BR overlooks opportunity to cut project cost
Sunday, 19 April 2009
M Azizur Rahman
The government may count additional costs of over Tk 4.0 billion if it awards work order to the lowest bidder for construction of a double line rail track as the quotation far exceeds the actual allocation, said officials.
The lowest cost quoted by the China Railway Engineering Co (CREC) for construction of the 64-kilometer Tongi-Bhairab Bazar double line rail track is Tk 11.31 billion against the actual allocation of Tk 7.24 billion, a senior Bangladesh Railway (BR) official told the FE Saturday.
The additional costs would be on account of the large gap in prices of the raw materials quoted in the CREC bid and their existing market prices both in local and international market. Lending rate of banks and financial institutions was also high during that time.
The state-owned BR had floated tender for construction of this double-line rail track in mid 2008 when the prices of the raw materials like deformed steel bars, mild steel rod, steel structures were in peak both in local and international market.
Eleven bidders were preliminarily qualified to take part in the final bidding.
Five of them, all from China, including some having joint ventures with local companies, submitted bids finally for construction of the project aimed at reducing the travel time of Dhaka-Chittagong and Dhaka-Sylhet.
But the prices of the raw materials nose-dived immediately after submission of the bids in the final round and the lending rate of different financial institutions also declined significantly.
The average local price of 60-grade quality MS rod was around Tk 75,000 a tonne in July 2008 when the tender was floated, which now has come down to Tk 52,000 per tonne, said a market player pointing to the extent of price fall.
But the BR has overlooked the huge gap in prices and the tender evaluation committee headed by Additional Director General of BR Md Iqbal Mollah has already recommended awarding of the contract to the CREC.
"We have already made our recommendation in favour of the lowest bidder and sought approval from the project financier, the Asian Development Bank (ADB)," Mr Mollah told the FE.
He, however, declined to comment the basis of recommending the CREC for construction of the Tongi-Bhairab Bazar double-line track.
The project is now in the final stage for approval, said a senior communication ministry official.
Pointing to the benefit out of constructing the double-line track between Tongi and Bhairab Bazar a BR official said: "It will reduce 20-30 minutes of travel time between Dhaka and Chittagong."
At present only 100 kilometers out of the total distance of 320 kilometers between Dhaka and Chittagong have double line facilities.
The Philippines-based ADB has committed to providing US$65 million as loan for the construction of the double line rail track and the remaining cost would be borne by the government, the official said.
The Executive Committee of National Economic Council (ECNEC) has approved the total project cost at Tk 7.24 billion.
When contacted, BR Director General Md Belayet Hossain refused to comment on the issue.
The government may count additional costs of over Tk 4.0 billion if it awards work order to the lowest bidder for construction of a double line rail track as the quotation far exceeds the actual allocation, said officials.
The lowest cost quoted by the China Railway Engineering Co (CREC) for construction of the 64-kilometer Tongi-Bhairab Bazar double line rail track is Tk 11.31 billion against the actual allocation of Tk 7.24 billion, a senior Bangladesh Railway (BR) official told the FE Saturday.
The additional costs would be on account of the large gap in prices of the raw materials quoted in the CREC bid and their existing market prices both in local and international market. Lending rate of banks and financial institutions was also high during that time.
The state-owned BR had floated tender for construction of this double-line rail track in mid 2008 when the prices of the raw materials like deformed steel bars, mild steel rod, steel structures were in peak both in local and international market.
Eleven bidders were preliminarily qualified to take part in the final bidding.
Five of them, all from China, including some having joint ventures with local companies, submitted bids finally for construction of the project aimed at reducing the travel time of Dhaka-Chittagong and Dhaka-Sylhet.
But the prices of the raw materials nose-dived immediately after submission of the bids in the final round and the lending rate of different financial institutions also declined significantly.
The average local price of 60-grade quality MS rod was around Tk 75,000 a tonne in July 2008 when the tender was floated, which now has come down to Tk 52,000 per tonne, said a market player pointing to the extent of price fall.
But the BR has overlooked the huge gap in prices and the tender evaluation committee headed by Additional Director General of BR Md Iqbal Mollah has already recommended awarding of the contract to the CREC.
"We have already made our recommendation in favour of the lowest bidder and sought approval from the project financier, the Asian Development Bank (ADB)," Mr Mollah told the FE.
He, however, declined to comment the basis of recommending the CREC for construction of the Tongi-Bhairab Bazar double-line track.
The project is now in the final stage for approval, said a senior communication ministry official.
Pointing to the benefit out of constructing the double-line track between Tongi and Bhairab Bazar a BR official said: "It will reduce 20-30 minutes of travel time between Dhaka and Chittagong."
At present only 100 kilometers out of the total distance of 320 kilometers between Dhaka and Chittagong have double line facilities.
The Philippines-based ADB has committed to providing US$65 million as loan for the construction of the double line rail track and the remaining cost would be borne by the government, the official said.
The Executive Committee of National Economic Council (ECNEC) has approved the total project cost at Tk 7.24 billion.
When contacted, BR Director General Md Belayet Hossain refused to comment on the issue.