Saudi co bypasses deal with state-run Gemco

Saudi Arabian company Engineering Dimensions is going to produce transformers and other electrical equipment all by itself, bypassing a joint-investment deal signed with Bangladeshi state-owned General Electric Manufacturing Company Limited (Gemco) in 2018. 

In this situation, Bangladesh is now revisiting the agreement and trying to find out ways to go into production jointly. The Saudi company had pledged an investment amounting to $35 million for the purpose. 

During a meeting held at the industries ministry on 6 October on Bangladesh-Saudi Arabia investments, Salman F Rahman, prime minister's private industry and investment adviser, made a directive for revisiting the deal.

In the keynote address at the meeting, Shib Nath Roy, then additional secretary (state-owned enterprise) of the industries ministry, said although the memorandum of understanding and the strategic partnership agreement were signed for joint venture, Engineering Dimensions formed a separate company named Saudi General Electric Manufacturing Company Limited and is managing their production separately.

The strategic partnership agreement Engineering Dimensions and Gemco, an enterprise of Bangladesh Steel and Engineering Corporation, was on 20 December in 2018 at the industries ministry. Later, the final agreement was signed at the PMO on 7 March in 2019. 

Contacted, Md Shahidul Hoque Bhuia, chairman at Bangladesh Steel and Engineering Corporation, said "There are some inconsistencies in the deal signed between Gemco and Engineering Dimensions. The government has decided to re-evaluate the agreement and the issue of joint venture production will be looked into as well." 

He added that the Saudi Arabian company has pledged to invest $100 million in the country, including for setting up a solar power plant. 

"The government also wants to ensure that the promised investment takes place," he said.

Meanwhile, a seven-member panel, headed by the additional secretary (state-owned Corporation) of the ministry of industries has been formed to review the agreement. In addition to the representatives of the Ministry of Industries, the panel will include members of BSEC, Bangladesh Investment Development Authority (Bida), Engineering Dimensions, Gemco and two lawyers from both the parties, according to sources at the industries ministry.

Gemco sources said the Saudi General Electric Manufacturing Company Limited got registered with the Register of Joint Stock Companies .

The company has also set up an office and a shed on Gemco's land in Chattogram. However, the Saudi electric manufacturing company is yet to go to production owing to the pandemic-led disruption. According to the terms of the agreement, the Saudi company owes Tk3.77 crore to Bangladesh Steel and Engineering Corporation for its use of shed space and electricity.

Saudi General Electric Manufacturing Company Limited is planning to produce oil-immersed type transformer, dry-type transformer, special transformer, box-type transformer, high voltage switchgear series, low-voltage switchgears series and switch series products in their factory.

No response was received from Engineering Dimensions when requested for comments on the matter via email.

Meanwhile, on condition of anonymity, a senior official of Gemco said the main objective of the government was to modernise the production system by replacing the dilapidated machines of Gemco through a joint venture. Besides, the target was to export transformers and electrical equipment abroad after meeting the domestic demand. But the formation of a separate company by Engineering Dimensions will undermine the objectives. 

"If Gemco is not modernised through investment, the state-owned company is likely to deteriorate further," he said.

Gemco was established with the technical assistance of AE (Overseas) Company Ltd of the United Kingdom and Promash Export of Russia, on 122.96 acres of land in Patenga, Chattogram as a feeding company of the Power Development Board. It started commercial production in 1980. The 100% state-owned company manufactures power distribution equipment – distribution and power transformers (up to 5 MVA), drop out fuses, lightning arresters, disconnectors, HT & LT switchgears, distribution panels, etc.