Bibiyana-1 power plant through bidder’s credit

The government is going to implement the 450MW Bibiyana-1 power plant project through bidder’s credit instead of independent power producer (IPP), after cancelling Summit Group’s bid.

According to official sources, the Power Division has taken up an initiative in this regard last week on the basis of a recommendation of the government’s Power Development Board (PDB).

Bibiana-gasAn official at the Power Division said the bidder’s credit means the project will be implemented in the public sector through funding by the contractor.  In this case, the contractor will arrange the required fund for the project through its own capacity. After the implementation of the project, the government will pay back the fund with interest.

In case of IPP, the project is funded and implemented by the private sponsor and the government purchase electricity from the project, UNB reports.

“We’re preparing an executive summary of the new proposal for the Prime Minister’s approval. If any minister or state minister joins the ministry soon, we’ll take his consent and then send it to the Prime Minister’s office (PMO). Otherwise, the proposal will be directly sent to the PMO,” said a joint secretary at the Power Division.

The Bibiyan-1 power project has been a long standing project of the government. Earlier, the government invited bid to implement it as an IPP project. Summit Group won the project, but failed to execute it for various reasons.

As a result, the government in August last year cancelled the Summit’s bid following a recommendation of the Power Cell which invited the bid to implement it in the private sector.

The government had signed the contract with the Summit Group on May 12, 2011 and the project’s was supposed to be completed within next two years.

The government has awarded contracts of a number of power plants to implement those under bidder’s credit due to fund crisis. These projects include Ashuganj-1, Bibiyana-3, Shajibazar-1, Barapukuria coal-fired power plant, Chapainawabjanj power plant and a unit of Ghorasal power station.

However, many experts in the power sector are very critical of the bidder’s credit project because of exaggerated cost of the project.

When a bidder arranges the fund for the project, its cost goes up too much because, the critics say, the bidder has to arrange it through taking loan from any international bank or financial institution at a high interest.