Bangladesh may allow foreign investors to set up small power plants

The Cabinet Committee on Economic Affairs may take a decision on accepting fresh proposals from local and foreign firms for setting up 15 small power plants with capacity between 10 and 30 megawatts (MW) during its meeting Saturday, official sources said.

Quoting an official of the ministry, The Financial Express, the country’s lone financial daily, reported that such a move will not only help the government to overcome the fund shortage, it will also enable the local entrepreneurs to enter into the power generation business.

Earlier, the government floated a tender last year to set up such small power plants under private sector. More than 200 local firms purchased tender documents. But only the local entrepreneurs were allowed to participate in the bidding. The Power Development Board (PDB) was assigned to implement the project.

But later the Power Ministry suspended the process on the plea that it needed some amendments to the criteria of selecting the project developers and the task of implementation of the project was shifted to Power Cell from the PDB.

The Power Cell, a technical organ of the Power Ministry that deals with reforms and project implementation issues, has recently prepared the pre-qualification (PQ) document for the bidding process. It brought huge changes to the earlier criteria and set some new terms and conditions for the project
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Under the new terms and conditions, both the local and foreign firms would be allowed to set up such small power plants. But the foreign firms have to participate as associates of any local firm under the joint venture (JV). In this case, the local firms become the dominating partner with at least 51 percent share of the JV.

Another condition for the project developers would be to have the experience of installation and operation of a power project with a minimum capacity of 10 MW, the sources confirmed.

According to the Power Ministry projection, the country's electricity demand would stand at 6,500 MW in 2007 against the present 3,800 MW and it would need about US$1.6 billion in investment to address the generation shortage. (End/si)