DESCO seeks Tk 6.27b cost hike after project misses deadline

The Dhaka Electricity Supply PLC (DESCO) has sought an additional Tk 6.27 billion, or an increase of 27.6 per cent, in public funds following its failure to implement a power distribution project on schedule, officials said on Wednesday.
The project cost would now rise to Tk 28.997 billion from the original estimate of Tk 22.72 billion.
The state-owned electricity distributor has recently proposed increasing the project's cost and extending its implementation period by two more years after failing to complete the distribution network upgrade within the original four-year timeframe, which expired in March this year.
During the period, the DESCO completed only 51 per cent of the total physical work of the project titled "Dhaka power system expansion and strengthening project in DESCO area" as of February 2026.
The Planning Commission (PC) is now scrutinising the revision proposal of the DESCO, said a senior official.
DESCO attributed the delay primarily to the late confirmation of foreign financing. It said the Asian Development Bank's (ADB) confirmation of 12.21 billion (US$160 million) loan was delayed by 21 months after the project's approval, significantly slowing implementation.
The company also cited fluctuations in the US dollar exchange rate as a major factor behind the proposed cost escalation.
The project was approved by the Executive Committee of the National Economic Council (ECNEC) for implementation between April 2022 and March 2026.
A senior Power Division official said DESCO's failure to complete the project on schedule had resulted in both cost and time overruns. "So, we have sent a revision proposal to the PC for approval."
"We have no option but to revise the project. Finalising the loan deal with ADB had taken 21 months and the dollar rate also increased significantly over the period. So, the overall cost has escalated," said a senior DESCO official requesting anonymity.
According to the DESCO's revised proposal, Tk 27.207 million has increased due to project delays, Tk 56.73 million for higher material prices, and Tk 6.607 billion due to exchange rate fluctuations.
"This present government has emphasised the need for timely project execution. We are scrutinising the DESCO's proposal carefully," a PC official said.
Under the project, the DESCO will construct four grid sub-stations at Airport, Kalshi, Bashundhara and Tongi, and four distribution substations at the Baridhara Diplomatic Zone, Mirpur, Tongi and Purbachal.
Besides, it will install 27 km of 132kv underground distribution lines, 50-circuit km of 33kv and 100-circuit km of 11kv underground cable lines and 150km of 11/0.4kv overhead distribution lines in Dhaka city.
The expansion and upgradation of the distribution system would ensure uninterrupted power supply across its service areas, DESCO officials said.

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