Govt spending on DAEE project may jump 78pc

Government spending on the Dhaka-Ashulia Elevated Expressway (DAEE) project is likely to rise by 78 per cent as the Bangladesh Bridge Authority (BBA) has finalised a revised cost estimate of Tk 272.33 billion.

The government's contribution to the DAEE project was Tk 59.51 billion, which increased to Tk 78.60 billion in the first revision. The latest revised development project proposal (RDPP) proposes raising the government contribution further to Tk 139.90 billion.

Meanwhile, the China EXIM Bank's contribution will rise to Tk 132.42 billion, up from Tk 109.49 billion in the original DPP. Overall, the second revision of the DPP shows a 55 per cent increase over the original project cost, while the Chinese loan share is set to rise by 37 per cent.

According to the DAEE project office, more than 62 per cent of the cost escalation is due to regulatory and market adjustments, including higher tax, VAT and customs duty, as well as exchange rate depreciation.

Officials said both the original DPP and the first revised DPP were prepared using an exchange rate of Tk 86 per dollar, which has now risen to Tk 121.7.

However, sources said the DAEE has again exposed gaps between the feasibility study and the detailed design, as the second RDPP also proposes 38 per cent variation and additional physical works.

Project officials said substantial funds are required to increase the height and span length of bridges over the Turag River and for the grade-separated interchange at Baipail. Additional funds will also be needed to integrate the expressway with the entry and exit points of Hazrat Shahjalal International Airport.

The BBA initiated the DAEE project with an original cost of Tk 169 billion to construct a 24-kilometre elevated road, 2.72 kilometres of two-lane bridges, 10.84 kilometres of ramps, 10.84 kilometres of at-grade roads and four toll plazas to connect Dhaka with industrial zones in Ashulia, Baipail and the Dhaka Export Processing Zone.

The project is also aimed at improving connectivity with the northern, western and south-western regions. It was approved by the Executive Committee of the National Economic Council (ECNEC) in September 2017.

However, while the commercial agreement with a third party was signed on November 29, 2017, the loan agreement with China EXIM Bank for Tk 109.49 billion was signed nearly four years later, on October 26, 2021. The loan became effective on May 10, 2022.

Under the original DPP, the project was scheduled for completion by June 2022, which was later revised to June 2026 in the first RDPP.

According to the project office, overall physical progress stood at 65 per cent as of October, while financial progress was recorded at 68 per cent.

Officials said the second revised RDPP has been sent to the Bridge Division for placement before the Planning Commission, proposing an extension of the project deadline to September 2028. The proposal is now awaiting a decision from the adviser to the Ministry of Railways, Road Transport and Bridges.

Sources said the interim government is unlikely to approve the revised DPP due to the sharp rise in project costs.

Once completed, the DAEE is expected to connect 30 districts and boost the country's gross domestic product by an estimated 0.21 per cent. However, the project remains behind schedule, with some officials putting overall progress at around 55.6 per cent.

smunima@yahoo.com