Indian $1.0b LoC - BR project cost goes up by 85pc
Published : Sunday, 25 November 2012
FHM Humayan Kabir
Bangladesh has faced another operational hurdle to implementing a project under a US$ 1.0 billion Indian line of credit (LoC) as the selected Indian supplier has sought higher prices for supply of railway engines.
This has led to the government's hiking of the project cost by 85 per cent, officials said Saturday.
The officials of the Planning Commission (PC) said the Bangladesh Railway (BR) has sought an additional Tk 1.77 billion fund, 85 per cent higher than the original Tk 2.08 billion project cost, to procure 10 broad gauge (BG) diesel electric locomotives from India.
The high bidding price by the Indian railway engine (locomotive)-supplier has created problems for the government to implement the project under the Indian LoC, a senior PC official told the FE requesting anonymity.
Limited market (only India) for bidding and lack of proper feasibility studies before undertaking the project by the BR are the main reasons behind inflating its cost, he added.
Under the Indian LoC, the BR had undertaken a project, among several others, to procure 10 BG locomotives at a cost of Tk 2.08 billion to implement its railway modernisation project between August 2010 and June 2013.
Since the bidding price is much higher than the original official estimate, the BR has now sought revision of the project cost, raising it by Tk 1.77 billion to Tk 3.86 billion. It has also sought two and a half years additional time for completing the procurement of the locomotives from India.
A BR official, requesting not to be named, said since the Indian locomotive supplier has submitted the bid, involving higher costs than the projected level, and the rate of US dollar against the local currency (Taka) has also appreciated, the overall project cost has soared.
"Under the loan deal, we are bound to procure goods from India. We have no scope to go for any competitive international bidding process and judge the actual price of the railway engines," he told the FE.
As per terms and conditions of the Indian LoC, Bangladesh is obligated to procure at least 85 per cent of all goods, works and services from India.
The BR officials said they have already signed the commercial contract with one Indian locomotive-supplier to import 10 BG diesel electric locomotives.
The locomotives/engines will be added to the fleet of the struggling BR to offer better services to the passengers.
The state-owned BR has been faced, for long, with the problem of an inadequate number of engines as the expiry dates of most of its locomotives are over and many are being operated through overhauling even after completing their standard-operation age.
The government has undertaken some 13 projects in the railway sector under the one billion-dollar Indian LoC to improve its services.
Financial Express :: Financial Newspaper of Bangladesh
Published : Sunday, 25 November 2012
FHM Humayan Kabir
Bangladesh has faced another operational hurdle to implementing a project under a US$ 1.0 billion Indian line of credit (LoC) as the selected Indian supplier has sought higher prices for supply of railway engines.
This has led to the government's hiking of the project cost by 85 per cent, officials said Saturday.
The officials of the Planning Commission (PC) said the Bangladesh Railway (BR) has sought an additional Tk 1.77 billion fund, 85 per cent higher than the original Tk 2.08 billion project cost, to procure 10 broad gauge (BG) diesel electric locomotives from India.
The high bidding price by the Indian railway engine (locomotive)-supplier has created problems for the government to implement the project under the Indian LoC, a senior PC official told the FE requesting anonymity.
Limited market (only India) for bidding and lack of proper feasibility studies before undertaking the project by the BR are the main reasons behind inflating its cost, he added.
Under the Indian LoC, the BR had undertaken a project, among several others, to procure 10 BG locomotives at a cost of Tk 2.08 billion to implement its railway modernisation project between August 2010 and June 2013.
Since the bidding price is much higher than the original official estimate, the BR has now sought revision of the project cost, raising it by Tk 1.77 billion to Tk 3.86 billion. It has also sought two and a half years additional time for completing the procurement of the locomotives from India.
A BR official, requesting not to be named, said since the Indian locomotive supplier has submitted the bid, involving higher costs than the projected level, and the rate of US dollar against the local currency (Taka) has also appreciated, the overall project cost has soared.
"Under the loan deal, we are bound to procure goods from India. We have no scope to go for any competitive international bidding process and judge the actual price of the railway engines," he told the FE.
As per terms and conditions of the Indian LoC, Bangladesh is obligated to procure at least 85 per cent of all goods, works and services from India.
The BR officials said they have already signed the commercial contract with one Indian locomotive-supplier to import 10 BG diesel electric locomotives.
The locomotives/engines will be added to the fleet of the struggling BR to offer better services to the passengers.
The state-owned BR has been faced, for long, with the problem of an inadequate number of engines as the expiry dates of most of its locomotives are over and many are being operated through overhauling even after completing their standard-operation age.
The government has undertaken some 13 projects in the railway sector under the one billion-dollar Indian LoC to improve its services.
Financial Express :: Financial Newspaper of Bangladesh
