Govt wants ‘safe exit’
The government is looking for a ‘safe exit’ from a 341 MW power project deal with Summit Power as the firm has claimed $45 million in damages on the ground that the government has ‘breached’ the contract, said officials.
The Power Division on Thursday asked the authorities to form a consultant committee to settle the dispute between the state-run Power Development Board and Summit, told PDB’s chairman Abdul Wahab Khan.
‘There is a provision in the contract between PDB and Summit that a consult ative committee will settle such disputes. The ministry will form the committee which will be comprised of representatives of the two parties and a third party,’ he said.
The consultative committee will decide and suggest whether or not the Bibiyan-1 project should be implemented, said Summit Group’s chairman Muhammad Aziz Khan.
A Power Division official said that they were trying to find a way to pull out from the project so that the government is not affected.
Summit Group’s Bibiyana 1 Power Company Ltd on August 12 this year served a notice upon the PDB for terminating the power sales/purchase agreement and demanded a total of $45 million in damages as the authority failed to provide it with the evidence of registration of the land lease agreement within three months after signing the agreement on 12 May, 2011. Today’s meeting was held in the wake of the notice.
But a Power Division official said that Summit used the contractual points to hide its failure to arrange sufficient investment for the implementation of the project.
‘Delay in registration of the land lease agreement does not affect project implementation. That is why it has not been included in the mandatory criteria of the contract,’ he added.
The sponsor of the power plant will get day-to-day extension until the PDB completes the registration of the land lease agreement.
Both the parties have been blaming each other vis-à-vis the registration of the land lease agreement for more than a year but are yet to find a solution to materialise the project.
The official, however, said that Summit might not have played such a trick had the authorities completed the registration on time.
Meanwhile, Summit is installing a 335 MW power plant at Meghnaghat and has signed an engineering, procurement and construction contract for the construction of another 341 MW plant at Bibiyana, known as Bibiyana-2.
Summit was awarded the Bibyana-1 project along with two other projects, one at Bibiyana and the other at Meghnaghat, through a bidding process.
On 12 May, 2011, PDB signed a power purchase agreement with Summit according to which it will buy electricity at 3.322 US cents or Tk 2.66 a unit for 22 years from the Bibyana-1 power plant.