The ERL, a subsidiary of Bangladesh Petroleum Corporation, incurred huge financial loss through Harbin's installation of a small three-megawatt (MW) steam turbine power plant under a contract signed during the previous Awami League (AL) government on September 23, 1999.

The alliance government awarded Harbin with the contracts for the 80MW Tongi power plant and 90MW Fenchuganj plant and is set to award the 150MW Chandpur power plant undermining national interest. Besides, opposing consultant's views, the government remains hell-bent on awarding the company the contract for 240MW Siddhirganj power plant -- now under tender process.

Of these projects, the Tongi plant started operation last year displaying the worst possible engineering and installation work in the country's history.

Harbin lobbyists meanwhile are trying to get the approval of the Cabinet's Purchase Committee for the 150MW Chandpur Power Plant on October 15, sources said. Previously, a government review committee had declared Harbin's bid in the Chandpur project as void But the government brushed aside the review committee's decision.

While Harbin's performance in the Tongi plant that tripped around 90 times from May last year is enough to blacklist this company from all power projects in the country, the government so far took no action against it.

However the ERL, also a government owned body, has taken a tough stance against Harbin for the first time.

"It only proves that Harbin can not even set up a small power plant," noted an expert of the power sector.

In a letter to Harbin in August, the ERL wrote that Harbin has failed to bring its steam turbine generating system to the 'final acceptance state as stipulated in the contract'.

"In fact, (the) steam turbine generating system supplied by you [Harbin], could not be run reliably even at considerably lower than rated load on continuous running basis since Provisional Acceptance," it added.

The letter noted that to rectify inherent faults and to make the system operational, Harbin kept its experts with the ERL for almost two years, but failed to improve anything. It could not even integrate the plant with ERL's existing power generation units.

Keeping the tradition of Harbin's Tongi plant, the ERL plant also tripped frequently and brought misery to the operation of ERL that processes crude oil and produces refined petroleum.

"The purpose of installing this plant was to ensure uninterrupted power supply at the refinery. But that has not been served," said a source quoting the ERL letter.

The ERL letter added, "Failure to deliver the required performance of the said steam turbine generation system, made it a sunk investment for ERL and is the root cause of substantial financial losses already incurred by the ERL."

"In view of the facts mentioned above, the ERL Board has decided to bar your company [Harbin] from future participation in any ERL's project," it noted.

"By this letter HPE (Harbin Power Engineering Company) is hereby blacklisted in ERL, and is therefore barred from future participation in any project at ERL either directly or as an associate of any other company," the letter said.