Role of consulting firms in energy sector

by Dieter Reinhardt | Published: 00:00, Mar 14,2019


IN 2016, the government of Bangladesh declared to double the country’s power capacity to 24 Giga Watt by 2021 and to 60 Giga Watt by 2041. These efforts will be based mainly on new coal-fired power plants. The Rampal CFPP is a part of this plan. National and international critics of this power plant argue that it will have a particular negative environmental impact on the huge mangrove forest, the Sunderbans, which is partly an UNSECO Natural World heritage site. The German enterprise ‘Fichtner GmbH & Co’ — in the following shortly named ‘Fichtner Group’ — is one of the largest German engineering and consulting firms and ‘chief engineering consultant’ of the Rampal plant. Fichtner Group is also involved in the construction of the Mongla port, through which the coal for the plant will be delivered, and additionally for the so called ‘environmental management’ (see below) of the coal transportation through the Sunderbans to this port.
In the following, reasons for the increasing worldwide relevance of consulting firms in the energy and other sectors are described first. The section that followed presented the business of Fichtner Groups, its involvement in the Rampal CFPP and in other projects in Bangladesh. Afterwards the Group’s involvement in a corruption case in the DR Congo and a highly controversial hydropower project in the Malaysian part of Borneo are discussed. Finally, the question is raised why over the past years, the national and international civil society organisations critical of the Rampal CFPP and several academic critical research reports have not managed to stop its construction. In the end, it is also discussed briefly why the participation of the Fichtner Group in the Rampal power plant was only fleetingly mentioned in a few articles of the German media and why there is not any public debate about its participation neither in the city of Stuttgart, nor in any other parts of Germany. This is particularly mindboggling given that Stuttgart is the capital of the German federal state Baden-Württemberg which is governed by a coalition lead by green party (B90/Die Grünen) with minor and weaker presence of conservative party, CDU. In addition, there are several very active environmental and human rights CSOs in this state who consider themselves as part of ‘transnational civil society’. It remains to be seen, whether the Bangladesh visit of a delegation of German MPs, including Claudia Roth, one of in total five vice presidents of the German parliament and a well-known politician of the green party prompts such a dynamic debates in late February 2019.
Two German Banks, Deutsche Bank and DZ Bank (Deutsche Zentral-Genossenschaftsbank, and the German Allianz Group are three of the 25 top bondholders of the Export Import Bank of India, which is financing through a credit around 70 per cent of the Rampal CFPP of the whole capital investment around 2 billion US Dollar (IEEFA 2016: 3, 5, 55). The STEAG Germany and its subsidiary STEAG India are involved in the Moheshkhali power plant hub, which includes also a CFPP, south of Chittagong/Bangladesh (BPDB 2018, Khan/Byron 2015). The involvements of these four German banks or firm are not part of the following description. Academic and other publications, which describe negative environmental and socio-economic impacts of the Rampal CFPP and present alternative energy mix solutions for Bangladesh based on non-fossil energy sources are also not discussed in detail. The decisions and reports of the UNESCO World Heritage Commission in the past years about the Rampal CFPP and other projects near the World heritage site of the Suderbans are as well not described in detail here.

Intransparent PR of Fichtner Group and further research
THE intransparent public relations policy of the Fichtner Group causes problems for a research about its involvement in power plants in Bangladesh and in other countries. Its website for example only informs about only one project in Bangladesh, but two projects linked to two coal-fired power plants in Bangladesh are not mentioned at all (Febr 2019). Requests of German journalists for further information about the Groups involvement in the Rampal CFPP has been refused so far by the Group (Perras 2018, Lessat 2017, Finke 2O17, Rahman 2017). Nevertheless, it is possible to get an idea about its involvement from publications of the owner of this plant and secondary sources published in dailies and academic journals in Bangladesh and other countries and CSO publications. Further research about the involvement of Fichtner Group and other consulting firms, construction firms and banks in ongoing constructions of power plants in Bangladesh, their environmental and socio-economic impact and violations of human rights of local populations and activists who are protesting against the Rampal and other plants, is necessary.

