A long-delayed power distribution network upgrade project in Mymensingh is set to face further cost escalation, even after cutting key components, as it awaits a second revision approval.
The Bangladesh Power Development Board (BPDB) has sought an additional Tk37.14 crore — about 2.29% more than the revised cost — and a one-year extension to complete the project, despite proposing to drop three new substations and cancel renovation work for another, Planning Commission sources said.
At a recent meeting of the Planning Commission on the second revision proposal, BPDB officials said a sharp depreciation of the taka against the US dollar had driven up equipment costs, forcing them to scale back parts of the project.
Under the first revised plan, the implementing agency was to set up 25 new substations, upgrade 14 existing ones, construct 3,235km of new distribution lines, renovate 1,770km of existing lines, extend eight bays, and build office and residential facilities.
However, in the fresh proposal now under scrutiny, BPDB plans to drop new substations at Fulbaria, Kashiganj and Shahpur, and cancel the upgradation of the Maizbari substation.
As a result, the total project cost is set to exceed Tk1,661 crore, with BPDB’s own contribution rising nearly threefold to Tk148 crore from the original estimate of about Tk51 crore.
“The project cost has gone up mainly due to the rise in the exchange rate. So BPDB has proposed de-scoping by curtailing some components to minimise the cost,” said Shibraj Chowdhury, an official at the Power Wing under the Industry and Energy Division of the Planning Commission.
He added that the exchange rate issue is particularly significant as the project is being implemented by a foreign contractor.
When the project was approved, the taka-dollar exchange rate was estimated at Tk 85.60 as of October 12, 2021.
However, BPDB has had to pay an average of Tk100.91 per dollar, officials told a recent Project Evaluation Committee (PAC) meeting.
For future payments, the exchange rate has been projected at Tk122.70, based on the October 26, 2025 rate, officials added.
The second revision proposal also seeks to reduce transformer procurement to 353 units from 725 that are yet to be supplied by the contractor. Initially, the project planned to procure 965 transformers.
Despite the scaled-down work plan, BPDB has already acquired 23.31 acres of land at 27 locations, only 0.07 acre less than the originally planned 23.38 acres.
Responding to questions on land acquisition, Shibraj told Just Energy News that the land may have been acquired in areas where work is already underway.
On the reduction in transformer procurement, he said BPDB informed the PAC that fewer transformers would be needed as some old units recovered from the project areas would be reused.
In addition, the second revision proposes to drop procurement of two lots of SPC poles and two lots of Wasp conductors, as they are no longer required.
“At this stage, it has been proposed to drop these components as we have reclaimed a total of 6,335 SPC poles along with the required Wasp conductors during renovation work,” a BPDB official told the PAC meeting.
The official also said BPDB would attempt to complete some unfinished work through other projects.
The Power Distribution System Development Project in the Mymensingh Zone first received Ecnec approval on November 28, 2017.
The project aims to ensure reliable power supply, meet rising demand and reduce system loss across 20 upazilas in six districts and one city corporation under the Mymensingh and Dhaka divisions.
The original project cost was Tk1,575.47 crore, with the government set to provide Tk1,524 crore. The implementation period was January 2018 to December 2021.
The cost rose to Tk1,624 crore and the deadline was extended to June 2024 after the first revision was approved on January 24, 2022.
On June 30, 2024, the project received a further one-and-a-half-year extension until December 2026 without any cost increase, as implementation remained sluggish.
So far, Tk1,390.35 crore has been spent, achieving 85.59% financial progress and 90.98% physical progress. However, only 12 new substations have been completed, along with renovation of five substations and extension of three bays.
The Planning Commission’s PAC has asked BPDB to clearly justify the cost increase and the proposed de-scoping in the revised development project proforma. It also sought a detailed breakdown of the components to be dropped.
Given the volume of unfinished work, the commission is not convinced the project can be completed within a year. It has suggested a possible two-year extension, pending a physical verification of the project by Planning Commission officials.