Thakurgaon 50MW Diesel Rental Power Plant

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On Sep. 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 Thakurgaon Rental Project was a 50 MW diesel-fired rental power plant with a 3 year rental term to be located in the division (state) of Khulna. 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 Rahimafrooz [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 Rahimafrooz signed the contract on Feb. 4 and deposited Performance Security Deposit (PSD) worth Tk 22 crore (US $.3 million) on Feb. 17. In Feb. 2010, Rahimafrooz wrote to BPDB about changing its diesel engine generator from Caterpillar to Mitsubishi units and seeking approval of a power transmission line. These issues were expected to delay the project. However, In August 2010, the rental project was commissioned, and by December 2010, the project was fully operational according to energy output reports to BPDB. The total project investment was estimated at US $11.8 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. Still operational in December 2012.