The proposed merger of a slow-moving power distribution modernisation project in the western zone has been scrapped after the initiative was deemed unviable.
The Modernisation of Power Distribution – Smart Grids Phase-1 project, implemented by the West Zone Power Distribution Company Ltd (WZPDCL), will now receive a two-year extension without any additional cost, taking its completion deadline to December 2028, according to Planning Commission sources.
The commission had asked WZPDCL whether the project, approved in June 2022 with a December 2026 completion deadline, could be merged with a new scheme to avoid repeated extensions. The implementing agency, however, argued that a merger was not feasible at this stage.
The Tk1,067.29 crore project was launched to replace decades-old distribution networks across 21 districts and 20 upazilas in the country’s southwest and reduce system losses. Germany’s KfW is providing Tk699.26 crore in financing.
As of June this year, the project’s cumulative physical progress stood at only 13.50%, against financial progress of 2.36%, officials said.
They attributed the slow progress largely to delays in appointing a consultant and repeated revisions to project documents, which together consumed nearly three years.
A recent review meeting on slow-moving foreign-funded power projects, chaired by Finance Minister Amir Khosru Mahmud Chowdhury, also decided to extend the project’s deadline rather than merge it with a new scheme.
Soon after taking office, State Minister for Planning Zonayed Saki had announced the BNP government’s plan to streamline ongoing Annual Development Programme (ADP) projects by merging slow-moving schemes with low progress.
Why the merger idea was dropped
In response to the Planning Commission’s instruction to consider a merger instead of seeking another extension, WZPDCL said contractors for all seven procurement packages had already been shortlisted, while bidding documents for four packages had been sent to pre-qualified bidders.
Fieldwork could begin as early as October-November, it said.
A merger at this stage would require starting the process from scratch, including preparing a new Development Project Proposal, obtaining fresh ECNEC approval and formally amending the KfW loan agreement with the lender’s approval.
KfW’s two-stage international tender process has already cleared the first stage. Restarting the process would mean losing that progress, WZPDCL said.
The company also noted that it has no alternative project lined up and no funding earmarked for a new scheme in the current fiscal year. It has already spent Tk25.16 crore under the existing project, leaving little practical basis for a merger.
What went wrong
Progress has been slow from the outset. Recruiting the Project Implementation Support Consultant alone took nearly a year.
The consultant then took another year to prepare the Inception Report, Project Planning Manual and preliminary designs. Pre-qualification documents for six packages and their evaluation consumed another year.
Finalising the bidding documents took nearly another year, officials said, largely because the consultant repeatedly failed to incorporate WZPDCL’s feedback into revised drafts, resulting in multiple rounds of revisions. Delays in obtaining No Objection Certificates from KfW further slowed the process.
Funding deadline also extended
The financing timeline has already been adjusted accordingly. The Economic Relations Division told the Power Division in May that KfW had extended the loan-utilisation deadline by one year to December 2028.
A tripartite meeting involving the ERD, WZPDCL and KfW in June sought to accelerate implementation, with the lender assuring the agencies of faster clearances going forward.
Finance minister gives final nod
At the review meeting, the project director said most of the 20 substations being renovated and rehabilitated under the project were built in the 1980s and are now in vulnerable condition.
Some also lack sufficient capacity to meet existing demand, underscoring the project’s importance despite its slow progress.
“Pre-qualification has been completed for all seven packages, and bidding documents for four of them — covering substation rehabilitation, automation and distribution line works — have already been issued to shortlisted bidders, with the remaining three expected to follow soon,” the official said.
The Power Division secretary said the extension was necessary to keep the project aligned with national priorities. The Planning Division secretary also supported extending the deadline to December 2028.
Finance Minister Amir Khosru Mahmud Chowdhury ultimately deemed the proposal acceptable given the project’s importance and said the Planning Commission would arrange the necessary extension.
He cautioned, however, that if any laxity was found at any stage of implementation going forward, appropriate legal action should be taken against both individuals and institutions.