3 November 2010 | The Daily Star
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Local leading power company Summit along with its American partner General Electric yesterday gave a winning power tariff offer for the Meghnaghat phase two 450 megawatt dual fuel combined cycle power project.
At the same time, Malaysian-Bangladeshi joint venture Ranhil-STS gave a winning offer for the Bhola 225 MW gas-fired combined cycle power plant.
Combined cycle plants use heat generated by simple cycle gas or oil generator unit to produce extra power and ensure less fuel consumption and lower cost for power generation.
Summit-GE had earlier won the first phase Bibiyana 450 MW gas-fired power project by offering US 3.32 cents per kilowatt-hour over a period of 22 years.
This is the first time a local power company has been awarded with two such major power projects that might need around $650 million investment.
But the Meghnaghat phase two project is a dual fuel-fired project and the bidders were asked to offer both gas-based and furnace oil-based tariff. Summit offered US 3.98 cents or Tk 2.76 per kilowatt-hour for gas-based power generation and 9.11 cents or Tk 6.73 per unit for furnace oil-based power. Its average tariff stood at 6.86 cents or Tk 4.74 per unit.
Its lone competitor Malaysian Powertek offered 4.6 cents for gas and 11.31 cents for oil-based per kilowatt power generation. Powertek's average offer stands at 7.97 cents.
In the Bhola project, Ranhil offered 3.43 cents or Tk 2.38 per kilowatt-hour, while its lone competitor Summit offered around 4 cents.
A top official of Power Development Board says the price offers in both these bids will now be evaluated to see if there was any mistake in the calculation. "Our target is to forward within this week to the power ministry our recommendation to award the bids to the lowest bidder," the official adds.
If the ministry approves the recommendation, these would be forwarded to the cabinet's purchase committee for approval, preferably before the Eid vacation. The PDB wants to conclude signing of the agreements by December so that these power plants could come into operation in 2013.
Whether Summit-GE could actually handle two such major investments had been one question raised by industry insiders.
Chief of Summit group Muhammad Aziz Khan notes, "The Bangladesh Bank as well as international multilateral agencies such as IFC, ADB, IDB, all have provided us with letter of support to debt-finance these projects. The capital market in Bangladesh has full confidence in the Summit Group and will be supportive to raise part of the equity.
"Summit itself is sitting on substantial cash reserves to invest in these projects," he adds.
"Summit is privileged and excited to be a part of solving the power crisis existing in Bangladesh. We believe the much needed electricity can be provided at low cost in an environmental friendly way by utilising the combined cycle technology," he said.
The PDB floated the tender for these two projects in May and initially drew interest of two dozen bidders.
Link: Summit makes winning offer for Meghnaghat-II