The deal with Malaysian Maritime and Dredging Corporation (MMDC) on capital dredging and bank protection of the Karnaphuli River has been cancelled for the foreign firm's repeated failure to implement the project, vital for operation of the Bangladesh's main seaport, sources said.
A letter to this effect has been sent to the company recently by Chittagong Port Authority (CPA).
"As the contract agreement between CPA and MMDC is violated, so it is no more active," reads the cancellation letter written by CPA project director Hasibur Rahman to MMDC project director Sharon Bin Zakaria.
The project started in May 2011 and was supposed to have been completed by January 2013. But, according to CPA assessment, until June 2014, only 80 per cent of physical progress had been made. It's "far behind the scheduled progress".
"This is a matter of worry that in the last twelve months only 4.0 per cent physical progress has been achieved, which is not acceptable at all. Moreover, from 18 May 2014 no activities on the site are going on," the letter cited as the grounds for doing away with the deal.
In August last year, the CPA authorities warned the MMDC that further failure to achieve satisfactory progress would entail harsh action. Thereafter, the MMDC submitted five works schedule. But, there again, no significant progress was seen.
"It seems that if this is continued, the completion of the project will be uncertain," the letter said.
Sources said the CPA letter also asked the MMDC officials to stop work immediately, make the site safe and secure, and leave the site after proper handover.
The port management, CPA, further said the remaining works of the project will be completed by engaging another contractor--or by any other means. The MMDC will be liable for any cost to be incurred in excess of the sum that would have been paid to the contractor.
Sources said early July the CPA tried to encash the bank guarantee the MMDC gave as performance security of the project. The attempt failed as the company filed writ petition on encashment of the bank guarantee.
The Tk 2.295 billion project aimed at removal of 3.6 million cubic feet of mud and waste from the Karnaphuli riverbed, constructing 400 meters of jetty in Sadarghat area and constructing 2.61 kilometres of embankment on the riverbanks.
Earlier, a four-member investigation committee, headed by joint secretary of the Ministry of Shipping (MoS) Nasir Arif Mahmud, found only 53 per cent of the project works done until July 2013.
The committee found out that the riverbank line, marked by the Bangladesh Survey (BS), was not followed during dredging. This fault narrowed down the river. It blamed the contractor of the project, MMDC, for completion of only half of the dredging works even after extension of the deadline.
The probe body recommended non-payment as any bill further until 80 per cent of the dredging was done.
Furthermore, a four-member parliamentary subcommittee headed by Shamsul Huq Chowdhury MP was formed to investigate irregularities of the project. The committee-to their surprise--found out that the contractor in most cases extracted sand from the riverbed only to sell it and earned money instead of removing the rubbish.
In January this year, the ministry asked the CPA to file money suit against the Malaysian company to realise compensation and confiscate dredgers and other equipment from the project site.
Until June 2014, the sources said, the CPA had paid some Tk 1.659 billion to the contractor against the works it did.
An official of the MoS said the money was practically wasted since a long period was passed to make progress in project implementation.
"The riverbed of the Karnaphuli has already been filled up again with sand and mud as there was no continuation of work. So, the government will have to spend a huge sum again to dredge the riverbed."
According to a CPA letter the remaining works involve Tk 635 million while the contractor has only Tk 345 million with the CPA as bank guarantee and retention money.
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