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Power pole nexus back into action

Use of concrete poles to push up electricity network cost by 40pc

Sharier Khan
A nexus of concrete pole manufacturers, which broke down in early 2007 due to political changeover, is now re-emerging in the Rural Electrification Board (REB) with some new faces leading the show.
The new nexus, through tender manipulation, is now compelling REB to buy concrete poles at double or even triple their own rate offered in 2007, when there was no scope for tender manipulation.
"Consequently, the per kilometre (km) cost of setting up power distribution lines, based on concrete poles, has gone up by at least 40 percent than that based on wooden poles," says a high official of REB.
The country's rural electrification system was originally designed in the late 70s using
only wooden poles.
Against a supply of around 750 megawatts (MW) of power, the REB serves 7.3 million consumers with an actual demand of 1.300MW. Such enormous base compels REB to purchase costly poles just to replace old lines or improve the existing system.
Even though wooden poles are cheap to install, easy to transport and install and strong, the REB can no longer rely on wooden poles alone because of its large client base, sources said.
Selling of poles became a silentbut lucrative business in the mid-90s when the country's power distribution network started to expand rapidly. At that time, a retired army officer entered the pole business but with concrete poles for the first time. As the REB would not accept concrete poles to replace wooden ones, he planted negative news with the help of the press against the use of wooden poles. Ultimately, the REB started accepting concrete poles and finally it started buying more concrete poles than the wooden ones.
Till 2001, the retired army official had monopoly in selling hundreds of crores of taka worth concrete poles by staging "competitive" tenders participated by five or six companies, all of which he owned.
This monopoly ended as die Hawa Bhaban leaders took interest and entered die scene after 2001. A new business nexus was born, which included the retired army officer as well
Under the influence of this nexus, the REB stopped using wooden poles completely.
During 2001 and July 2006, the 14-mernber nexus, led by some Hawa Bhaban leaders, through bid manipulation and political influence sold REB 15 lakh overpriced concrete poles worthTk 1,100 crore.
The January 11, 2007, change over smashed the Hawa Bhaban led nexus paving die way for new concrete pole manufacturers to enter the stage. That year, in absence of the nexus, REB received unusually low price offers for concrete poles.
According to REB records, an R-41 size concrete pole was sold for Tk 8,575 in 2006. The same pole was sold for only 4,462 in 2007. Similarly, an fl-44 type concrete pole was sold for Tk 15,500 in 2006 but it dropped to a mere Tk 6,426 in 2007.
"It took litde more than a year for the disbanded syndicate to have a new understanding," said a competent REB official. From 2008, REB started smelling foul play in their pole procurement tenders.
"Last year, it seemed that four or five bidders would participate in a tender process, each time increasing the price by 10 percent froip the previous ^ids. Eventually, the price of the concrete poles has shotup significandy.
The pole that was sold for Tk 4,462 in 2007 is now being sold at Tk 9,900 and the Tk 6,426 one at Tk 17,750.
"This time the nexus is no longer headed by any polidcal figures," said the source.
Some concrete poles manufacturers claimed that the price of their poles dropped significandy in 2007 as they had huge unsold stocks piled up in their inventory.
This stock was created following a late-2006 decision
to suspend new projects expanding REB distribution lines as there was huge power supply shortfall. The REB. however, continued purchase of poles under ongoing projects and for repairs and maintenance of the existing lines.
But this claim is not substantiated as figures show that though REB had not taken up new projects, its existing projects arc big enough for the market. The REB in the last two years purchased nearly 190,000 concrete poles worth more than Tk 170 crore. This figure includes an order of 28,000 poles worth $3.4 million not yet supplied.
After the 2007 change over, the REB once again started buying some wooden poles under international tenders only.
However, since foreign companies are uncompetitive against local wooden pole manufacturers, wooden poles were bought from a single local manufacturer as lack of business incentive halted growth of any other manufacturer.
As per a World Bank guideline, at least 20 percent of the poles purchased by REB should be wooden. The REB follows this guideline as per an instruction of the ministry and also as recommended by REB's superintended engineers across the country.
In the last two years, REB bought around 33,000 wooden poles worth of $4.75 million (Tk 33.25 crore).
Because of massive distri-bution line expansion between 2001 and 2006, the REB's client base doubled from three million to six million and power demand from 1.000MW to 2.000MW during peak season. But as the government failed to install new power plants at the same time, it is able to supply only 700MW to 1.200MW of power to the REB network, thus creating widespread dissatisfaction among people.
The per km installation cost difference between concrete and wooden poles is significant. For instance, in 2004^05 fliW^hr. the REB spent around Tk 250 crore to buy four lakh concrete poles for setting up 16,700km of distribution lines. But if wooden poles were used, the same job could have been done with half the number of poles and spending between Tk 75 crore and Tk 85 crore.
The REB has 70 Palli Bidyut Samity (PBS), most of which incur losses. However, a few of them make enough profit to keep the REB system look functional. The REB's annual earning was Tk 2,240 crore in 2007.