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Dhaka Sunday,  Jun 24, 2018

Matarbari Power: Plant Deal signed with Sumitomo-led consortium

Shahnaj Begum

Coal Power Generation Company Bangladesh Limited (CPGCBL) has signed a contract for construction of 1,200MW Matarbari coal-fired power project with Sumitomo-led Japanese consortium on Thursday.
Following the judgment of an arbitrator panel of Central Procurement Technical Unit (CPTU), CPGCBL signed the US $ 4.5 billion project at a simple ceremony at its office.
“The two member judges’ panel of CPTU observed the process was right. One member opined that the process was wrong, increasing the chance for Sumitomo to win the race,” a senior official of the Power Division said.
The Matarbari Coal-fired Power Project is the country’s second largest investment project, next to Rooppur Nuclear Power Project, funded by JICA. On July 6, Japan International Cooperation Agency, the lending agency of the country’s second largest project, approved the evaluation report of the financial proposals, said officials. JICA would provide $4.5 billion in credit for the project, they said.
However, the aggrieved bidder, Japan’s Marubeni-led consortium has filed complaint with the CPTU against the process for awarding contract to Sumitomo-led Japanese consortium questioning the latter’s eligibility for the contest.
On July 10, the coal power company issued the notice of award to Sumitomo Corporation-led consortium, one of two Japanese short-listed bidders, for the construction contract at $4.5 billion project.
The company’s board approved the evaluation reports of the two financial proposals and chose Sumitomo, as its evaluated price was $300 million less than the price quoted by the other Japanese bidder, a Marubeni-led consortium, he said.
The evaluated prices increased significantly from the companies’ quoted price (readout price), as both the companies did not include several components in their financial proposals, said officials.
Sumitomo quoted $4.5 billion and Marubeni quoted $3.9 billion in their financial proposals submitted on January 31, 2017, they said. Marubini did not quote name of many items in the list, the official added.
The complaint said that awarding the contract to a consortium having a partner lacking financial soundness was a violation of bid evaluation criteria and the procurement guideline of Japan International Cooperation Agency.
The government started designing the Matarbari 1200MW plant project in 2010 and completed the feasibility study in September 2013 but all development works of this project has been halted following the incident.
Two Japanese firms – Sumitomo Corp and Marubeni Corp earlier collected bid documents to implement the fast-track project. But they refrained from submitting those due to the escalating security concern after the Gulshan café attack on July 1, 2016.
The company issued the notice of award to Sumitomo consortium as the lowest bidder on July 10, 2016 after JICA’s consent, Md Abul Quasem, Managing Director of Power Generation Company said.
Quasem, however, said the financial soundness of each of the partners of a consortium was made mandatory at prequalification stage when Toshiba’s net asset was not negative.
He also claimed that the bid documents did not say that the procuring entity, the power generation company, would disqualify a bidder after prequalification stages for lacking financial soundness.
The first unit of the 1,200MW power plant with 600MW capacity would be commissioned by December 2022 and the other by June 2023.
The coal power company extended the bid submission deadlines on four occasions as officials of the companies were scared to visit Bangladesh after July 1, 2016 Gulshan café attack in which seven Japanese nationals along with 22 others were killed.

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