As the Power Development Board (PDB) serves Obaidul Karim's company BON Consortium with a notice cancelling the Meghnaghat 2 power project deal, the second lowest bidder Malakoff of Malaysia proposed the government that it is ready to pursue the scheme.

In a letter to the PDB on August 1, Malakoff said it was ranked as the second lowest bidder in the April 21, 2004 bid. "In view of the acute power shortage in the country, we propose

to expedite our negotiation process and explore ways to bring early electricity to the grid," the letter said.

A top official of the energy ministry, however, noted that Malakoff's power tariff offer was very high-close to 4 cents--whereas the BON offered a price of 2.78 cents. The PDB is yet to act on Malakoff's letter.

Malakoff in its letter said the lowest bidder BON Consortium has failed to meet obligations under the Request For Proposal (RFP) and project agreement and failed to provide the required performance

guarantee to the PDB. According to the RFP, "If the project company cannot achieve Financial Close as agreed upon, then the BPDB may invite the Second Ranked Bidder to participate as project Sponsor.

"Although a significant amount of time has passed, we are prepared to reinstate our Bid Bond immediately and commence Clarification and Finalisation of project Agreements. We will require to review our Bid Proposal, specifically the EPC (Engineering Procurement Construction) solution and the tariff proposal to account for the time lapsed since our submission," theletter said.

The PDB late last month served Obaidul Karim's shell company BON Consortium with a notice to terminate the power purchase agreement (PPA) of the Meghnaghat 2 power project.

In a letter to BON Consortium's Orion House office at Tejgaon, the PDB said the BON failed to close the project's financial arrangement within its agreed deadline of May 27. The PDB then gave it an extra time up to July 15 to meet its contractual obligations, but the BON failed again.

Obaidul Karim, who bagged many large-scale contracts during the five-year BNP-led alliance government's rule, established BON Consortium, which initially stood for Belhasa of the United Arab Emirates, Orion Power of Bangladesh and Nisso Eiwi of Japan. Nisso was the lead bidder in the project's tender. Neither Belhasa nor Orion qualifies for this power project but Nisso's experience qualified BON's bid. After the bid selection, however, Nisso was replaced by German company Steag.

Officials and power industry players had been strongly doubtful whether the BON would ever be able to carry out this project as Obaidul and the consortium's "official" leader Steag are nowhere to be seen. They also said the global cost of setting up a power plant has significantly gone up which makes it even more difficult for the BON to set up this plant without incurring a huge loss under the contract that has already been signed. Apparently the Belhasa group is the only visible solvent partnerofOrionin the deal.

Following the May 27 letter andlegal homework, the PDB on July 4 concluded that as per the contract the deadline can be extended for some time as long as the Commercial Operation Date (COD) of the power plant remains unchanged, and that the BON submits Performance Security Deposit.

Earlier, BON missed a deadline to pay up land rental and other fees on January 21 and faced a notice of "Project Company Event of Default" to pay up Tk 6.22 crore by February 22 or face cancellation of the contract. A representative of the Belhasa group saved the contract by submitting the money on the last minute.

During this phase, the Belhasa representative proposed that it would take over Orion's share--which is only 16 percent--and drive the project on. Belhasa guarantees implementation, said one of its executives to the power ministryin February.

Obaidul Karim is wanted by the police in different graft and criminal cases for swindling Tk 594 crore from the Oriental Bank. Heis also accused of heavily bribing alarge number of people close to former prime minister Khaleda Zia to unfairly bag various deals, including the Sayedabad-Jatrabari flyover project where the Belhasa group is partnering with the Orion.