Mega-projects to get Tk 18,700cr
The government will announce a separate roadmap for the first time for 10 mega-projects, for which about Tk 18,700 crore will be allocated in the upcoming budget.
The estimated total cost for the 10 projects is Tk 340,214 crore, or $43.61 billion -- which is equivalent to the proposed budget for next fiscal year.
An 80-page document, “the Mega-Project – New Roadmap”, will give details of each project including the start and end dates, the economic impact of each project and the source of financing.
The mega-projects' allocations for the next three fiscal years will be specified in the budget, which will run into Tk 200,000 crore, said a finance ministry official.
The number of mega-projects may increase every year, he said, adding that the implementation status of the existing projects will be presented next fiscal year.
Most of the government's fast-track projects are included in the 10 mega-projects.
Save for Padma bridge, all other projects will be financed by bilateral and multilateral partners such as China, Japan and the Asian Development Bank.
The Padma bridge is being built with the government's own funds, after the World Bank withdrew its $1.2 billion funding commitment over corruption allegations.
“All of these projects will have a huge impact on the economy,” the finance ministry official said.
For example, once implemented, the Padma bridge and the Padma Rail Link projects would boost the country's economic growth by 1.5-1.75 percentage points.
The LNG terminal project is expected not only to diversify the country's primary energy sources but also ensure that the gas-based industries and installations do not face a sudden death in the near future.
However, the project has not started in the last six years.
Major infrastructure projects have a history of problems in Bangladesh, such as cost overruns, delays, failed procurement, unavailability of private financing.
The WB said most overruns are foreseeable and avoidable, and many of the problems stem from a lack of professional, forward-looking risk management.
Large infrastructure projects suffer from significant under-management of risk in practically all stages of the value chain and throughout the life cycle of a project.
But the finance ministry official said the progress of each mega-project would be monitored closely so that delays do not occur. At a pre-budget meeting last month, Finance Minister AMA Muhith said the government plans to formulate a separate budget for transformational mega-projects next fiscal year.
He said the government has to go for transformational projects with expenditure running into billions of dollars.
“We will not rely on concessional loans only for these transformational projects,” he said, adding that four countries, including China, are interested in financing them.
Muhith said the capital budget will be somewhat non-concessional but its terms and conditions will be fairly reasonable.
Wahiduddin Mahmud, chairman of the Economic Research Group, a think-tank, while speaking at the same pre-budget meeting, supported the government's emphasis on transformational projects.
Although the big picture of the mega-projects looks good, there is a need to look at the finer details, such as the project design, their quality, the priorities and the projects' social goals, he said.
“Once a large project is implemented it is tough to rectify.”