Roles of consulting firms
THE reasons and the type of the involvement of the Fichtner Group in Bangladesh is as an example of the growing worldwide significance of consulting firms in the energy and other sectors. The process of industrialisation and the development of modern state administrations are linked to a growing number of regulations and standards in all sectors, which are defined by governments and diverse international organisations and bodies i.e., UN, World Bank, International Monetary Fund, ADB, International Organisation for Standardisation/ISO. The most known consulting firms are inter alia Deloitte, McKinsky, KPMG and Price Waterhouse Coopers (pwc). Often highly specialised consulting firms offer state and private actors their services. These actors are primarily interested in involving specialized consulting firms to enhance complex planning and decisions making processes as they are often better informed about these regulations and standards than administrations. Consulting firms conduct studies, evaluations, impact assessments and oversight activities and develop policy strategies. State and non state actors as costumers choose consulting firms and the firms provides general criteria to measure environmental and socio-economic impacts of a projects. These measurements are ignored the real negative short, mid, and long-term impacts of a project and its real (social, enviromental) costs. Secondly, costumers are interested in employing consulting firms additionally to gain legitimacy for a project, thus to overcome or neutralise internal or external rejection or resistance against a specific decision or policy. Therefore, these firms clearly have a political function. The growing relevance of consulting firms can also be observed in the worldwide growth of the power sector which is based on fossil, renewable and nuclear power technologies.

‘Coporate philosophy’, intransparent public relations
FICHTNER Group is a German family owned ‘engineering and consulting enterprise’ that works in the fields of renewable, as well as fossil energy, infrastructure, energy transportation and distribution, smart grids, water management, waste management, environmental protection technologies, business management and information technology in Europe, Africa and Asia. This Group named itself as a ‘global player’ in its website:
Fichtner Group is Germany’s leading independent engineering and consulting enterprise. The Group is a global player represented in 60 countries with offices and operating sites, and is expanding dynamically as a recognised high-capacity organisation servicing clients in all its target sectors. Established in 1922 and family owned ever since; Germany’s biggest independent engineering and consultancy enterprise for infrastructure projects; More than 1.500 employees worldwide – of which 500 are based in the Stuttgart Home Office; Project experience in 170 countries; More than 1.800 ongoing projects – of which 600 are handled in the Stuttgart Home Office; More than €281 million sales turnover in 2016; Capital investment volume now under planning in the Home Office: More than €180 billion – of which more than €53 billion is in the sector of renewable energies.
Nearly 50 per cent of Fichner Groups total turnover of 285 millions US Dollar in 2015 was raised by the energy business sector and nearly 15 per cent of this turnover in Asia/Australia (Koepfer 2016: 5).
The high numbers of CFPPs, in which Fichtner Group is involved in Europe as well in Africa, South and Southeast Asia and of which are not all described on the Groups project website is a hint that CFPPs are an important business section for this Group. This website is not listing all projects and some projects are taken off after a while. The two CFPPs in Bangladesh, in which the Group is involved, are not mentioned in its website; but it describes more than 12 CFPPS in India and more than eight CFPPs in South East Asia and Africa (as of February 2019). The Group is involved also in renewable energy projects like wind and solar energy. The reason for editorial policy for its website is most likely not to publish any information about controversial projects. The ‘wayback’ plattform has documented some old project websites of the Fichnter Group (Internet Archice/wayback machine 2016).
Fichtner Group consists of around 30 subsidiaries or affiliated corporations and nearly 40 corporate family connections (Borchert 2014). It is not a joint-stock company, which is registered at a stock exchange, but a family owned enterprise, which is not obligated to publish detailled annual accounts. The Group describes its compliance policy in two short documents ‘Corporate Philosophy’ (Fichtner Group 2018 a) and ‘Code of Conduct’ (Fichtner Group 2018 b), both published in July 2018:
‘We are committed to sustainability and conservation of resources. We seek solutions that are sus-tainable and that protect the environment. As far as possible, the solutions proposed should mini-mize any existential threat to future generations.... we are committed to compliance with the laws, ordinances, applicable regulations and our internal rules as well as to high standards of ethics and integrity.’ (Fichtner Group 2018 a: 4).
‘We respect human rights, laws and regulations as well as the ILO core conventions.’ (Fichtner Group 2018 b: 1).
‘When meeting our social responsibilities on an international level, we are guided by the principles of the UN Global Compact and observe its underlying principles. In providing our services, we give priority to solutions that support the concept of sustainability.... We are committed to compliance with the laws, national regulations and ordinances both in Germany and in project countries.’ (Fichtner Group 2018 b: 2).
These two documents are not mentioning explicitly the term Corporate Social Responsibility. The Fichtner Group’s policy to refuse any public statement about its involvement in the Rampal CFPP violates its own compliance confessions.
The city Stuttgart, where Fichtner Groups headquarter is located is the capital of the German federal state Baden-Württemberg and also the place of the headquarter of the Mercedes-Benz company. This state is the single federal state which is governed by a coalition government of the Green party (Die Grünen/B90) and the conservative party CDU. The chief minister Winfried Kretschmann is a politician of the Green party being the majority in the coalition. Since 2013, the major of Stuttgart is also a politican of the Green Party. There is thriving networks of environmental, development, human rights civil society organisations, often with Green Party. Fichtner Group is partner of the energy policy think tank ‘Agora Energiewende’, which promotes ‘transforming energy systems toward clean energy in Germany and across the globe’. Fichter Group anually organises so called ‘Fichter talks’ in Stuttgart about the German ‘Energiewende’, renewable energy policies and other topics. Mr Georg Fichtner, the CEO of the group is their host (Fichtnertalks 2018, 2017, 2016).

