The cost of 1,200MW coal-fired Matarbari power project is set to shoot up to Tk 50,000 crore, almost double the initial Tk 27,000 crore estimated in 2013 as the construction begins later this month amid alleged lack of transparency in its implementation.
On August 12, 2014, the National Economic Council approved the project with a revised cost at Tk 35,984 crore much before the beginning of the construction of the power plant and other infrastructures on Matarbari island in Cox’s Bazar, said officials.
State minister for power, energy and mineral resources Nasrul Hamid on Friday said that the project cost would be as high as Tk 50,000 crore as the scope of works had increased and its implementation was delayed.
Abnormal cost escalation and awarding a major contract to a Japanese consortium that has a partner with negative asset raised concerns of the experts who find lack of transparency in the project implementation.
The Japan-funded project shortlisted two Japanese companies for bidding for engineering, procurement and construction (EPC) contract which also raised question whether the process was open and competitive as the contract was supposed to be awarded through international bidding.
The state-run Coal Power Generation Company of Bangladesh is now preparing a revised development project proposal with the increased cost and would soon send it to the power division for government approvals, the officials said.
Prime minister Sheikh Hasina is scheduled to inaugurate the project’s construction work on January 25.
Additional investment would be required for soil treatment of the project site and a few other areas of the project, Nasrul said.
He, however, said that the government would carry on with the project implementation even at increased cost considering its vast positive impact on the country’s economy.
He stressed that the project was needed to be completed fast.
According to officials, bid submission date was deferred by six months, from July 24, 2016 to January 31, 2017, as representatives of two Japanese companies declined to visit Bangladesh citing security concerns after July 1, 2016 Gulshan attack in which seven Japanese along with 22 others were killed.
The coal power company is implementing the project with soft loan from Japan International Cooperation Agency.
The project comprises construction of a deep sea port with coal handling facilities for coal import, coal storage, power plant construction, township development, rural electrification and construction of transmission facilities and road communication.
M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh and also an electrical engineer, expressed his worry over such cost escalation.
He apprehended that the implementation cost might increase further by the time when the project would be completed in June 2023.
The authorities maintained no transparency in implementing the project, said Shamsul, adding that such high cost power project would ultimately raise the price of electricity although they were taken to reduce the price.
Echoing Shamsul’s remarks, Transparency International Bangladesh executive director Iftekharuzzaman observed that increasing cost of development project had become a culture in the country.
He said that the rise in project implementation cost would be passed on to the people and all the authorities involved in the project were responsible for the cost escalation.
He also alleged that project under government-to-government agreement lacked transparency.
On July 27, 2017, the coal power company hurriedly inked the EPC contract with Sumitomo Corporation-led consortium at a cost of $4.59 billion (Tk 37,730 crore).
The contract was signed few hours after a government review panel handed down a split verdict on a complaint filed by second-lowest bidder, Marubeni Corporation-led consortium, for the project saying that Sumitomo-led consortium was not eligible for the contest.
Thursday afternoon, three-member review panel chair Md Enamul Kabir commented that Sumitomo-led consortium was not eligible for the contest while the other two members — Muhammad Shamsul Alam and Syed Enayet Ullah — ruled the opposite, according to the order.
In its complaint, Marubeni-led consortium said that Toshiba Corporation, a partner of the Sumitomo consortium, issued a statement on May 15 showing its net asset (-)260 billion yen which disqualified the consortium from the bidding process.
The complaint also said that awarding the contract to a consortium having a partner lacking financial soundness was a violation of bid evaluation criteria and the procurement JICA guideline.
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