunderthe DNPP.
The local agents of Lahmayer and Alsthom belongs to the same business lobby.
This unsolicited contract with Alsthom, signed in October last year, outlines a very high cost of Tk 1000 crore and violates the private power policy and the Prime Minister's Office's specific directives.
In contrast, the 450 mw AES Meghnaghat Project was set up at a cost of Tk 1200 crore (at present exchange rate of dollar) which offered a power tariff of Tk 1.7 (2.79 US cents) per kilowatt hour.
But Alsthom seeks a tariff of Tk 2.2 for the same. Besides it suggests that the tariff will increase by
4.5 percent per annum in tandem with currency fluctuation and the consumer price index while payments are to be made in Euro.
The project's funds will come from 15 Palli Bidyut Samities (PBS) or rural consumers. Only a part of it may be derived from the IDB.
"This process will simply make the rural people pay undue money to benefit a business lobby," observes a source.
Like in all other projects of the RPCL, Lahmayer is the project's consultant. Lahmayer was hired unsolicited on costly terms from the first RPCL projectthe 70mw Asian Development Bank funded Mymensingh phase-1 project. Then it was hired for Mymensingh-2 and 3.
When it was again hired for the DNPP, the ADB categorically brought allegations of corruption in it.
Lahmayer is also hired as the Operation and Maintenance (O&M) contractor for all the RPCL power plants. For two phases of the Mymensingh projects that generate 140mw power, Lahmayer gets 7 million dollars for O&M annually.
Yet, in case of the 115mw Baghabari projectBritish company Midland Power had offered 1.5 million dollars only. Even the O&M costs of 450mw Meghnaghat and 360mw Haripur projects are much lowerthan the Lahmayer's.
RPCL's parent organisation REB defends the costly operation of Lahmayer and the high cost of any of the RPCL's projects saying, "It is a very qualified company and all the RPCL plants are of very high quality. Quality always asks for better price."
So far the government has taken no action against RPCL's for its corruption or violation of the national policies in pursuing the DNPP.
Donors, led by the World Bank, have expressed concern at the opaque dealings in the RPCL.