Fichtner’s involvement in Rampal CFPP
SINCE several years, the government of Bangladesh is implemented major infrastructure and industrial projects in the Southwest region of Bangladesh, which are also financed or constructed by Indian and Chinese banks or companies. The Rampal CFPP, which will cost more than 2 billion US Dollars, and the nearby Mongla port linked with the Special Economic Zone’ are central projects for the government’s Southwest regional development plan (as shown in the map). There is acutally one operating coal mine in Bangladesh — the Barapukuria mine (Risad 2018). Another mine in Phulbari was closed in the face of fierce movement in 2006. However, a British and Chinese company along with Bangladesh government decided to reopen it in 2019 (Energy Central News 2019, GCM/Powerchina 2019). It has planned to import coal needed for the Rampal CFPP through the Mongla port. A new container delivery yard and other port facilities will be financed through a credit of 730 million US Dollars by the Indian government and through an additional credit by the Chinese governments (New Age 2018, Dhaka Tribune 2019).
The Bangladesh-India Friendship Power Company runs the Rampal CFPP, also parts of the Mongla port is a 50/50 joint venture between Bangladesh Power Development Board and India’s state-owned National Thermal Power Corporation. BIFPCL and Fichtner Group signed a 18 million euro contract on May 15, 2014. According to the mandate of this contract, Fichtner Group is the ‘chief engineering consultant’ of this plant (BIFPCL 2016: 28) and responsible ‘to appoint contractors, oversee equipment purchase, and supervise the construction work’ (Green Watch 2014). As described in the contract, they are also responsible for: (a) organisation of the transport of coal for the plant; (b) the ‘environmental management’ of the coal transport by vessels from the Golf of Bengal through the Suderbans to the Mongla port; (c) arranging compensation/grievances regress for citizens who suffered damage caused by these transports. The environmental impact assessment of coal transportation for the Rampal power plant says:
BIFPCL has engaged a German Engineering Consultant M/s Fichtner as an owner’s engineer (OE). The OE and the EPC (engineering, procurement and construction, the author) contractors… will also ensure the implementation of environmental management practices at each stage of the project activities... Grievance redress is a very important part of the EMP (Environmental Management Plan, the author) where any grievances caused by the potential impact of the project shall be addressed and prevented through the implementation of impact mitigation measures and community liaison activities. Minor issues will be resolved by the Contractor in consultation with owner’s engineer.’ (BIFPC 2018: 29)
Earlier, the government planned to import coal mainly from South Africa, Indonesia and Australia; now coal will perhaps be imported from India. It is unclear if Fichtner Group is still responsible the import from India (IEEFA 2016: 47).

To be continued

Dr Dieter Reinhardt is a political scientist at the Rhine-Waal University of Applied Sciences in Germany.

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