The Power Division has proposed an additional Tk55.47 crore to cover the rising costs of the repowering project for the fourth unit of the Ghorashal Power Plant, which raised controversy earlier due to extraordinarily higher cost estimation.
The project was initiated in 2016 with an estimated cost of Tk2,029.24, designed to convert the 190 MW steam turbine into a combined cycle system capable of producing 409 MW within three years of inception.
However, after eight years, and with only 87% of the work completed, the Power Division has submitted a third revision proposal to the Planning Commission, pushing the total cost to Tk2,226.92 crore.
Approval of the proposal by the Executive Committee of the National Economic Council (Ecnec) will extend the tenure to nine-and-a-half years—leading to an additional Tk197.68 crore, approximately 10% of the original project cost.
Planning Ministry officials have revealed that a meeting of the Project Evaluation Committee (PEC) will soon be convened by the Industries and Power Division of the commission to scrutinise the proposal.
The representatives of the commission in the PEC will examine the causes of the project’s delays, the justification for the cost increase, and the withdrawal of funding by the World Bank, among other issues, they said.
Experts have long questioned the justification of repowering old power plants, citing the unusually high costs.
They argue that the government could have built new power plants at a lower cost per megawatt (MW) of production capacity than repowering the old Ghorashal plant.
According to them, the project’s current cost estimate of Tk2,226.92 crore would result in a per-MW cost of Tk10.17 crore, which they consider excessive.
For comparison, the construction of a 100 MW gas turbine power plant in Shahjibazar was completed last year at a cost of Tk9.11 crore per MW, while the 800 MW combined cycle power plant in Rupsa has a per-MW cost of Tk10.62 crore.
The proposal also highlighted that Tk220.57 crore would come from the government's own funds, with Tk1,557.16 crore covered by a loan from the World Bank.
The remaining Tk449.19 crore would be financed by the Bangladesh Power Development Board (BPDB).
However, due to project delays, the World Bank cancelled a Tk215.10 crore contract, forcing BPDB to shoulder additional expenses.
As of June this year, the project has spent Tk2,171.45 crore, completing 87.21% of the work but using only 81% of its allocated budget.
The Power Division has attributed the need for a budget revision to the withdrawal of World Bank funds and the need for alternative financing.
Despite the World Bank initially promising $217 million for the project, it cancelled $10 million of the contract, and the remaining $21.92 million was not disbursed before the contract’s expiration in September last year.
Steam turbine rectifications and commissioning work are expected to take another year and a half to finish, according to the Power Division.
Planning Commission officials have expressed concern that the project revision process was initiated too late.
Although revisions are typically submitted at least three months before a project’s deadline, this amendment was not proposed until after the project's expiration in June.
The proposed revision also sets the exchange rate at Tk110 per US dollar, a figure that Planning Commission officials are likely to question during the PEC meeting.
Additionally, while the number of project staff remains unchanged, the proposal suggests increasing officer salaries by 21.37%, employee salaries by 25.40%, and allowances by 24.88%, further raising concerns about the justification for these costs.
