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Not AL, coalition govt signed Niko deal

Sharier Khan
Upon coming to power the BNP government cancelled or renegotiated a number of faulty deals signed by the previous Awami League (AL) government, but it did not stop finalising the faulty Niko-Bapex joint venture deal against the will of its own energy experts.
Contrary to what adviser to energy ministry Mahmudur Rahman and his predecessor AKM Mosharraf Hossain are saying, the Niko-Bapex deal was not signed during the Awami League regime, but during the present regime in
October 2003, flouting all rules and regulations.
Last week, Mahmudur Rahman told the parliamentary standing committee on energy ministry that the previous AL government signed the Niko deal. He even produced a document showing the then prime minister Sheikh Hasina's signature, which confused the members of the standing committee.
The document, signed by Sheikh Hasina on June 6, 2001, was actually an approved "Procedure for development of marginal gas fields."
The AL government indeed
initiated the Niko deal by okaying a framework of understanding (FoU) in 1999. A FoU does not allow Niko to have access to three gas fields, which was awarded to it through a joint venture agreement between Niko and Bapex in October2003.
In addition, the BNP government took away the three gas fields of Feni, Kamta and Chhatak from two gas companies of Petrobangla, without paying them any compensation. These fields were placed under Bapex so that Niko can have access to them through the joint venture.
Mahmudur Rahman argues that the FoU had compelled the government to sign the deal. ButtheFoU did not dictate any legal obligation for the state. It is not even an agreement and it does not give any legal premise to anyone for arbitration. It is the most primary framework for two parties to proceed towards a certain direction. In addition, Bangladesh had no diplomatic or political obligation to Canada over this deal as well.
In contrast, the BNP government did not hesitate to cancel the Memorandum of Understanding (MoU) for two Di-ammonium Phosphate (DAP) Fertiliser Projects with China and Japan, both of which were signed during the AL regime. A MoU is far more advanced than a FoU in any business because it is followed by initialling an agreement.
Despite the justification, the cancellation of these state-to-state deals had instantly affected BangI adesh-J apan and Bangladesh-China relations. For the sake of the relationship with Japan, the country's biggest bilateral donor, the government reopened the DAP project in late 2003 while the Chinese DAP deal has remained scrapped.
The Japanese aid flow is still suffering due to the cancellation, which Japan views as an instance of 'dishonouring' state-to-state agreements.
On the other hand, the Niko deal did not give Bangladesh any justifiable benefit. In fact, the Niko-Bapex joint venture deal that was initially outlined by the AL government was even better than the deal the current government ultimately signed.
The original draft of the Niko-Bapex deal as okayed by the-then prime minister Sheikh Hasina had the option for "Swiss Challenge".
Under the Swiss Challenge system, Niko-Bapex's unsolicited deal for three gas fields would have been put for an open tender for a better financial offer from any other oil company. The option of Swiss Challenge was incorporated to legitimise the unsolicited nature of the agreement.
But Niko was not interested in Swiss Challenge -which could have helped Bapex secure a better deal with a better oil company. The current BNP government dropped this option along with some other contractual issues, undermining the national interest, and signed the contract in 2003.
That the government holds the sovereign right to cancel a contract even at the final stage has been demonstrated by cancelling the bid for 450 megawatt Sirajganj Power project in early 2004. This bid went to Summit Power and it was okayed by the Cabinet Purchase Committee and the World Bank and other multilateral donors were funding the project when the government cancelled it without showing any reason. Such decision was driven by an anti-Awami League mindset, although the government knew this would jeopardise the future power supply.
There are other instances where the government cancelled or retendered shady deals signed during the Awami League regime.
For instance, the BNP retendered the submarine cable project signed during the Awami League government with SingTel.
The government also cancelled the faulty contract to launch obsolete Personal Handy Phone System in the country.
A number of power projects including the 210 megawatt Khulna plant, 20 megawatt Bhola plant and
Ghorashal Power plant modernisation project have also been shelved.
But on the other hand, like the Niko contract, a number of faulty projects have been given go ahead. The government also did not take any action against any bureaucrat and politicians involved in corruption, although in a white paper it named 40 different projects and purchases which were done through corruption.
The Niko contract was pushed by AL government's energy secretary Dr Towfiq-e-Elahi Chowdhury while it was present law minister Barrister Moudud Ahmed facilitated it as Niko's adviser during the AL regime. After 2001, ex-state minister for energy Mosharraf Hossain pushed the deal to the extent that on behalf Prime Minister Khaleda Zia, he signed the government's approval in October 2003.
The Daily Star previously reported that some powerful young policymakers belonging to the 'alternative powerhouse' of the government are backing Niko and even had business stakes in Niko's Tengratila operations.
Following the second round of Tengratila blowout, Mahmudur Rahman had formed three committees. All of these committees are clear about Niko's incompetence and the faults in the Niko deal.
In addition, all the country's energy experts among other people have demanded cancellation of the Niko contract. But so far the government punished Bapex officials and threatened Petrobangla officials for not watching over Niko. Mahmudur has defended the deal saying that Niko's presence is necessary to finish the remedial works in Tengratila.