The cost of a railway-track-setting project under the Indian US$800 million line of credits (LoC) has swelled 30 per cent as the contractor from the funding country quoted higher biding price, officials said Friday.
"Higher bidding price than official estimation by the Indian contractor has not only forced the Bangladeshi project-executing agencies to increase the project cost but its implementation has also been delayed by two years," a senior government official said.
Railway Ministry officials said they had sought revision of the project with upward costing from the government to start construction of the 3rd and 4th dual-gauge rail tracks in the Dhaka-Tongi section and doubling dual-gauge Tongi-Joydevpur section with the upgrading of its signaling systems.
The cost of the Tk 8.49 billion rail-track project has increased to Tk 11.07 billion--a 30.43 percent hike.
The ministry has also sought one and a half years more, up to December 2016, from the earlier June-2015 deadline for executing the project, the officials added.
Railway ministry officials said the government would provide Tk 9.03 billion from the Indian $800 million LoC and the rest of the funds for the inflated cost would be given from the national exchequer.
The state-owned Bangladesh Railway (BR) undertook the 48.80-kilometre (45km main line and 3.8km loop line) rail-upgrading project at a cost of Tk 8.49 billion in 2012.
A senior BR official said: "We had cancelled the first tender due to the higher bidding price than our official estimation. In the subsequent tender, the Indian contractor again submitted higher bids."
He adds: "Since we have no option to invite tender from outside India, we can't find out competitive bidders from the global market for the construction of the railway tracks. So, we are forced to accept the bids with inflated price," he said.
According to the deal for the $800 million LoC, Bangladesh government will have to procure 85 to 100 percent goods, services and works from the Indian market.
The state-owned rail-service provider has undertaken the highest 13 projects under the $800 million LoC for upgrading its infrastructure and service facilities.
A Planning Commission official said most of the projects under the Indian LoC have faced with implementation delays and also increased costs, resulting in failure to get expected outcome from the Indian assistance.
A senior Railway Ministry official said the higher bidding price by the Indian contractors, lack of proper feasibility study before undertaking the projects and weak project- execution capacity of the executing agencies are the major reasons behind the poor outcome from the aid.
If the Railway could implement those projects in time, the cost could not go up and railway-service takers got benefit from those projects directly, he added.
New Delhi signed a $1.0 billion credit deal with Dhaka in August 2010 to support Bangladesh's development works, especially transport development between the two countries.
The Indian government last year announced $200 million of the billion-dollar credit line as grants. The Bangladesh government has decided to use the grant amount for constructing the $2.9 billion Padma Bridge.
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