Power purchase deals signed with S Alam-led groups

Star Business Report

The government yesterday signed power purchase agreements with two private joint ventures led by S Alam Group to buy electricity at 8.259 US cents or Tk 6.61 per kilowatt-hour.

The state-run Bangladesh Power Development Board or BPDB struck the deals for the two projects with total electricity generation capacity of 1,224 megawatts.

SS Power I Ltd and SS Power II Ltd, two joint ventures of S Alam Group and SEPCOIII Electric Power and HTG of China, will set up the power plants in Banshkhali, Chittagong by November 2019.  The electricity will be supplied for 25 years.

The project will require an investment of $2.4 billion of which $1.75 billion will come from Chinese lenders, according to a handout distributed during the contract signing ceremony at Bidyut Bhaban in Dhaka.

BPDB and Power Grid Company of Bangladesh, another state-run company, also signed project implementation agreements with the joint ventures.  SEPCOIII, a power generation company in China, would be the contractor for engineering, procurement and construction of the two power plants. It operates in coal, oil, gas-fired thermal power, hydropower, solar, wind, and biomass-based power generation.

S Alam Group has investment in commodities, transport, banking, leasing, insurance, stock broker houses and merchant banking business and power.

Tawfiq-e-Elahi Chowdhury, energy adviser to the prime minister, Ahmad Kaikaus, additional secretary of the Power Division, Mohammad Saiful Alam, chairman of S Alam Group, Zhang Hongsong, executive president of SEPCOIII, and Hu Jai, head of project manager at HTG, were present during the programme.

EU unveils plans to vet energy contracts outside bloc

Afp, Brussels

The EU unveiled Tuesday plans to vet energy contracts that member states sign with countries outside the bloc as it seeks to cut dependence on Russian gas.

The European Commission, the executive of the 28-nation bloc, proposed changes so it can review such agreements before they are signed to see if they comply with EU rules. Currently the Commission can only examine contracts after they have been signed.

"It means no country should sign an inter-governmental agreement until the Commission has given its opinion," EU energy Commissioner Miguel Arias Canete told a press conference.

Such opinions would be given in 12 weeks and the member state would have to do its "utmost" to take the findings into consideration.

"This is an important and unprecedented step to ensure a level playing field for all," Canete said.

"As EU markets continue to integrate, decisions taken by one member state can have a negative impact on the security of supply in neighbouring countries," he added.

The European Union is already investigating whether Russian state energy firm Gazprom has imposed unfair prices which breach the EU's rules, in a move which further inflamed relations already strained by the Ukraine crisis.For the tenth year in a row, EU states imported half of their energy needs in 2014. A third of their gas imports comes from Russia alone and some newer eastern members are almost entirely reliant on Moscow.

"With political tensions on our borders still on a knife-edge, it is a sharp reminder that this problem is not going to go away," Canete said.

Brussels also wants to be automatically notified of any commercial contract lasting more than one year if the market share it involves means that it carries a risk of security of supply. "We consider a 40 percent market share to be an appropriate threshold," Canete said.

Germany's plans for a second pipeline, Nord Stream 2, to carry Russian gas under the Baltic Sea have caused some disquiet.

Rome saw it as hypocritical that Berlin should pursue a major deal when the rest of the bloc is being asked to sacrifice their interests to pursue sanctions against Russia over Ukraine.

The Nord Stream 2 consortium said its deal is only based on commercial cooperation between companies and is not based on any agreements between countries.

"Therefore there are no potential issues with EU law compliance of underlying intergovernmental agreements," it said in a statement to AFP.

FICCI calls for withdrawal of tax on workers' fund

Star Business Report

Foreign investors yesterday urged the government to withdraw the tax imposed on the workers' profit participation fund (WPPF).

“Taxes have been imposed on the WPPF through Finance Act 2015,” said Rupali Chowdhury, president of the Foreign Investors' Chamber of Commerce and Industry.

The WPPF is a fund where workers and management contribute equally for the welfare of the workers.

FICCI has called for the strict implementation of the ceiling on the provident fund contribution. The provident fund contribution ceiling has also been fixed at 8 percent by the labour rule, an alignment of which will be difficult for companies that are already contributing a higher percentage, Chowdhury added.

If the ceiling is not complied with, it can lead to labour unrest as some workers will receive more than others, Chowdhury said at the monthly luncheon meeting of the FICCI at the Westin hotel in Dhaka.

To operate a manufacturing company, a company requires complying with more than 15 laws, including income tax law, VAT law, foreign exchange regulations and labour laws, Chowdhury said.

“FICCI members being compliant with all relevant laws require rearrangement in their operations to ensure conformity with the changed laws,” she said.

Speaking as the chief guest, Mujibul Haque, state minister for labour and employment, said the government has not been allowing trade unions in the services sector considering the foreign investment.

After the Tazreen Fashions fire and Rana Plaza building collapse, the government amended the labour law of 2006 in July 2013, allowing full freedom of association in the factories.

After amendment, trade union registration in the garment sector gained momentum. Training programmes started for the office bearers of the newly formed unions, with technical assistance from the International Labour Organisation, Haque said.

The government also published the rules of the amended labour law in September last year, focusing on worker safety and welfare through a wide range of consultations with the stakeholders, he said.

“It is imperative to mention here that good industrial relations are a prerequisite to development. We need to work together with synergy for productive employment and sustainable development.”