US company wants undoing of PPA termination

Five years after the power-purchase agreement (PPA) was terminated, SunEdison USA has sought permission to build a 200-megawatt solar power plant in seaside Cox's Bazar.

After the regime change in Bangladesh the Missouri-based renewable energy giant, which wanted to invest US$200 million in the stalled project, has submitted an appeal to the energy adviser of the interim government with the hope of revocation of the PPA termination.

The energy division recently sent the application to Bangladesh Power Development Board (BPDB) for its opinion about processing the SunEdison plea, officials said.

The company also seeks approval for granting a new site and extension of commercial operation date (COD) for the project.

SunEdison's Consulting Director for Business Development Mohammad Abdur Rab in the application cited that SunEdison USA, through its wholly-owned Singapore Subsidiary and Bangladesh SPV Southern Solar Power Ltd, signed a 200mw solar PPA with BPDB in January 2017.

The company, by the end of July of the same year, had completed the full logistics of buying 600 acres of land on the Naf riverbank in Teknaf of Cox's Bazar coastal district.

However, Rohingya refugee influx into the surrounding project area since August 25 created a chaotic "warlike situation" which forced the company to immediately halt all land-acquisition efforts.

Subsequently, the situation worsened over the next six weeks with tens of thousands of refugees settling in the Unchiprang refugee camp, close by the project site.

Mr Rab also wrote a "highly influential" government official then asked the company to sign a deal with a particular firm as local partner. Under duress, they tried to negotiate but it broke off on November 22, 2017 due to the local company's "egregious financial and control demands".

Following the feud, the letter reads, the high official began PPA-termination process and a notice to terminate PPA issued on April 5, 2018.

Later on, the company successfully signed lease agreement on 700-acre of land in another location in Cox's Bazar and submitted a revised application for site change and time extension on May 22, 2018.

"We remained engaged with the government but could not get any approval. We also went to Bangladesh Supreme Court and got an injunction," he notes.

On July 17, 2019, the high official sought specific financial favour from him in a closed-door one-on-one meeting to grant the site approval and time extension.

"Being fully a compliant company we could not oblige, making him despicably angry," the letter reads.

Mr Rab also mentioned that while other PPA-signing companies received months to multiple years of repeated extensions for apparently no good reason, "we were the only one not to receive any" despite a warlike situation on the project site. A good number of companies also received site-change approval as well.

The High Court Division of the Bangladesh Supreme Court had ordered not terminating the PPA for 60 days from the date of receipt of the certified copy and allowing them to go to an international court.

"We received the certified court order on 10 July 2019. Regrettably the official then committed 'contempt of court' by issuing a PPA-termination letter in 43 days on 23 August 2019," he noted.

He also argues that the termination letter issued in direct violation of the Bangladesh Supreme Court order is contemptuous and legally null and void hence the PPA still remains a valid legal contract.

Therefore, the company offers the government to lower the tariff rate by 10 per cent, withdraw all litigation and proceedings, reimburse all litigation costs borne by the government and in exchange for these he sought a 36-month extension from PPA reinstatement to COD and approval for a new project site.

Contacted, Mr Rab told the FE recently that he was yet to receive any response from the government side.

"We want to make the investment in right way. We could not do that during the Sheikh Hasina government," he said, adding that due to change in administration, "we believe that the new government wouldn't behave like in the past".

syful-islam@outlook.com