Grid line cost to bring Adani power triples to Tk10,000cr

As Bangladesh signed a power purchase deal with India's Adani Group in 2017 and the country's northern swathe was crying for a consistent electricity supply from the ongoing Rooppur nuke plant, the state-owned national power grid operator took up a transmission line project in 2018.

With Indian line of credit, the 260km electricity line from Dinajpur's Barapukuria to Gazipur's Kaliakair via Bogura was estimated at Tk3,322 crore and to be completed by June 2022. According to the original plan, the construction cost of the power line was projected at Tk12.77 crore per kilometre – similar to other ongoing power line projects.

But the cost escalation and time overrun since then has become eye-popping as the Power Grid Company of Bangladesh now estimates the cost to be at Tk10,248 crore, which is 208% more than the original estimation, with a new launch date of June 2025.

According to Power Division sources, weak price estimates in the original plan stalled the transmission line project at the initial stage, prompting the Power Grid Company to seek a 22% cost hike and pushing up the deadline to 2024 in the first revision.

Now with the excuse of volatile exchange rates in defence of a second revision, the implementing agency seeks the revision pushing up the cost by around 153% with the new deadline.

The physical progress of the project is 42% so far as the Planning Commission has called an evaluation meeting on the extension proposal on 19 February. Planning officials said they will seek an explanation from the Power Division about the "abnormal" cost hikes – per kilometre at around Tk39 crore – despite the project scopes remaining the same.

The project director, however, said the cost escalation of the Barapukuria-Bogura-Kaliakair 400kV Line Project is "logical" and he has sent the supporting documents to the Planning Commission prior to the meeting.

The Power Division has already labelled the project non-viable in terms of both financial and economic analyses. This means, according to the government's project guidelines, the project should be abandoned instead of approving the cost escalation with the option for a new project to be taken up if required.

Planning Commission officials also said they have queries to the Power Division, which is already in negative fiscal space in the medium-term budgetary frameworks, about how it will meet the spiralling project costs.

Before pricier dollar, weak estimates called for frequent adjustments

The project was formulated at an exchange rate of Tk84.80 per dollar. But in the proposal for the second revision, the rate shot to Tk107, driving up the cost of two construction packages by around Tk602 crore.

However, a senior official of the Power Division on condition of anonymity said the project witnessed frequent price adjustments thanks to weak planning and estimates in the first place.

For instance, the 9km stretch of the transmission line over River Jamuna was initially estimated at Tk624 crore. For the patch, the initial estimates by the PGCB largely followed Aminbazar-Mongla dual circuit lines – a similar ongoing project over the River Padma at a total cost of Tk2,505 crore.

After bidding and re-bidding where only Indian contractors took part as per the conditions of the Indian credit, PGCB now finds the lowest value of the work at Tk2,998 crore – 20% more than the cost of the entire Aminbazar-Mongla project.

In the proposed revision, the national power grid operator also seeks Tk5,286 crore in electrical equipment – 197% more than the initial estimates. For electrical installation, the implementing agency wants an additional Tk215 crore.

Tk39 crore per km

Planning Commission officials said they will decide on the proposed second revision after comparing the costs with two recently completed projects.

The per kilometre transmission line set-up cost, estimated by dividing the project cost by the stretch, shows the Barapukuria-Bogura-Kalaikair rate at Tk39 crore per km – which is 2-2.7 times higher than the per kilometre cost in similar projects elsewhere in Bangladesh.  The 174km Aminbazar-Mongla power line, which will be completed by June, costs around Tk2,505 crore –  per kilometre at Tk14 crore.

Construction of 169km Patuakhali (Payra) - Gopalganj 400 kV Transmission Line and Gopalganj 400 kV Grid Substation project is being implemented at Tk3,532 crore. Under the project with 7km lines over the rivers, per kilometre construction is at Tk21 crore.

Under the Dhaka-Chattogram Main Power Grid Strengthening Project, the construction of 227.5 km transmission line is at Tk4,567.49 crore. In this project, per kilometre lines cost Tk20 crore.

PD defends cost hikes

Sheikh Zakiruzzaman, project director and also the Chief Engineer of PGCB, said that there have been some delays in the implementation due to valid reasons. And the cost hikes are also logical.

"All the documents have been sent to the Planning Commission through the ministry. The details will be presented in the evaluation meeting," he told The Business Standard.

"It will not be appropriate to make further comments on this matter to the media before the meeting," he commented.