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PDB's rental woes go on

2 inexperienced power companies continue to default on plant delivery, penalty

Sharier Khan
TWo local companies awarded with rental power contracts by the caretaker government despite their inexperience have become a pain in the neck of authorities for their continual failure to deliver the power plants and refraining from paying penalty as per contracts.
Energy Prima of Hosaf Group and Venture Energy Resources that never dealt with rental power projects before are now dictating their own terms and deadlines about delivering three rental power plants totalling 104 megawatt capacity and asking the Power Development Board (PDB) to forgo the
penalty.
Energy Prima even went to the court last year to prevent PDB from obtaining penalty and is now asking the Board that through an amendment to its existing contract it should be allowed to deliver its 20mw Bogra power plant, initially, with 14mw only and without paying penalty.
Ironically. Energy Prima "promised" to withdraw its case against PDB if the latter agrees to amend the contract.
The two other power schemes that keep on missing deadlines are Energy Prima's 50mw Fenchuganj Power project and Venture Energy's 34.5mw Bhola power scheme.
All these plants were supposed to
come into operation within May 2008 -120 days from signing of the agreements in January last year.
Now Energy Prima is proposing that it can bring its Bogra power plant in two phases from May 15. The company however could not give a clear schedule for its Fenchuganj 50mw power plant and Venture Energy is asking for a March 31 deadline.
"The concept of rental power plant is that the contractor owns power units that can be mobilised and installed within a short period for a short-term or mid-term period. Because of this easy mobility, the government was ready to pay higher
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tariff. When the government signed these agreements in January 2008, it aimed at increasing power generation by that summer. Now the purpose of it has been severely compromised," says a PDB source.
Experts now question whether two of these three gas-fired projects -- the Fenchuganj 50mw and Bogra20 mw — have any relevance now, given the fact that the country is facing tremendous gas crisis.
The PDB cannot generate 450-500mw power due to gas supply shortfall and there is no chance that the government would be able to supply enough gas to all the power plants this year or next year.
The problem with the Fenchuganj plant is slightly different. Though there is enough gas in Sylhet to fire the plant, there is not enough power transmission line to evacuate new power to other parts of the country’.
However, the Bhola plant might be useful, as it has Shahbazpur gas field --untapped since 1993. Power from this plant may be supplied to Bansal region
The then energy secretary, who was repeatedly questioned why inexperienced companies like Energy Prima and Venture Energy' were given so many contracts, had told The Daily-Star the penalty provision was high enough as a disincentive for the contractors for dillydallying with their projects.
The penalty provision was that for each day’s delay, the contractor will pay 5500 for each megawatt capacity
Both Energy' Prima and Venture Energy’ have been repeatedly given various deadlines last year and the last deadline expired in January and February While both of these companies paid some penalty in the beginning, they eventually stopped it
In fact, by now the rental Cower contract should have een automatically cancelled.
The power ministry will sit today to discuss the next course
of action.
The PDB has already forwarded the progress report to the ministry regarding these projects In the report. PDB marked that the contract with Energy Prima should be cancelled on grounds of failure to meet contracted rental capacity in the Bogra power project. '
The PDB notes that Energy Prima resorted to various lies regarding possession of power plant equipment. Before signing the contracts, the company claimed that it possessed the equipment, but soon after the agreements, it wrote to PDB that it was missing the deadline because its third party’ contractor had failed to supply’ the required gas-fired engines
To give its failure a legal cover, Energy Prima has also submitted a Force Majeure Notice to PDB But PDB noted that there was no scope for Force Majeure under this contract.
Despite such observations, PDB says as there was severe power snortage in the country, the government may extend the project deadline till May. if the company withdraws its case, pays its penalty of S500 per megawart per day and with the term that if it failed to miss the new deadline, it will pay $1,000 per megawatt per day penal ty.
Energy Prima's Fenchuganj power project is also in a shabby’ state as it could not bring in all equipment required to run it.
Venture Energy last week sought PDB's help in getting clearance for import of some equipment of its Bhola 34.5mw plant. Venture Energy owes PDB liquidated damage worth $4.9 million, but it has paid $2.9 million saying it does not have the ability to pay more.
Energy Prima of the Hosaf Group that was awarded four rental power projects has missed its May2008 deadline for all of the four power projects totalling 170m w capacity’.
However, it brought two power projects totalling 100mw capacity online last year after substantial delay.