The installation of the 70 megawatt (mw) combined cycle power plant under the third phase of Mymensingh Power Plant Project has become uncertain again due to non-compliance of financial terms with the foreign contractor, it was alleged.
Power sector sources said Thursday Siemens informed the Rural Power Company Ltd (RPCL), the executing agency of the project, last week that it was not in a position to continue the works because of the violation of agreed terms.
The Siemens issued the letter following RPCL's failure to open a letter of credit (L/C) for payment of outstanding dues to Siemens.
Under a consensus reached between the RPCL and Siemens the opening of the L/C by local bank in Bangladesh was scheduled to be done by January 15, 2006.
Sources said the RPCL will have to pay Siemens Tk 1.37 billion (Euro 16.5 million) in compensation due to its negligence.
The principal amount due to be paid to the Siemens is Euro 42.29 million. This means the RPCL will have to pay the foreign company a total of Euro 58.79 million including the compensation amount.
The RPCL is also facing arbitration in the International Arbitration Court due to termination of the operation and management contract with the Lahmeyer International Pally Power Services Ltd (LIPPS) unilaterally.