Planning Commission suggests cost cut in revised Padma Bridge project

The Planning Commission has questioned the rationale behind the cost hike in the proposed third revision of the Padma Multipurpose Bridge Project, noting that costs in some sectors need to be reduced for final approval.

The revised proposal is expected to be placed in the Executive Committee of the National Economic Council (Ecnec) meeting on Tuesday, according to sources at the commission.

Although the Padma Bridge was opened to traffic in June last year, work on some elements of the project is still underway. Besides, due payments for the work done need to be cleared. Hence, the project has been revised for the 3rd time.

The Bridges Division sent the revised proposal to the Planning Commission in January, seeking an additional Tk2,682.13 crore and an extension of tenure by another year. 

According to the revised proposal, the reasons for the additional fund include the devaluation of the taka against the US dollar, design change in pile foundation, increase in VAT (value-added tax) and income tax due to change in legislation, increased cost due to the design of 400kV transmission tower foundation platforms, and design change in Mawa River training work, additional works related to operation and maintenance and other civil works and bridge opening ceremony, etc.

At the Project Evaluation Committee (PEC) meeting held in March, the Planning Commission sought an explanation from the Bridges Division for the cost increase in some sectors, including allowances of officials and consultants, purchasing computers and accessories, and work on main bridges and river management.

The minutes of the meeting, signed by the member (secretary) of the Physical Infrastructure Division of the Planning Commission, Mohammad Emdad Ullah Mian, have been sent to various departments, including the Bridges Division.

According to the proposal, the project authority has already spent 1.5 to 8.5 times the sanctioned allocation in various sectors of the project and sought fresh allocation, which is 16 times higher than the approved amount. The commission said such an increase in expenditure goes against planning discipline.

In the evaluation committee meeting, a decision was made to approve the proposal on condition that the project implementing agency will review and readjust some of the additional expenditures and complete all project works by June next year, as mentioned in the proposal.

What project officials say

According to project officials, the increase in VAT and income tax rates and devaluation of currency led to additional expenditure in several sectors.

As per the third revised proposal, the project cost will now increase to Tk32,875.54 crore, which in the second revision was estimated to be at Tk30,193.38 crore.

In the meeting, Project Director Safiqul Islam said, the increase in VAT and income tax rates for the construction work raised the cost by Tk687 crore (Tk405 crore for the main bridge and Tk282 crore for river management). Besides, the cost has also increased due to the increase in VAT and income tax of consultants.

He also said the dollar exchange rate was Tk78.30 at the time of the contract, which now stands at Tk107. As a result, about Tk200 crore more will be required.

In addition, an additional 43 months of work on the main bridge and 55 months of work on river management have increased the expenditure by Tk727 crore, the project director said.

Moreover, additional expenditure has been sought for electricity connection, entertainment and other ancillary works — to which the Planning Commission objected.

When asked about lowering costs, Manjur Hossain, Secretary of the Bridges Division, told The Business Standard (TBS), "It will be possible to reduce expenditure in some sectors. However, as the contract with the contractor is about to expire in June this year, the project proposal needs to be approved quickly to clear the remaining bills for the work on the main bridge."

According to officials of the Bangladesh Bridge Authority (BBA), most of the works, for which funds were sought in the third revision, have been completed. The new financing is now needed to pay the bills.

Project details

According to Planning Commission sources, the Padma Bridge project was approved in August 2007 at a cost of Tk10,162 crore with loans from various organisations, including the World Bank.

Although the work was supposed to be completed by June 2015, the cost was increased to Tk20,507 crore, and the tenure was extended by six months in the first revision of the project.

The second revision was approved in February 2015, increasing the cost to Tk28,793 crore with 100% internal financing due to the cancellation of loans from the World Bank and other lenders. In this revision, the project deadline was set in December 2018.

Later, in the special revision, the cost of the project was further increased to Tk30,193.39 crore with a deadline of June 2023. *