The Financial Express

Dhaka ducks Delhi's LoC loan for hard tags

| Updated: January 28, 2022 18:13:10

Dhaka ducks Delhi's LoC loan for hard tags

Bangladesh decides to avoid funding from the Indian Line of Credit (LoC) to install river-crossing electricity transmission lines from Rooppur nuclear power plant following exorbitant procurement price quotes.

Officials say the funds, worth US$330 million, might now be arranged by the government itself from the country's foreign-exchange reserves with assistance from a state-run commercial bank.

They say the entire electricity-evacuation facilities of the 2,400- megawatt RNPP project, including 20-kilometre electricity-transmission lines, were supposed to be implemented under India's third LoC funding facility worth US$1.0 billion.

Under the terms of the third credit line, inked in October 2017, at least 75 per cent of the procurement for service-oriented projects and 65 per cent for public-works projects must be made from India.

But the bid as offered by the designated Indian contractor for setting up the across-the-river electricity transmission lines is much higher than the estimated cost, leading to rejection of the offer, according to the sources.

It was a closed bidding as only Indian contractors could participate in it under the LOC conditions.

State-run Power Grid Corporation of Bangladesh (PGCB), the implementing agency of the transmission line, "will float an international tender very soon" to build the transmission line, PGCB managing director Golam Kibria told the FE Thursday.

Indian firms will also be able to take part in the fresh bidding, like other global firms, he says.

Indian firms are, however, building onshore electricity transmission lines of the RNPP project under the LoC funding, he adds.

The government will try to shift the Indian LoC fund which was supposed to be spent for RNPP's river-crossing transmission lines into other necessary projects, say the sources.

They are afraid that full-capacity electricity evacuation from the RNPP might be delayed due to the slow progress in installing transmission lines.

It might also delay the implementation of Bangladesh's maiden nuclear power plant.

The RNPP is located in the vicinity of two of the country's mighty rivers, and three important river-crossings over the Jamuna and the Padma confront evacuation of the electricity to be generated from the currently under-construction nuclear-fuelled plant being built with overall Russian assistance.

It will take around two years to complete the river-crossings-two over the river Jamuna having around seven km each and one over the Padma of around six km-meaning electricity evacuation from the expensive RNPP project will be delayed after completion of its construction works.

The PGCB or Bangladesh Power Development Board (BPDB) might have to count capacity payments for their failure to evacuate or purchase electricity even after completion of the mega power-plant project.

"The construction work on the RNPP project is going on in full swing with a target to complete and commission the first 1,200mw-capacity unit by 2023," says a senior official of the RNPP project.

The second 1,200mw RNPP unit is expected to be commissioned in 2024.

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