These equipment lack guarantee of their builder, sources said.

The PDB will hold a meeting tomorrow to discuss making the $ 17.7 million contract 'effective' with the poorly performing Russian company Technopromexport or TPE. The contract remains suspended since it was signed in 2000.

Sources said the PDB is now preparing to pay the TPE several million dollars with retrospect effect from 2001 for import of the equipment.

"But we are not sure if the old plants can at all be rehabilitated with these rusted machinery. It is likely that the money will be wasted," said one source.

The PDB however accepted the equipment following an independent review by some experts from Bangladesh University of Engineering and Technology, who reported the equipment are okay.

"The TPE has also agreed to provide 18 months' warranty for the equipment," said a PDB official. "We will seek the power ministry's approval in a few days to make the contract effective."

A business lobby has been putting pressure on the PDB for years to make the payment to the TPE. The Russian embassy in Dhaka also sent letters asking the government to make the TPE contract effective.

The PDB signed the rehabilitation contract, bypassing the Economic Relations Division (ERD), under suppliers' credit scheme in May 31, 2000. Each of the two Ghorashal units produces 55 megawatt power.

An annoyed ERD opposed the contract signing. An inter-ministerial probe was launched and the contract was suspended for some time.

The suspension was later withdrawn. But the contract could not be made effective as the Russian company declined payment of 10 per cent of the total project cost within 45 days of the contract signing, as provided for in the contract.

The finance ministry is also supposed to issue a letter of guarantee to the TPE so that it submits its bank guarantee to the PDB to make the contract effective. But considering the company's failure to complete construction of the Siddhirganj plant timely, the finance ministry did not issue any guarantee letter.

Against this backdrop, the TPE tried to impose the project on the government by unilaterally importing 1,400 tonnes of power plant equipment in April 2001. Despite the efforts of some PDB officials, the equipment were not accepted as they did not have builder's guarantee.

When the BNP-led coalition came to power, the Bureau of Anti-Corruption started investigating the deal. The probe however was suspended apparently without any reasons.

In 1995, the TPE signed the contract to set up the 210 mw Siddhirganj power plant in three years but took 10 years to complete the task.