The government's project implementation is so slow that by the time it releases 20 percent of a project's fund, half the project time elapses, according to the Asian Development Bank.
An ADB portfolio review mission recently analysed 58 projects funded by the bank, and showed how slow disbursement affects project implementation.
For example, the $400 million Sustainable Power Sector Development Project, approved in June 2007, was scheduled to be completed by 2013. But almost 45 percent of the project time had elapsed before 20 percent of the fund was disbursed, show ADB data.
Similarly, the $3.85 million Power Sector Development Project faced delays. Almost 89 percent of the project time elapsed before the government released 20 percent of the amount.
“The delay in the initial disbursement is mostly a result of poor project readiness," says an ADB report.
Assessing ongoing projects, the ADB says it requires about 13 months on average for approving a loan and making the first disbursement in a project. And it takes 38.5 months for making 20 percent disbursement.
Delays in approving development and technical project proposals are common and directly contribute to delays in starting the work and the implementation.
Apart from procedural constraints, there is a capacity problem in the planning cell of executive agencies and line ministries.
The planning commission takes considerably long time to review project proposals. "As a result, in many of the cases more than 12 months are spent in the approval of the DPP [Development Project Proposal]," said the report.
The ADB gave a detailed picture of delays in the seven stages of approval of 16 ADB-funded projects between 2011 and 2013.
The bank also found that delays in procurement and recruitment of consultants still remain endemic in infrastructure projects. Low level of delegation of power in the government approval system also contributes to the delays.
Moreover, a big number of unnecessary contracts cost both the executive agencies and ADB staff additional time and resources.
Resettlement and land acquisition also delay project implementation by 2 to 2.5 years.
Project budgets for land acquisition are made in line with a 1982 ordinance. It stipulates that payments for acquired land will be made at government-fixed rates, not at market rates.
The ordinance also doesn't allow giving compensations to people affected by a project, resulting in legal disputes that delay project implementation.
Last year, the ADB raised the issue before the Economic Relations Division, and the ERD agreed to send a proposal to the law ministry for amending the ordinance.
The ADB said it would not place any project at its board from this year unless approved by Bangladesh's Executive Committee of National Economic Council.
Officials at the finance and planning ministries said they are going to take steps to speed up the implementation of the ADB-funded projects.
Planning Secretary Bhuiyan Shafiqul Islam told The Daily Star that the government has already moved to expedite the approval process and delegate more authority to the officials working at different levels of a project.
An order would be issued very soon to empower the officials concerned to approve projects.
The secretary said the planning ministry is working on a new DPP format in consultation with the stakeholders. Once in place, it will help cut down delays in DPP approval.
On condition of anonymity, a finance ministry official said a separate allocation would be made in the next budget for land acquisition to speed up the process.