Indo-Bangla joint venture
As reported in The Daily Star, dated 31.08.10, two national companies of Bangladesh and India signed a Memorandum of Understanding (MOU) for setting up two coal-fired power plants of 1320mw each in Chittagong and Khulna under joint venture. Under the MoU, a member board of directors will manage the joint venture with Bangladesh as its chairman and an NTPC representative as the managing director for the first eight years before switching over to three- year rotational system. The two countries will by rotation hold the post of chairman and managing director for a period of three years, said the MOU. Bangladesh and India will have an equal number of nominees--four each in the board. The power plants, to be set-up at a cost of Rs.13200 crore (2.78 billion US dollars) with 50:50 equity and 70-80 percent liquidity managed through debt financing, are likely to be operated by India. The NTPC will manage the plant while PDB or other government officials will participate in its operation. As per company rule, the shareholders according to the ratio of shares will manage the joint venture company and the directors representing each partner according to the share shall constitute the board of directors. The company will follow the prevailing companies Act 1994 of Bangladesh and be registered with the Registrar of companies and firms, Bangladesh with its Memorandum of Association and Article of Association of the company elaborating the authority of the board of directors of the company and the character and jurisdiction of the activities of the company. Utmost care must be taken in making the Memorandum of Association and Article of Association of the company so that the interest of Bangladesh is safeguarded. As the share of partners is equal, it will not be possible to take decision where there is a difference of opinion creating stalemate in functioning of the company. As such it is suggested that as the power station being constructed in Bangladesh, BPDB should be given major share and it can be BPDB and NTPC share 60:40 for smooth functioning of the company.
As Bangladeshis have been operating, maintaining and managing all the power plants in Bangladesh for many years, the matter of managing the plants by NTPC and likely to be operated by India should not be agreed upon. The joint venture company may also opt for O&M contract for certain period with LTSA (Long term service agreement) with renowned foreign company through international tender. The terms of financing, preparation of tender documents, tender evaluation methodology, and selection of consultants are of high importance to be looked into with utmost care by experts so that the interest of BPDB is safeguarded.
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