Matarbari Power doesn’t bother to disclose Tk10,000cr cost hike

The Matarbari 1,200MW Coal Fired Power Plant will cost an additional Tk10,893 crore and will take at least a year longer to complete, while the government remains in the dark about it.

A team of the Implementation Monitoring and Evaluation Division (IMED) discovered the hike in cost during a recent visit to the site.

The state-owned Coal Power Generation Company Bangladesh Ltd (CPGCBL), implementing agency of the mega-project, signed an engineering, procurement and construction (EPC) contract with a Japanese consortium – comprising Sumitomo Corporation, Toshiba Corporation, and IHI Corporation – for Tk46,877 crore in 2017.

However, in July 2014, the Executive Committee of the National Economic Council (Ecnec) had approved a cost of Tk35,984.46 crore for the project.

Although the value of the contract exceeded the approved amount by 30 percent, the CPGCBL neither disclosed it nor revised the project cost in the last three years.  

The project authorities also failed to explain to the IMED why the EPC agreement value is higher than that approved by Ecnec.    

Last week, the IMED prepared the inspection report and sent it to the Power Division and CPGCBL, asking for a formal explanation about the issue within one month.

The report also mentioned that Ecnec had approved the project setting June 2023 as the deadline. However, the EPC agreement set the deadline in 2024 – a clear violation of the decision taken by Ecnec.

Speaking to The Business Standard, CPGCBL Executive Director (planning and development) Md Nuzrul Islam, said, "It is an issue associated with the development partner Japan International Cooperation Agency [JICA]. JICA knows everything and we have nothing to do in this regard."

The IMED also asked the implementing agency to inform which component of the project required the additional amount and why the cost of the specific component(s) went up.

Abul Mansur Md Faizullah, secretary of the IMED and leader of the inspection team, stated in the report, "Though the project has been going on for five years, it is yet to get a full-time project director."   

Golam Kibria, managing director of the Coal Power Generation Company Bangladesh, has been serving as the project director in addition to fulfilling his other duties with the company.   

"In the absence of supervision, several issues, including land acquisition for the Matarbari project, is yet to be resolved. Moreover, the landowners are being harassed when they are demanding compensation," said the IMED report.

It also noted the slow pace of implementation.

The Matarbari 1200MW Coal Fired Power Plant project was approved by Ecnec in 2014, with 10 years for implementation.

The Japan International Cooperation Agency will provide Tk28,939.03 crore of the total project cost as official development assistance loans in different phases.

Till October this year, the CPGCBL spent a total of Tk10,215.47 crore – about 28.39 percent of the total estimated cost.

For quick implementation, the government included this in the list of fast track projects, but the physical progress of implementation is only 26 percent.