Three Major Power Projects
Agreements with Summit Power on May 12
The government and Summit Power will enter final agreements for three major power projects on May 12 after about two weeks' delay, a power ministry source said.
The government had invited Summit to sign the deals for Bibiyana phases 1 and 2 gas fired (341 megawatt each) and Meghnaghat dual fuel 335 MW power projects on April 24. The signing was deferred as the law ministry did not clear the related documents.
Explaining about the delay, an official said while all past private power project agreements had referred to British law for any arbitration between the contractor and the government, the law ministry this time wanted to refer to Bangladeshi arbitration law.
The law ministry had cleared the Bibiyana phase 1 project agreement that refers to the British law as the “last instance” of reference law. But it wanted to include Bangladeshi law in the deals for Bibiyana phase 2 and another gas-fired private power project in Bhola.
The Bhola 225 MW project is being set up by Ranhill-STS joint venture.
The financiers of both these projects did not agree to these deals, saying the bid documents sought British law rather than the Bangladeshi law.
According to them, the donors have promised to fund these projects on the basis of reference to British law.
The matter has been sent to the prime minister for a decision. It would be resolved within this week, sources said.
Another aspect causing the delay has been a last minute disagreement between Summit and Power Development Board (PDB) over the power tariff during simple cycle phase of the Bibiyana combined cycle power plant.
As per the agreement, Summit will have to start the simple cycle unit within 24 months of signing the final agreement. It would complete the combined cycle part within 36 months.
During this period, the private power producer would provide power at a reduced rate under a certain formula. The company initially wanted to modify this formula but later agreed to the proposal prescribed by the government.
Summit initiated the contracts for Bibiyana 1, 2 and Meghnaghat plants back in January.
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