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SHS unit racking up damages over delay in Bangladesh solar power project
THE delay in delivering a solar power project in Bangladesh has led an SHS Holdings subsidiary to default on key agreements, the board of directors said on Tuesday.
HDFC SinPower could accrue up to US$912,500 in liquidated damages over its failure to complete a 50-megawatt plant by Apr 18, under agreements with the Bangladesh Power Development Board (BPDB) and the Ministry of Power, Energy and Mineral Resources.
The delay - which the board blamed on "outstanding land issues, regulatory approvals, delay in obtaining financing and inclement weather conditions" - has led it to chalk up liquidated damages of US$2,500 a day, up to 365 days from the missed deadline, said SHS Holdings.
But the board said it believes that the BPDB's right to terminate the power purchase agreement (PPA) can kick in only on or after Apr 19 - one year from the planned commercial operations date.
"Based on the information available to the board and its analysis of the current situation, as the board does not view the termination of the PPA and implementation agreement as a likely event at this announcement, the financial effects of such termination on the group will be assessed and announced accordingly when so required," it added.
"The company will provide further updates on material developments to the solar project as necessary or appropriate."
When SHS Holdings first announced the project in 2016, it said that the cost of the plant was expected to be between US$70 million and US$80 million, with about 70 per cent to come from financial institutions and the rest to be internally funded by the subsidiary.