The government has finally revoked the deal with the Summit Group, as it failed to mobilise funds to implement the Bibiyana-I and II power projects. The government signed three power project deals with Summit in May 2011. As per the agreement, the Summit, one of the leading private sector conglomerates of Bangladesh, comprising a chain of twenty synergic business units ranging from power to shipping to communications, was to have arranged funds for the 341 MW Bibiyana-I and II power plants by last February and March, but it failed, a senior power division official said.
“We will take action as per rules. We gave them enough time to manage the funds. Unfortunately they failed,” the official told The Independent.
The company, known as an influential policy maker of the ruling party Awami League, won the tender for the projects by offering a very low price of around Tk. 2.6 per kilowatt hour for 22 years. The total cost of developing power projects was estimated at around USD one billion.
In February, Summit had asked the government to give it one more month’s time, but it could not arrange the funds.
Earlier, the Power Development Board (PDB) sent a letter to the Summit Group asking it to appraise the government of the company’s latest position, but it did not respond, power division sources said.
Aziz Khan, chairman, Summit Group, told the media that the company is facing serious funds crunch as the World Bank (WB) refused to offer Performance Risk Guarantee (PRG) against its three IPP (independent power producer) projects.
The company also alleged that the power board had failed to provide the company with evidence of registration of the land lease agreement within 120 days from the date of contract, i.e. May 12, 2011.
According to the power division official, power Cell, the power division think-tank, suggested to the power ministry that the deal be repealed as it failed to fulfil the obligation of the contract. “The power ministry finally approved the power Cell’s proposal for the termination of the contract with Summit, claiming that the company had failed to arrange the finance for the project,” the power division official said.
The former Director General of power Cell lost his job as he raised questions against Summit’s project, the official alleged. Summit has served a notice to the power division claiming that the government had failed to provide a partial risk guarantee (PRG) of the International Development Agency worth USD 200 million.
According to finance and power ministry sources, the government had nothing to do with the PRG issue and it was a matter between the private developer and the WB.
The Summit Group also claimed that the WB said nothing against the project and it was only reluctant following the Padma Bridge scam issue.
But what happened actually was that the WB told Summit that its “financial quality is bad” when it submitted financial documents in 2008 to implement the project under the caretaker government regime. “Summit submitted its financial statement calculating assets value of its share as per market rate and not as per actual price of its share. It was fake,” a senior power official said. The official said power Cell under the contract will realise USD 3 million that Summit deposited in a bank as performance guarantee.
The Summit Group had in the meantime served a contract termination notice to the government and the agencies concerned seeking USD 45 million in damages with a 4 per cent interest as the power, energy and mineral resources ministry and the Power Development Board had failed to meet their contractual obligations for the project. In the notice, the Summit Group wanted the performance guarantee back.
“They have no right to claim this. They are incapable of implementing the project and due to their inability the nation is suffering hugely in terms of electricity and economy. They should be punished,” the official added.
-With The Independent input
