Bangladesh: Padma Bridge getting costlier

The long-cherished Padma Bridge is set to cost more as more funds and time is needed to complete the structure even though it is open to the public since June 2022.

At the time of inauguration on June 25, 2022, some works, especially river training, a major component of the project, were incomplete.

Now, the bridges division has sought Tk 2,682.13 crore more and an additional year, according to the revision proposal sent to the Planning Commission for approval.

If the proposal is approved, the bridge, which established a direct connection between the capital and the country’s southwest, will end up costing Tk 32,875.51 crore — more than three times the original estimate.

Project Director Shafiqul Islam cited the increase in the cost of construction materials, depreciation of taka against the dollar, the need for additional money to build power transmission towers and increase in value-added tax and income tax rates due to changes in legislation as the main reasons for the latest round of cost escalation.

The project authorities would need Tk 3,444.89 crore extra but they are clawing back Tk 762.76 crore from several components, including Tk 368.09 crore allocated for resettlement.

Of the sum, Tk 1,665.60 crore would be required for the main bridge, Tk 877.53 crore for river training and Tk 450.29 crore for consultancy services.

“The US dollar traded at Tk 78.3 in the foreign exchange market when we started the works but the rate has escalated since then. We had to spend an additional Tk 500-600 crore for this reason alone,” Islam said.

The government on many occasions has changed VAT and income tax rates.

In the case of foreign contractors, the VAT and income tax have been increased to 15% from 10.5%, so the project authorities have to provide the additional 4.5% as per the contract, he said. This cost the project authorities an additional Tk 687 crore, according to officials.

The project authorities have to spend about Tk 400 crore more for the detailed design and construction of foundations of seven 400KV transmission towers on the Padma.

They will also have to procure some equipment for the operation of the bridge, which will take about Tk 300 crore, he said.

Approved in August 2007, the project was supposed to be implemented at the cost of Tk 10,162 crore within June 2015. In 2011, it went through a major revision that took the project cost to Tk 20,507 crore. After two more changes in expenditure, the project cost rose to Tk 30,193.34 crore. The latest deadline for the project is June this year, including a year as a defect liability period.

Asked about the reason behind the time extension, Islam said they would take up to June this year to complete the river training works.Then, they would require another year for the defects liability period.

A defects liability period is the time period specified in the contract during which a contractor is legally required to return to a construction site to repair any defects which have appeared in that contractor’s work since the date of completion.

“That’s why we sought the deadline extension to June 2024,” Islam added.

As of December 2022, the project saw 95.8% overall progress, with 99.7% and 96.25% progress in main bridge and river training respectively. The project saw 93.68% financial progress.