Abu Taher BappaPublished:
2019-12-12 19:01:52 BdST
Project costs rise abnormally during implementation
There has been an abnormal escalation in the cost of many government's mega-projects even after they were approved by the Planning Commission.
This has been happening quite frequently for no good reason – a strong indication that the implementation of these projects are being marred by anomalies.
The Bridges Division sent the proposal for the Karnaphuli Tunnel project to the Planning Commission with an estimated cost of Tk5,600 crore. The cost jumped to Tk7,600 crore even before the proposal reached the Project Evaluation Committee (PEC) meeting.
The PEC meeting raised questions about expenditure on several issues. The proposal was then sent back because the Bridges Division could not provide satisfactory answers.
The proposal came back to the Planning Commission after being labelled as a 'priority project', with a further elevated cost of around Tk8,446 crore. The Executive Committee of the National Economic Council (Ecnec) approved it in November 2015.
Finally, the revised cost of the project went up again to Tk9,880 crore.
Though the project is scheduled to be implemented by June 2020, only 48 percent of the work has been completed so far. There is growing concern that the project might require more time and money.
Almost every project, like this one, has the same story of irregularities and anomalous costs. The Planning Commission had to commission these projects because of mounting political pressure.
AB Mirza Azizul Islam, an adviser to the former caretaker government, said that officials should be made accountable for such anomalies. "Tk20 is allocated for a project that requires Tk5 at the most, thus plundering public money," he said.
Arastoo Khan was a member of the Physical Infrastructure Division of the Planning Commission when the Karnaphuli Tunnel project was approved.
He said, "It is unacceptable to see that nearly Tk10,000 crore is being spent when the project could be implemented at a cost of Tk5,500 crore."
He suggested that the Planning Commission and the Economic Relations Division (ERD) should shake off political influence to stop such misuse of public money.
Officials said the Planning Commission often has to approve such projects in the face of pressure from political and other quarters, while government officials and contractors get the kickbacks.
Development partners sometimes influence the rise in project costs with the help of government or non-government insiders who work for them.
Requesting anonymity, a high official of the Planning Commission said that the chief engineer, the contractor and other officials are responsible for increasing project costs.
"This happens when they prepare the project proposal or even during implementation. Also, costs go up several times because projects are taken-on without conducting a feasibility study or by doing a poor survey," he said.
Planning Minister MA Mannan said some implementation agencies propose abnormal costs by mistake while some increase costs on purpose.
"From now on, such projects will not get clearance from the Planning Commission. It will be possible to revise costs, but logical grounds will have to be provided in such cases," he said.
Md Nurul Amin, secretary of the Planning Division, said the Planning Commission has stiffened its scrutiny of projects.
"The costs of different project components are examined in detail, resulting in a decrease in the overall cost of many projects. Project proposals are not approved that easily these days," he added.
The proposed cost of building a five-star hotel on the compound of Motel Probal in Cox's Bazar went up from Tk250 crore to Tk501 crore.
The estimated cost of a new terminal at Hazrat Shahjalal International Airport was initially Tk13,614 crore, but now it has become Tk21,399 crore.
The problem of high estimated costs
There are serious irregularities in the implementation of mega-projects. The estimated cost of some projects is incredibly high.
On April 9, 2019, the Akhaura-Sylhet rail track dual-gauge conversion project was approved at an Ecnec meeting. Previously in 2018, the Planning Commission refused to give the project the final nod because it found the cost to be abnormally high at Tk16,104 crore.
The Planning Commission said the project cost estimate is double the actual value because it can be implemented for Tk7,000-8,000 crore.
The Electricity Generation Company of Bangladesh is building the 335MW Siddhirganj Combined Cycle Power Plant at a cost of $961 per kilowatt. The cost was $847 for the 412MW Haripur power generation unit in Narayanganj and $317 for the 450MW Ashuganj plant in Brahmanbaria.
The Implementation Monitoring and Evaluation Division termed the Siddhirganj power plant as one of the costliest power generation units in the world.
For the recently-finished 747MW electricity generation unit in Sindh province, the Pakistan Power Company spent $854 per kilowatt of electricity generation.
Another Tk3,829 crore project to procure 1.5 lakh Electronic Voting Machines (EVMs) and train 3,000 polling officers was okayed ahead of the 2018 national elections. The proposed price for an EVM was Tk2.34 lakh while neighbouring India spends Tk21,350 for it.
Planning Commission officials said the EVM procurement project cost is abnormally high.
The executive director of the Policy Research Institute, Ahsan H Mansur, said all projects are in the same condition.
"They [government officials] have learnt how to make money from project irregularities," said Mansur.
"Tenders can be floated before setting project costs. In such cases, contractors will be in the dark about project expenditure. This way, projects can be implemented at a lower cost than their allocations.
"Moreover, each component of a project should go through proper scrutiny. Technology has made that very easy now," he added.
A member of the Planning Commission's Socio-Economic Infrastructure Division, Abul Kalam Azad, said, "Escalation in project costs are sometimes too high because of the non-professional attitude or the lack of skill of concerned officials."
"For example, the official who prepared the proposal for Chattogram Medical University is a physician. He does not have any prior experience in doing such a thing," he added.
Unauthorized use or reproduction of The Finance Today content for commercial purposes is strictly prohibited.