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Contract with Chinese consortium for Khulna 330 MW plant faces termination

Contract with a Chinese consortium for constriction of Khulna 330 MW dual-fuel combined cycle power plant is going to face termination as the contractor failed to arrange required fund for the project.

According to official sources, the government signed a contract on November 17 in 2016 with the Chinese Consortium of Harbin Electric International Co Ltd (HEI), and Jiangsu Etern Co Ltd, to set up the plant’s simple cycle unit within 15 months (450 days) and combined cycle unit within 30 months (900 days).

Nineteen months passed by but, no progress has been made in implementation of the project as the bidder failed to arrange the required fund from the Chinese bank.

Officials said the total cost of the project is about $400 million, equivalent to Tk 3,253 crore. Of this, the Chinese Exim Bank was supposed to provide $304 million, equivalent to Tk 2370 crore, which shares 85 percent of the turnkey contract cost.

As per the contract with the government, the bidder will have to arrange at least 85 percent of the turnkey contract amount by its own initiative. The remaining Tk 1,240 crore will be financed by the Bangladesh government.

But in last 19 months, nothing but a draft loan agreement was made ready by the bidder in getting the required loan.

The issue of the Chinese bidder’s failure was widely discussed in a review meeting of the Power Division last month.

The meeting, presided over by the State Minister for Power and Energy Nasrul Hamid, decided to terminate the contract with Chinese consortium if it failed to arrange the Chinese Exim Bank’s promised loan of $281 million within 2 months.

Following the decision of the meeting, the state-owned Power Development Board (PDB) sent a letter to the Chinese consortium giving 10 days time to ensure the financing of the project by making the projects financial closing within June 20.

"But so far we don’t have any information that can suggest the Harbin- Jiangsu consortium will be able to make the financial closing by June 20", said project director Jotirmoy Halder.

He said once the given deadline is over, the things will be communicated to the higher authority for final action against the Chinese bidder.

It was learnt that the Exim Bank sent a draft loan agreement which the Bangladesh government approved with some amendments and sent it back to the Exim Bank.

The PDB also sent a letter to the bidder consortium to execute the loan agreement as per amendments.

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