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WEDNESDAY, 23 APR 2014
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Bassil suspends power plant deal
Energy and Water Minister Gebran Bassil arrives to attend a Cabinet session at the Presidential Palace in Baabda, Monday, July 30, 2012. (The Daily Star/Mohammad Azakir)
Energy and Water Minister Gebran Bassil arrives to attend a Cabinet session at the Presidential Palace in Baabda, Monday, July 30, 2012. (The Daily Star/Mohammad Azakir)
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BEIRUT: Energy Minister Gebran Bassil shelved Monday an offer by two companies to build a power plant in Deir Ammar on the grounds that the price was higher than earlier expectations.

Bassil said winning bidders need to cut prices by some $160 million before they can go ahead with construction.

The minister, who spoke at a news conference, said a final green light for the project had been delayed after the cost of the project increased from $502 million to $662 million.

“The price hike sought by the two companies came after the government asked that the total capacity of the plant be 450 megawatts. [Instead] the two companies had offered a capacity of 525 MW,” he said following a meeting with Abener-Butec, the Spanish-Lebanese consortium that won the bid last month.

Bassil pointed out at the news conference that Cabinet had decided to enter into negotiations with the two companies in an attempt to reduce prices: “Otherwise we will have to launch a new tender.”

“We do not want to cancel the project because time will be wasted,” he added, stressing that up to 30 months was required to finalize the project.

Commenting on the issue, MP Mohammad Qabbani said this amounted to a scandal.

“In addition to violating Parliament’s request to seek international funds for funding the project, mismanagement from the minister [Bassil] and his 50 advisers resulted in overpricing the project by $160 million,” the lawmaker told reporters at a news conference.

He suggested that Abener-Butec had been the highest bidder at the tender awarded last month, but that Butec won the deal because the Lebanese company is owned by a supporter of Bassil’s Free Patriotic Movement.

Commenting on negotiations between the government and the two companies, Qabbani said such talks “only happen in the most corrupt and underdeveloped countries.”

“If Bassil had worked within the framework of Lebanese law and transparency during the last three years, we would have been close to providing electricity to all of Lebanon,” the lawmaker said.

Bassil said a deadline had been set for the companies to reduce prices.

“We believe they are fully capable of doing so,” Bassil said.

Electricity-generating barges were also delayed, Bassil said, because payments to the Turkish provider were late.

“Last week the issue was finally settled and the sums were sent to the Turkish company,” Bassil said.

In mid-July Lebanon signed a $360 million three-year contract to lease electricity-generating barges from Turkish firm Karkey Karadeniz Elektrik Uretim, a subsidiary of Karadeniz Holding. But the two barges, the first of which had been due to arrive in October, have yet to be dispatched.

The two electricity barges combined are expected to generate 270 megawatts of power, according to the deal, which stipulates that fuel needed by the vessels should be provided by the Lebanese government.

The Turkish firm supplying the barges has been mired in scandal. Leading Turkish newspaper Hürriyet reported last week that two power-generating barges that were owned by the same supplier had been detained in Pakistan after their contracts were canceled earlier this month.

The Pakistani government had recently decided the barges could leave after repaying a deposit of $17.2 million. But the decision was suspended after a Pakistani parliamentarian objected with the Pakistani High Federal Court, claiming that the Turkish company should pay up to $229 million for the release of the two ships.

According to the Turkish paper, the company has pledged to take the case for international arbitration if the two ships are not allowed to return home.

The conflict between the government of Pakistan and the Turkish company started last year when Islamabad said the company had failed to deliver 230 MW of electricity that had been promised in its contract.

The company blames disruptions in fuel for severely impeding its ability to deliver the promised amount of electricity to the city of Karachi, Pakistan.

 
A version of this article appeared in the print edition of The Daily Star on November 20, 2012, on page 5.
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Gebran Bassil / Lebanon / Economics
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