The New Nation - Internet Edition

UNB, Dhaka

The Power Division is likely to send an executive summary to the Prime Minister's Office (PMO) seeking directions as to which way to take to penalize 5 rental power plants that failed to make a start while the country suffered from staggering electricity shortages, official sources said.

Sponsors of these plants failed to install machines and start operation as per deals with government, thereby incurring huge sums of penalty to be paid to the state-owned Power Development Board (PDB).

The past caretaker government had taken the move to install the expansive rental power plants in private sector as a remedy for the long-running nagging power crisis. PDB was supposed to buy electricity from the plants at a higher rate of tariffs than the normal plants'.

Among the five plants, 4 are of 3-year term. These are Fenchuganj 50 MW, Bogra 20 MW, Ashuganj 55 MW, and Shikalbaha 55 MW plants. The remaining one is a 15-year-term 50 MW plant, and a second one at Fenchuganj.

The PDB signed agreements with the sponsors of the 3-year-term plants with a condition that they would have to install and commission the plants within 120 days (4 months) time.

If the sponsors failed, they would have to pay a penalty of US$ 500 per megawatt for each day. Of the entrepreneurs, Energy Prima, a sister concern of the local Hosaf Group, signed the deals for the Fenchuganj 50 MW and Bogra 20 MW plants on January 16, 2008 during the caretaker government's tenure.

Both the plants are of 3-year term, which means the PDB will purchase electricity from the plants for 3 years.

As per agreements, the two were due to come into operation by May 16, 2008 but failed. And PDB imposed penalty at the rate of US$ 500 per megawatt for each day of the delays.

According to a calculation, the Energy Prima alone is now to pay about US$ 14 million, equivalent to Tk 100 crore, to the PDB while the three other firms will have to pay substantial amounts of fines.

However, Precession Energy and Royce Power signed agreements for their respective projects in June and December last year, and their penalty amounts are also less than that of the Energy Prima.

Similarly, Barkatullah Electro Dynamics, another local firm, is penalized for its failure to install Fenchuganj 50 MW (15-year-term) plant as per schedule.

A senior official of the Power Division said they have readied an executive summary on the issue to send to the PMO for further directives. "The summary might be sent within a week," he told UNB.

"Since the penalty is increasing with every passing day and the sponsors are not able to pay the huge penalty, that's why we are moving to seek the MPO's directive to determine the next course of action," he said.