The New Nation - Internet Edition

Staff Report

The Summit Industrial and Mercantile Corporation (SIML) has requested the government to review its decision on excluding the company from the tender processes for the 330 to 450MW Bibiyana and Sirajganj independent power plants.

Through separate letters to concerning department of Bangladesh Government, the company has justified their position and claimed to have been declared non-qualified over contradictory facts, source from the Ministry of Power informed.

Summit Power was the only local power company to apply the pre-qualification tenders for the two power projects, has sent separate letters to the Director General of the Power Cell and forwarded it to the Power Division. The letters requested the responsible department to revise the decision, which has disqualified them, said the source.

The Government has selected four foreign companies and consortium to take part in the tender for the Bibiyana plant and three of them for the Sirajganj plant on the recommendations of the tender evaluation committee, headed by the Power Cell Director General Abdul Jalil.

Sources said the tender evaluation committee had almost nothing to do with the process as the pre-qualification applications for Bibiyana were evaluated by the International Finance Corporation (IFC) of the World Bank and for Sirajganj by the Asian Development Bank (ADB).

Initially, the consortium of the Summit Industrial and Mercantile Corporation and the US-based GE Energy was conditionally pre-qualified to take part in the tender for Bibiyana.

Sources in the Power Cell said the IFC consultants observed that Summit bid did not have the net worth of US$100 million as they took into consideration the consolidated figures of the Summit Group - the Summit Industrial and Mercantile Corporation and its subsidiary, Summit Power Limited.

In the letter for Bibiyana, Summit Group said, 'It appears to us that the Power Cell made the aforesaid conclusion [to exclude the SIMC] on the basis of "consolidated" figures [of the Summit Group], not the "company" figures. The company [SIMC] is the legal entity, not the group which has no legal recognition either in the Bangladesh Companies Act 1994 or the Bangladesh Income Tax Ordinance 1984.'

Referring to Section H.2.2 of the pre-qualification documents, 'We would like to point out that the consolidated figures do not represent the fair value of our net worth as these are based on the historical costs; whereas the company figures are stated at fair values as per the IAS/IFRS issued by the international accounting standards committee/board,' officials added.

Summit was declared non-responsive in the Sirajganj tender as well, but was not given any clarification why it was declared non-responsive.

In its letter, Summit said, 'we have submitted our financial statements to the Power Cell that are IAS-compliant and our financial statements for the three months ended on September 30th 2007 audited by SF Ahmed and Co, one of the leading audit firms in the country and the representatives of Ernst and Young, clearly demonstrate that the net worth of the company as on September 30 was equivalent to US$121,025,082'.