Home | Bangladesh | Solar park deal signing uncertain as US firm turns bankrupt
The Cabinet Purchase Committee on October 1 last approved a proposal of the state-owned Power Development Board (PDB) for awarding contract to SunEdison to set up the largest solar plant in the country on a build-own-operate (BOO) basis.

Solar park deal signing uncertain as US firm turns bankrupt

WT24 Desk

The signing of proposed contract with the largest US firm, SunEdison, for setting up a 200 MW solar park at Teknaf in Cox’s Bazar has become uncertain following the company’s bankruptcy in its own country.

The Cabinet Purchase Committee on October 1 last approved a proposal of the state-owned Power Development Board (PDB) for awarding contract to SunEdison to set up the largest solar plant in the country on a build-own-operate (BOO) basis.

After this approval, it was supposed that PDB would sign power purchase agreement (PPA) and implementation agreement (IA) with SunEdision to implement the project within 18 months.

However, although nine months have elapsed after the approval, no contract was signed between the PDB and the SunEdison in this regard.

Official sources said after obtaining the Teknaf project, SunEdison faced problem in purchasing huge 1000 acres of land in Cox’s Bazar for its liquidity crisis. The US firm then pursued a local firm to become its partner who would purchase the land for the project. The efforts went in vain when the news spread that SunEdison filed a petition with a US court for “Chapter 11 bankruptcy protection”.

In its bankruptcy filing in April this year, the company said it had assets of $20.7 billion and liabilities of $16.1 billion as of September 30 of 2015. This has put the local partner in a dilemma to continue its partnership with SunEdison in the Teknaf project. The local firm finally backtracked from out from the project.

In such a situation, the Power Division in a meeting on June 23 thoroughly reviewed the overall situation when most of the officials came up with negative remarks about the signing of the contract with the SunEdison. But the meeting finally decided to ask the PDB for taking legal experts’ opinions on signing deal with a company which became bankrupt.

“We’ve asked the PDB to take the opinion of their legal experts about the signing of the contract. We hope we’ll get the opinion soon and then the government will go for the final decision,” Mohammad Alauddin, joint secretary at the Power Division and in-charge of renewable energy related issues in the division, told UNB.

However, SunEdison officials said though their mother company in the USA became bankrupt, it has no effect on its Bangladesh project. Because, Bangladesh project is being dealt by SunEdison’s subsidiary in Singapore which is not declared bankrupt.

But Bangladeshi officials do not buy this statement. SunEdison’s Bangladesh chief executive A Rob said his firm is ready to sign the contract with the government.

Official sources said SunEdison, having experience of 2,000+MWp solar power projects in 25 countries, had offered to implement the Teknaf project on a 75:25 debt-equity basis. SunEdison had submitted a $1 million performance guarantee (PG) bond to the government for the project.

The sources said the total investment of the US firm would be between $280 and $300 million.The SunEdison was selected by the government on an “unsolicited” process where it did not have to face any competition.

It offered electricity tariff at 17 cents or Tk 13.26 per kilowatt hour (each unit). The PDB on behalf of the government will buy its electricity for about $1.1 billion or Tk 8,595 crore in 20 years.

PDB will purchase electricity from the project on a “No Electricity, No Payment” basis, meaning the project does not need to have any capacity payment guarantee. The condition, however, applies to other IPP projects like rental and quick rental plants that use traditional fuels.

The move for allowing IPP solar plants has been part of the government’s plan to generate 24,000MW of electricity by 2021, the sources added.

Special emphasis was laid on power production from non-conventional sources. It aims to increase the total solar power production by 5 percent by 2015 (meaning 800MW), and 10 percent by 2020 (2,000MW). The total solar power production in Bangladesh has not crossed 200MW yet.

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