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CHANDPUR POWER PLANT

Harbin's $41m offer declared void

SHARIER KHAN
Responding to a formal complaint, a government review panel for the first time severely grilled the Power Development Board (PDB) for grossly violating all rules and regulations in the tender for the 150 megawatt Chandpur Power Plant, rejecting PDB's selection of Chinese bidder Harbin.
On Tuesday, a three-member review panel of the government's
Public Procurement Regulation (PPR), under the Implementation, Monitoring and Evaluation Division (IMED), declared Harbin's offer of $41 million for the plant as informal and void. Harbin's offer, which PDB showed as the lowest, did not have any technical proposal.
The Panel noted that the power division secretary, PDB chairman and the project's director lacked professionalism in the way it handled complaint letters from the bidders. Coupled with this, the PDB's illegal practices “do not uphold the national image”. If they were professional, the officials could have handled this complaint themselves and saved national prestige.
The Daily Star had been reporting on the highly irregular handling of the PDB in selecting Harbin in this bid. Harbin was earlier given the contract of the 80 mw simple cycle Tongi plant, which has been stumbling from the beginning of operation from earlier this year, and the 90 mw Fenchuganj combined cycle plant, for which Harbin does not have the necessary experience to qualify as a contractor.
The CMEC on September 29 filed the first ever complaint under the PPR to the review panel following a series of complaint letters to PDB, the power ministry and the Prime Minister's Office (PMO). None of these offices responded to these complaints.
The panel, headed by ex law secretary Mohammad Asaduzzaman, ordered the PDB to immediately start negotiations with the first available, lowest and technically compliant bid of another Chinese company, CMEC, which quoted a price of $56.68 million.
This negotiation will be completed within two weeks and the PDB will take another two weeks for the final signing of the contract, the panel said. PDB's ex chief engineer, CJ Kabir, and FBCCI ex vice president Abul Qasem Haider are the two members of the panel.
In case the negotiation with CMEC fails, the PDB will negotiate with the second lowest bidder, Indian Bhel, which quoted a price of $63.69 million, the panel said.
But PDB is not allowed to hold a retender of this project as the first option, because it is already holding two technically compliant offers and there is no guarantee that a re-tender will bring down the price level or that there will be enthusiastic participation of bidders.
“There is no guarantee that it will be possible for BPDB to overcome by then, the lack of transparency, in yet another tender evaluation process that will follow, which could frustrate the administrative system and result in another re-tender,” it said, citing the example of the 90 mw Fenchuganj power project, which was awarded to Harbin through a fifth re-tendering.
Re-tendering will also delay the project implementation by a year, the cost of which will outweigh the cost of unserved power.
The PDB has also been asked to pay Tk 3 lakh, as per the PPR, to CMEC for expenses for the review.
On rejecting the PDB's Chandpur bid evaluation, the panel declares, “The recommendation of the TEC (the PDB's technical evaluation committee) and its sub-committee, being far from transparent as well as lacking direction, professionalism and respect for law, are hereby rejected.”
The TEC is blamed for producing an erroneous and misleading tender evaluation report and PDB must initiate a departmental investigation and actions against the culprits.
On canceling Harbin's bid it notes, “With the given option to choose between the rules and regulations and apparent financial benefit shown in arithmetic that may be derived by accepting an irregular tender, the PPR Review panel has no hesitation to uphold the law of the land and classify the HPE offer… as informal and void.”
The panel recommended that the members of the PDB's technical committee and subcommittee should undergo further training in handling procurement procedures at the Central Procurement Technical Unit
of the IMED.
The PDB should immediately dissolve the current tender evaluation committee for misleading the board and higher authorities, with an erroneous evaluation report concerning a major infrastructure project.
The panel also observed that half a dozen press reports on the project came out, but “not a single befitting rejoinder was published by the PDB on the allegations reported. There is no satisfactory answer to this question. It asked PDB to evolve a system of regularly informing the truth through press releases on sensitive issues,” it read, adding, “This will help improve the image of BPDB in public, which is needed so badly to uphold.”
In the June 28 bid, Harbin filed a bid beating its nearest competitor CMEC by $11 million and Indian competitor Bhel by $24 million. But as required, Harbin did not submit any technical bidmaking its offer invalid. Yet the PDB's TEC accepted the offer.
The panel observes, “This irregular action neither conforms to the PPR 2003, nor BPDB's own regulation and practice.”
To cover up this major flaw, the project's director on July 9 sought Harbin's technical evaluation afterwards, although the bid was already closed.
The panel observed two flaws here. First, as per the regulation, such a letter must be signed by the Chairman of TECnot the project director. But a more serious flaw is that Harbin was given the opportunity to improve its bid by submitting the missing documents in violation of the PPR.
The evaluation reports were based on an erroneous interpretation of rules, deliberately biased and therefore unacceptable. The irregular Harbin offer was wrongly identified as the lowest bid. Harbin's price related to a phantom technical offer and does not deserve any merit in evaluation.
The TEC in a meeting did identify a 'shortcoming' in the Harbin offer, and concluded that the Harbin proposal may be acceptable subject to acceptance of the shortcoming by the cabinet committee on economic affairs. “TEC in turn passes the thorny question of approving an irregular tender to the cabinet committee, asking essentially to by-pass the relevant rules and regulations. It is not understood how and why the cabinet committee should deviate rules. It is unfortunate that the law of the land does not take precedence in TEC report,” the panel observed.
Sources said that although the projects were already under the purview of the review committee, the PDB last week hurriedly sent Harbin's proposal to the cabinet purchase committee for approval. The cabinet committee returned the files, saying that the review panel must at first resolve it.
All the tender practices under the present government have seen a series of complaints of irregularities. Currently the government has okayed the phase 2 Meghnaghat 450 mw project to be awarded to Orion-Belhasa, although the original bidder was different. It is holding an unsolicited and secret negotiation with a British company, Cadogen Manning, for Meghnaghat 3. The government also signed two other unsolicited projectsthe highly overpriced 250 mw Barapukuria coal fired power project, and the overpriced 70 mw third phase Mymensingh power plant. Till now, the government has not paid any attention to any of complaint.