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Summit Bid For Power Projects

Power Cell finally explains rejection

Sharier Khan
After dilly-dallying for three weeks, the Power Cell yesterday verbally explained to representatives of Summit Industrial and Mercantile Corporation why its bids in Bibiyana and Sirajganj 450 megawatt (MW) power projects were rejected.
The Power Cell, under the power ministry, in a letter informed Summit of its disqualification to participate in the Sirajganj power project on January 10 without giving any explicit reasons. On February 14, the cell in another letter disqualified Summit in the Bibiyana project citing reasons that Summit thought were wrong and unjust.
This rejection reduced competition in these two major power bids. As Summit previously qualified for the 2003-04 Sirajganj 450MW power project and had arranged financing from the World Bank and the Asian Development Bank (ADB), many raised questions about the cell's fairness in bid evaluation.
As Summit had been formally asking the cell to explain, the power ministry on March 3 asked the Power Cell to have a meeting with Summit and explain the matter so
that Summit can also explain its position. But, the Power Cell did not have the meeting.
Instead of holding the meeting, the cell wrote to the projects' consultant International Finance Corporation (IFC), the private financing body of the World Bank group, to send its representatives to explain why Summit was disqualified. "The IFC naturally did not send anyone for the meeting,' said a ministry source.
The cell then turned to its own bid evaluation committee asking its members to prepare an explanation for Summit as to why they disqualified its bid. The members of the committee did not fully agree to the idea.
This prompted the ministry to write again to the cell on March 17 and point out the cell's dilly dallying on the matter and urged it to take immediate measures.
Meanwhile, the IFC, which disqualified Summit's bid during financial evaluation of the two projects, had objected to holding of any meeting and asked the cell to send Summit a detailed written response.
The IFC held the view that such a meeting is "extremely unusual and not in line with standard
international procurement practice". The IFC says that while a detailed letter is also unusual, it was far more common than meetings.
The Power Cell had a meeting yesterday and the IFC sent two representatives on its behalf. The cell yesterday finally decided to send Summit a letter explaining the causes of the rejection.
"Clearly the cell cannot make its own decisions. It is the IFC which is deciding everything for the cell," said a source.
The Bibiyana tender will now have only three competitors and Sirajganj just two.
In the Bibiyana project, the cell pre-qualified US Companies AES and Chevron (which also operates the Bibiyana Gas Field), Korean Kepco, Malaysian Powertek along with Siemens and "conditionally qualified Summit and disqualified Malaysian YTL on grounds of small differences. In the Sirajganj project, the cell pre-qualified just AES, Kepco and Powertek last month.
Interestingly, soon after this prequalification, Kepco and Powertek on Februrary 11 announced that they would merge and bid as one, thus shrinking the competition in Bibiyana and Sirajganj. On February 14, the cell finally disqualified Summit in the Bibiyana project.
The cell's February letter noted that Summit was designated as a conditionally qualified bidder because its financial statements were not prepared in accordance with the International Accounting Standards (IAS).
The cell on December 4 named four auditors and asked Summit to have its finances audited as per the tender rule by employing any of the four auditors. The audited financial statement should reach the cell before January 15.
The Bibiyana tender requires that a bidding company’s net financial value would be more than SI00 million. Summit accordingly submitted its audited financial statement complying with the IAS within the deadline. Even though the auditor puts Summit's net financial value at more than $121 million, the cell arbitrarily puts its own financial evaluation at only $32.5 million. The cell termed the company "nonqualified bidder".