Insider sources said this syndicate sold another two lakh poles to the REB on record. But these poles cannot be found in reality.

By controlling pole prices, the syndicate made the REB pay double the actual price of the poles. In many cases, the REB paid three times the price of the poles, the sources said.

From November last, the REB has stopped purchase of concrete poles and power distribution procurements with local funds. The caretaker government (CG) had asked it to stop expansion of power distribution due to a huge demand and supply shortfall.

Because of a massive expansion of distribution network in the last five years, the REB's client base doubled from 3 million to 6 million, and demand for power from 1,000 megawatt to 2,000 MW. But as the then government had failed to install new power plants during the period, it was able to supply only 700 MW to 1200 MW power, and thus created widespread dissatisfaction among the consumers.

Besides, the REB could take the decision regarding concrete poles as external pressure to award contracts had significantly declined.

"As a result of stoppage of all procurements with local funds, REB's utilisation of the annual development programme (ADP) funds remained stagnant at a disappointing 37 percent till December," said an official.

The government had allocated about Tk 500 crore in local currency to the REB under the ADP with Tk 400 crore of it for poles procurement.

"REB has decided to revise the ADP (relating to it) and reduce its size. But we will try to utilise the foreign exchange components," the official added.

He pointed out that Khamba, a pole manufacturing company set up by Hawa Bhaban leaders including Ghiasuddin Mamun, was all set to win a tender in October-November last when the REB decided to re-tender it because of gross irregularities in Khamba's bid.

Sources said that in the last five years till 2006, the REB installed power distribution lines of 75,000 km almost entirely with 15 lakh concrete poles. Prior to that the REB installed 1,35,000 km lines using 17 lakh wooden poles and another few lakhs of concrete poles. Under pressure from the concrete pole syndicate, the REB stopped purchasing any wooden poles in 2003 and opted for costlier and low quality concrete poles.

The installation cost difference between concrete and wooden poles per km is significant. For instance, in fiscal 2004-05, the REB spent around Tk 250 crore to buy four lakh concrete poles for construction of 16,700 km distribution lines. If wooden poles were used, the same job could have been done with half the number of poles by spending around only Tk 75 crore to Tk 85 crore.

Each wooden pole has double the strength of a concrete pole, according to different reports of the REB.

The REB has 70 palli bidyut samities (PBS), most of which run on losses. Only a small number of them make enough profit to keep the REB system look functional. The REB's annual earning stands at Tk 2,240 crore.

Beneficiaries of poles business

The major chunk of the Tk 1,100 crore poles sale money went to an ex-defence official and tycoon, who owns five out of these 13 pole manufacturers and who imposed the idea of concrete poles on the REB in the mid-nineties. Before that, the REB used only wooden poles. According to REB sources, this tycoon alone claims 30 to 35 percent share of the pole business through his firms.

He is followed by another company owned by Hawa Bhaban leaders along with a former state minister and their associates. This company claimed 20 to 25 percent share of this business.

The other seven companies take the remaining market share.

Before this syndicate was born in 2002, the ex-defence official was enjoying a monopoly in the REB by staging bids with his five companies from 1996. The REB knew that the owner of these five companies was a single person but it did not oppose such corruption saying that these companies have separate boards and tax identification number.

But soon after the BNP-led four-party alliance government came to power, the other competitors arrived, and the ex-defence official had to strike a compromise with them since Hawa Bhaban was backing them.

Poles purchase under foreign finances

While the REB stopped poles purchase with local funds, it is continuing some tenders to procure wooden and concrete poles under international tenders sponsored by the World Bank and the DFID.

During the five years of the alliance rule, the government on an average allocated in the ADP around Tk 700 crore for the REB. Of this, the local currency component hovered around Tk 500 crore and the rest was in foreign currency given by donors.

But the syndicate was not interested in foreign currency. Donor funded poles purchase is conducted only through international tenders, and allows wooden poles purchases. As this kind of tender does not help the syndicate to bag the deals, they made the REB stop poles purchase with foreign funds from 2003.

Only in this fiscal year, the REB has decided to utilise the WB and DFID funds to purchase poles. Both the WB and DFID gave condition in December 2005 that from now on, at least 20 percent of the poles to be purchased by the REB should be wooden poles. Yet, under the influence of the syndicate, ex-power secretary ANH Akhtar Hossain asked for restricting this condition to the WB and DFID tenders only.

This contradictory stance delayed the tender process and only recently the REB has finalised the tender.