Japanese development partner JICA-assisted Matabari Coal-Fired Power Generation Project is finally on a roll again. Some uncertainties were created in the financing and implementation of the project following the unholy incident of Holey Artisan Bakery in Gulshan. But strong actions following that by the Bangladesh government has reassured the Japanese government and Japanese investors to return to Bangladesh.
With JICA assistance Bangladesh plans to construct a coal port capable of handling coal import required for 10,000 MW coal-fired power generation. Matarbari and Maheskhali will be developed into a major energy hub with the construction of at least two LNG terminals. All other relevant infrastructures will be developed there to turn it into a city like Singapore.
The coal-powered generation company received two bids from Sumitomo Corporation and Marubeni Corporation for the 1320MW imported coal-fired power plant in Matabari.
During the receipt of the tenders Engr Abul Kasem, managing director of the Coal Power Generation Company, said that a few other companies had expressed interest for building the plant but from them the two consortiums were selected for their past proven track records. The two consortiums on the scheduled date of January 31, 2017 submitted their offers following Single-Stage, Two-Envelope bidding process. The cost of the contract would be US$ 2.7 billion and the entire project with other ancillary facilities would be US$ 4.6 billion.
We are not sure whether Sumitomo Corporation bid includes Toshiba as a partner directly or indirectly. International media have recently reported of two serious allegations of multibillion-dollar scandals. A Reuters report published on January 30 states "Trust Banks plan to sue Toshiba over 2015 accounting scandal". Another report published in the New York Times on December 27, 2016 says, "Toshiba Could Lose Billions From Troubled U.S. Nuclear Power Deal". In this situation if Sumitomo offer comes into consideration for award it may create an unfortunate situation for Bangladesh. Another report published in The New York Times on January 27, 2007 says, "Toshiba, Desperate for Cash After Scandal, Will Sell Microchip Business."
For the sake of clarity we may discuss about the media reports mentioned above.
The New York Times on January 27, 2007 mentioned that the ill-fated investment in nuclear power projects by Toshiba of Japan have already precipitated an embarrassing accounting scandal at the company. Now the company is selling its most valuable business to try to undue the damage. The report further states that Toshiba would spin off its microchip division. The business makes the information-storing "brains" inside millions of smart phones, digital camera and other devices. It has been the biggest contributor to Toshiba's profit in recent years. The report further commented that the above move is evidence of Toshiba's desperation for cash after the punishing nuclear-related losses.
Reuters report of January 30, 2017 stated that Japanese trust banks were preparing to sue Toshiba Corp over its 2015 accounting scandal, a fresh headache for the conglomerate as it scrambles to offset a separate imminent multi-billion dollar write-down. The news followed an announcement by the struggling conglomerate that it would sell a minority stake in its memory chip business to raise funds and that its overseas nuclear division - the cause of its current woes - was now under review.
According to the report, Mitsubishi UFJ Trust and Banking Corp was preparing to seek 1.0-billion yen ($8.7 million) in damages on behalf of its client pension funds after Toshiba's shares slid in the wake of the accounting scandal two years ago. The bank is a unit of Mitsubishi UFJ Financial Group.
Two other trust banks, Sumitomo Mitsui Trust Bank Ltd and Mizuho Trust & Banking Co were also preparing similar suits.
Another report of The New Work Times of December 27, 2016 stated "Toshiba Could Lose Billions From Troubled U.S. Nuclear Power Deal". It mentioned that Toshiba, the Japanese technology conglomerate, spent a decade and billions of dollars building itself into one of the largest players in the global nuclear power industry by buying up rivals. The result turned out to be a financial quagmire - one that was about to deepen. The report said Toshiba warned that it might need to write off "several billion U.S. dollars" because of its purchase of an American construction firm that specializes in nuclear power projects. Toshiba said it was still figuring out the size of the write-off, which was related to its acquisition a year ago of the business, CB&I Stone & Webster.
In tied grants recipient countries often can not enjoy freedom in selecting contractors. We hope Bangladesh would be able to adopt a very transparent selection process and award the work to the right company after thoroughly scrutinising all information. If necessary a re-tendering may be done for ensuring competitiveness.
The power plants based in Matabari and Moheshkhali are essential for achieving sustainable energy security under power sector visions 2021 and 2041. It is essential that right companies with sound financial capability gets the work for delivering the projects on time and within cost. While evaluating the bids of Sumitomo and Marubeni every piece of credible information should be taken into account.
The writer is an engineer.
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