Delay in Ghorashal power plant upgrade to cost government extra Tk 4.39 billion

The government will have to spend extra Tk 4.39 billion funds for paying interest against loan as well as consultancy and other fees following delay in implementing a power plant project, insiders said on Wednesday.

The state-run Bangladesh Power Development Board (BPDB) has failed to complete the Ghorashal power plant (unit-3) upgradation work by its three-year deadline until December 2018.

"Since the project execution has delayed, its cost has increased, especially for paying higher interest, different loan fees, taxes, consultancy fees, staff salaries, and fuel cost," said an official of the Power Division.

The BPDB took the "Repowering of the Ghorashal 210 MW power plant (unit-3) project" in January 2015, borrowing costly buyers' credit, for enhancing its capacity to 416 MW.

Failing to complete repowering of the unit on time, the board has recently sought project revision, increasing the cost by Tk 4.39 billion, which is 17 per cent higher than its original cost of Tk 25.19 billion.

Among the Tk 4.39 billion cost hike, the BPDB has sought 123 per cent higher funds from the public exchequer.

The government officials said to complete the power plant upgradation work the board has sought double time until December 2021 from its existing deadline.

According to the revised project proposal, the BPDB has sought 1325 per cent higher fund for paying commitment fee, security fee, agency fee, MIGA application and processing fee, structuring fee, agreement fee, ECA premium or agreement of credit fee, and legal fee for Tk 25.89 billion buyers' credit for the project.

A total of Tk 288.5 million funds for loan fees were set aside in the original development project proposal (DPP).

The BPDB has sought Tk 4.11 billion funds, 1325.15 per cent higher than the original estimation in the revised DPP for paying loan fees.

The board has also sought 150.11 per cent higher funds, amounting to Tk 268.12 billion, for consultancy fees in the revised DPP from the original estimation of Tk 107.20 million.

Meanwhile, the BPDB has to pay 8531 per cent higher interest amounting to Tk 1.98 billion during construction period from that of original Tk 22.91 million since it has failed to upgrade the power plant in time.

The agency has also sought higher funds to the tune of Tk 1.43 billion in the revised DPP for paying VAT, tax and AIT, as the National Board of Revenue has enhanced their rates in recent years.

The BPDB has to pay salaries, honourarium, wages and allowances to its project staffs for some additional three years up to 2021 due to the delay in project implementation.

It has sought Tk 120.39 million funds for paying the staffs in the revised DPP, which is 74.18 per cent higher than the original estimation of Tk 69.12 million.

The BPDB has also demanded higher cost for natural gas purchase for running initially (for one month) its proposed upgraded Ghorashal power plant, as the fuel price has been raised recently by the gas supplying companies.

In the revised DPP, the entity has sought Tk 203.45 million or 58 per cent higher funds than the original estimation of Tk 128.97 million.

Meanwhile, the BPDB in its original project proposal added some 'unnecessary' components, like - foreign and local training for 80 persons, procurement of 17 vehicles, and hiring some local and foreign consultants, insiders said.

"The project will be implemented with costly buyers' credit from foreign lenders, and the government has to pay the loan back from its hard-earned foreign exchange reserve. So, the BPDB should avoid those ambitious and unnecessary spending," said a top government official.

This correspondent has failed to contact Syed Abdul Hakim Shah, the project director, despite repeated attempts.

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