India edges out China to clinch major power deal in B’desh

After China’s recent success in pushing development projects in Sri Lanka, a breakthrough in Bangladesh would be welcome news for Indian officials who have long fretted over Beijing’s encroachment in territory it considers its own back yard.

India believes Bangladesh is a part of a “String of Pearls” China is building across the Indian Ocean that stretches from Gwadar port in Pakistan to Djibouti on the African coast where it is building a naval base.

After years of negotiations, BHEL will sign a contract to build a 1,320-megawatt (MW) thermal power station in Khulna in southern Bangladesh on February 28, officials in New Delhi and Dhaka said.

China’s Harbin Electric International Company Ltd, which has power projects in Iran, Turkey and Indonesia among others, lost the bid on technical grounds, said a Bangladesh official, speaking on condition of anonymity.

But Anwarul Azim, a spokesman for the Bangladesh-India Friendship Power Company Limited, a joint venture set up to build the coal-fired plant, said BHEL was the lowest bidder.

The Indian government’s external lending arm, the Exim Bank, has backed up BHEL’s offer with nearly 70 percent funding of the project’s costs at a soft interest rate of around 1 percent above Libor, the leading global benchmark for pricing transactions, an Indian government official said.

He declined to be named, saying the two sides were about to seal the contract.

Officials at China’s Harbin who dealt with the bid refused to comment.

But an employee in the after-sale service department said: “The company has been involved in many such tenders, it is very normal - either we win or lose the bids.”

India and China have stepped up bids for infrastructure projects in the region in recent years, with Prime Minister Narendra Modi pushing for a greater engagement with smaller neighbours after years of neglect.

The loss of the power project is the second setback for China, after Japan muscled into Bangladesh’s port sector last year, offering 80 percent financing on easy terms for a seaport, barely 25 km from a $8 billion deep water port that Beijing was negotiating to construct.

Bangladesh finance minister Abul Maal Abdul Muhith, however, told reporters recently that the necessary steps had been taken to reduce the impact on the environment.