Power Division has requested a one-year extension for a major grid transmission project implemented by the Power Grid Company of Bangladesh (PGCB) and co-financed by Germany’s KfW development bank.
Officials cited land litigation, right-of-way (RoW) disputes, and delays in installing imported high-voltage equipment for the slowdown.
In a 26 July letter to the Planning Commission, the division formally recommended pushing the completion deadline for the Grid-based Power Supply Efficiency Improvement Project from 30 June, 2026, to 30 June, 2027.
If approved, the new timeline (January 2017 to June 2027) will not require additional funding from either the government or KfW.
While the initiative has already achieved 96% physical progress and 89.6% financial progress, extra time is needed to complete outstanding transmission-line and substation construction, as well as test and commission the imported equipment.
Litigation, RoW disputes delayed work
According to documents on the extension proposal, delays affected a section of the LILO line connecting the Mirpur-Tongi 132kV transmission line with the Aminbazar 200/132kV substation and part of the Bangram-Naogaon 200kV double-circuit line because of ongoing land-related litigation.
Part of the Khagria-Daudkandi 132kV double-circuit line under Package 4.2 was also delayed by right-of-way disputes over land.
Although most of these impediments had been resolved or overcome by July, PGCB said the remaining work could not be completed within the existing deadline.
Another concern is the installation, testing and commissioning of specialised equipment already imported for the substations.
The equipment includes gas-insulated switchgear (GIS), control and protection systems, substation automation systems (SAS), telecommunications equipment, XLPE power cables, circuit breakers and isolators.
PGCB said the equipment has to be installed, tested and commissioned by the manufacturers’ specialists. Failure to do so, it warned, could lead to technical problems and disputes later over the equipment’s defect-liability and warranty obligations.
Project approved 10 years ago
The project was approved by the Executive Committee of the National Economic Council (ECNEC) on 10 November, 2016, at an estimated cost of about Tk2,389 crore.
Of the total, around Tk1,243.6 crore was allocated from government funds and Tk1,145.5 crore from project aid in the form of a KfW loan.
The original implementation period was January 2017 to June 2021. The project has subsequently received extensions without an increase in cost.
Its first extension moved the deadline to June 2022. Following the first revision of the project document, which reduced the project cost by about Tk57.5 crore, the deadline was subsequently extended to December 2024 and then to 30 June, 2026.
The KfW financing agreement remains valid until 30 June, 2027, which is also the date now proposed for completion of the project.
Most transmission lines already commissioned
The project has seven packages covering the construction of 12 new substations, 15 bay extensions at eight existing substations, rehabilitation or capacity enhancement of five existing substations, and 19 transmission lines totalling 250.683 kilometres.
Contractors include turnkey firm Energypac Engineering Ltd.
The substation packages — 1.1, 2.1, 3 and 4.1 — have recorded physical progress of 92.75%, 95%, 69% and 79.75%, respectively.
Commissioning remains pending for three new substations, five rehabilitated or upgraded substations and four bay extensions.
Most of the required equipment has already been imported. However, in Packages 3 and 4.1, installation has been held up because related civil works have yet to be completed.
The three transmission-line packages — 1.2, 2.2 and 4.2 — have achieved physical progress of 98.29%, 100% and 92.06%, respectively.
Of the project’s 19 transmission lines, 15, covering 189.92km, have already been commissioned.
Work on the remaining four lines is at an advanced stage. Of the 190 towers, piling has been completed for 188, pile-capping for 187 and tower erection for 183. Stringing has been completed over 44.861km of the remaining 60.763km.
PGCB said the unfinished transmission-line work must be completed before the connected substations can be supplied with power.
KfW rules out additional financing or new scope
The possibility of avoiding the extension by reducing or changing the project’s scope was also examined.
The Planning Commission had asked whether the project could be re-scoped or de-scoped instead of being given more time.
PGCB, however, said KfW had made it clear that it would neither increase the loan amount nor extend the validity of the loan agreement beyond 30 June, 2027.
Adding new work is therefore not possible, while reducing the scope would also be impractical, according to PGCB.
“Most of the contracted work is already in its final stages, and dropping portions of the work could create complications regarding warranties for equipment that has already been supplied,” Abdur Rashid Khan, managing director of PGCB, said.
“So, time extension is the only solution to complete the project instead of rescoping or descoping,” he added.
Under the project arrangements, a one-year defect-liability or warranty period will apply after completion of each package.
Planning Commission decision awaited
The extension proposal has gone through several rounds of correspondence between the agencies since April.
PGCB first wrote to the Power Division in early April this year. The Power Division then forwarded the matter to the Planning Commission and the Economic Relations Division the following month.
In mid-July, the Planning Commission asked PGCB whether re-scoping or de-scoping could avoid the extension, but the implementing agency replied that this would not be possible at this stage.
Later, the Power Division sent its fresh recommendation for a one-year extension to the Planning Commission. The Commission’s decision on the proposed extension is now awaited.