Water supply cost set to rise by Tk 28.28b more

The cost of the first investment initiative by the Dhaka Water Supply and Sewerage Authority (DWASA) to bring water to the capital from the Meghna is set to rise by another Tk 28.28 billion.

The Local Government Division (LGD) has submitted the third revision proposal for the project styled 'Dhaka Environmentally Sustainable Water Supply Project' at a cost of Tk 109.75 billion-an increase of 35 per cent from the latest revised estimate of Tk 81.47 billion.

The Physical Infrastructure Division of the Planning Commission conducted a Project Evaluation Committee (PEC) meeting on Thursday to review the proposal, said Planning Commission officials.

The meeting, chaired by MA Akmall Hossain Azad, member (senior secretary) of the Physical Infrastructure Division, expressed regrets over the scheme's failure to finish even 11 years after approval by the Executive Committee of the National Economic Council (ECNEC).

It also sought justification for the proposed hike for certain project components, despite a reduction in the number of structures under them.

Setting a timeline for the project by December 2019, the ECNEC approved the project in September 2013 at an estimated cost of Tk 52.48 billion to supply 500-million litres of water per day (MLD) from surface sources to Dhaka.

The project cost was increased to Tk 81.51 billion in February 2021 with the approval of the first revision, and was revised again the following year through a second revision, after repeated failures to meet extended deadlines.

The LGD has proposed extending the project deadline to June 2025, adding two more years to the current deadline of June 2025.

Any approval of the third revision will raise the cost by Tk 61.27 billion, marking a 126.38-percent rise from the original estimate of Tk 48.48 billion.

Of the total cost, the government will contribute Tk 42.13 billion from the state exchequer, while Tk 0.22 billion will be sourced from DWASA's own funds.

The remaining Tk 67.40 billion is expected to be bankrolled through loans and grants from the Asian Development Bank, the Agence Française de Développement and the European Investment Bank.

Compared to the original estimates, government funding will increase by 3.15 times, DWASA's contribution by 2.20 times and foreign financing by 1.93 times.

According to officials, the primary objective of the project is to reduce Dhaka's reliance on groundwater, as the city's water supply capacity continues to decline due to the steady depletion of aquifer levels.

It is supposed to supply 500-million litres per day from the Meghna to Old Dhaka, Motijheel, Paltan, Fakirapool, Uttara, Gulshan, Banani, Nikunja, Khilkhet, Badda and Mirpur neighbourhoods.

The project achieved around 87 per cent of physical progress up to last February with a spending of over 83 per cent of the estimated approved cost.

Documents reveal that the project cost is expected to surge due to expanded scope of work, including the implementation of distribution feeder lines, the installation of 50 deep tube-wells, higher land acquisition costs, increased VAT, tax and customs duty rates.

The higher road excavation charges, price adjustments, design variations as well as increased salaries, allowances for manpower, and office maintenance costs will also contribute to a spike in costs.

The proposal notes that a 2011 feasibility study recommended a 1,000-million litres of water from a treatment plant in Khilkhet.

However, after a review from October 2012 to June 2013, funded by the ADB, it was decided to build a 500-MLD plant in two phases at Gandharbapur, sourcing water from the Meghna river.

The project cost later increased compared to the original estimate due to expanded construction, the inclusion of 50 new areas, higher consultancy fees and the appreciation of dollar.

According to an official, the meeting expressed concern over the project's failure to finish within over 11 years of its approval and also asked the justification of seeking yet another two years of tenure.

It also aired worry that the government's investment in the project was mooted to rise to 3.15 times than the original estimate, with the overall cost reaching 2.26 times than the initial budget, he said.

"Given the critical importance of water supply in Dhaka, the project is deemed essential. However, it has been returned to the LGD with recommendations to rationalise expenditure in some components. Subject to these adjustments, the proposal may be placed to the ECNEC for final approval."

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