Bheramara 110 MW Diesel Rental Power Plant

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On September 9, 2009, Bangladesh Power Development Board invited tenders for the installation, operation and maintenance of 8 greenfield rental power projects in various locations. The bidders were able to compete for all 8 rental plants, but could only be awarded a maximum of 2 projects. The Bheramara Rental Project was a 110 MW diesel-fired rental power plant with a 3 year rental term in Khulna Division (state). Bangladesh Petroleum Corporation (BPC) was to pay for fuel supply and purchase the power generated by the plant. BPDB used a single envelope evaluation process to select the winning bidder, containing technical and financial bids. BPDB set the following deadlines: submission of bids and nonrefundable US$500 fee by Oct. 29, 2009; contract award date of Nov. 19, 2009; contract signing date of Nov. 30, 2009; and commercial operations date to be achieved within 120 days of contract signing. October 29, 2009, the tender committee recommended the award of the project to a developer called Quantum Power Systems, a subsidiary of Otobi Limited [Bangladesh, 100%]. On Dec. 23, 2009, the Cabinet Purchase approved the award of the contract - a delay of over one month from the scheduled Nov. 19 2009 award date. BPDB set the contract signing date for Jan. 27, 2010 and Otobi signed the contract on February 4, 2010 Otobi was due to pay a Performance Security Deposit (PSD) by Feb 18, but did not do so until Feb. 22, 2010. In December 2010, the rental project was commissioned, and undergoing test runs. The total project investment was estimated at US $26 million. To calculate this estimate, first the investment's present value (PV) was assumed by multiplying an assumed investment per kilowatt (US$600) by the plant’s installed capacity. The PV was then used to find an annual amortized payment, assuming 15 years as the expected asset life and a discount rate of 10%. This annuity payment was then multiplied by the term of the rental contract in years, giving the sponsor’s total estimated investment. The project became operational in January 2011 and was still operational in December 2012. Operational in December 2012