How Padma Bridge cost surged to Tk30,000cr

When the Padma Bridge was designed in 2007 in association with the Asian Development Bank (ADB), the exchange rate of US dollar was Tk68.65.

The value of one dollar has risen by around 24% to Tk84.80 over the years.

The devaluation of Taka has played a major role in raising the cost of the Padma Bridge project, as more than half of the project's expenditure has been paid in foreign currency.

The extension of the length of the main bridge by 570 metres has caused a Tk8,469.94 crore increase in the overall project cost.

The expenditure on river training for the project has almost tripled even though the area of river training has remained the same.

Besides, the project cost has been increased by adding various works that were not there in the original project.

These newly added expenditures include Tk200 crore for construction of a yard, Tk10 crore for archive and film, Tk62 crore for capacity building of bridge authorities, and Tk30 crore for the expansion of bridges building.

The cost of the Padma Bridge project was estimated at Tk10,161.75 crore at the August 2007 meeting of the Executive Committee of the National Economic Council (Ecnec). As the project could not be completed timely, the cost of the project has now risen to Tk30,193.39 crore.

The cost of the project has risen to almost three times the original estimate through four amendments at various stages over a period of more than 10 years.

According to sources, the project was originally scheduled to be complete by 2014. Through the amendments, its term has been extended till June next year. As such, the project completion deadline has been extended by about seven years.

Even though the work of installing the spans of the main bridge has been completed, more than 1,500 road slabs and over 1,000 rail slabs are yet to be installed. Moreover, works on installing bridge railings, pitch casting on the slabs, lighting, lampposts and connection of gas and electricity lines remain unfinished.

Because all these works are not likely to be complete within the stipulated time frame, an initiative is being taken to extend the project tenure by another two years.

As a result, the cost is expected to see another hike.

Cost of main bridge

In the original project, formulated in 2007, the cost of building a 5.58-km bridge including rail tracks was estimated at Tk3,663.45 crore.

In the first amendment, the length of the bridge was increased to 6.15km and the cost was estimated at Tk8,361 crore.

However, after several rounds of tenders, the China Major Bridge Company made a proposal to build the bridge at Tk12,133.39 crore.

As a result, the expenditure in all these sectors has increased by Tk8,469.94 crore.

River training

Some Tk2,612.7 crore was allocated for 16km of river training for the project. According to the latest amendment, the expenditure in this sector has been estimated at Tk9,400 crore, raising the cost by Tk6,7887.3 crore or 3.5 times the original allocation.

Connecting roads and service areas

Initially Tk360.23 crore was allocated for the construction of 12-km connecting roads, toll plazas and service areas, which has been raised to Tk1,903.68 crore. The amount of increase in expenditure in this case is Tk1,543.45 crore or 5.28 times the original estimate.

Rehabilitation

Rehabilitation expenditure originally estimated at Tk306.05 crore has risen to Tk1,515 crore, witnessing an increase by Tk1,208.95 crore or around 4 times.

Land acquisition

Tk528 crore was initially allocated for the acquisition of 918 hectares of land under the project. Subsequently, the area of land to be acquired was increased to 1,530.54 hectares and the estimated expenditure was raised to Tk1,298.73 crore.

The increase in expenditure in this sector has been Tk770.73 crore. For the acquisition of 0.66% additional land the overall expenditure has been hiked by 146%.

An additional amount of Tk1,400 crore has been spent to acquire 1,162.67 hectares of land to properly manage the soil that came out from the ground during the dredging of the river.

Newly added works

Even though it was not in the original project, Tk200 crore has been allocated for the construction of a yard in the revised project proposal.

Some Tk62.10 crore has been spent from this project to enhance the capacity of the bridge authorities.

Meanwhile, Tk30 crore is being spent for the expansion of the bridges building under the Padma Bridge project. Apart from this, the project also has an allocation of Tk10 crore for archive and film.

What do economists and experts say?

Prof Mustafizur Rahman, distinguished fellow at the CPD, said if you cannot complete a project within the stipulated time, the cost will go up automatically.

"Many of our mega projects struggle with their progress, and the Padma Bridge project is not out of this trend," he told The Business Standard.

The CPD distinguished fellow thinks the financial and economic returns of the project will be thus delayed.

About the Padma Bridge project, Prof Mustafizur said the construction as a mega project might not have many essential components at the beginning. Besides, the construction site and the river have numerous construction challenges. Taking these into consideration, adding some components to the bridge project might be logical.

Transparency International Bangladesh (TIB) Executive Director Iftekharuzzaman commented that Padma project cost estimation might be incorrect at the initial stage.

"Again, there are possibilities that the costs were shown lower than the actual so that the project could manage the go-ahead approval quickly. Because, we often see projects are inflating costs later once they get the approvals showing lower costs initially."

"Delay in project implementation has become a trend in our country since managing extensions for cost and deadline are too easy. And the cost hike in the bridge project might be the reflection of the reality. Because our officials lack capacity," he added.

"Whatever the reason is, people will have to bear the brunt ultimately," he said, adding, "Project costs in Bangladesh are the highest than any other country. We have to take it seriously. However, it is difficult to expect that the trend of inflated project costs will just go away overnight."

Meantime, Padma Bridge project Director Md Shafiqul Islam said the cost will not go up anymore.

He told TBS that the cost of the bridge has increased for a number of reasons, including design changes, adding new parts and rising equipment prices.

While explaining the cost hikes, the project director said additional piles had to be installed under a few piers due to the complex structure of the riverbed.

He also said the expenditure would be adjusted from the total allocation of Tk800 crore for physical contingency and price contingency in the project.