Bonikbarta Exclusive

The second rapid elevated road in the capital is the Dhaka-Ashulia Elevated Expressway. This 24-kilometer-long elevated road has a construction cost of BDT 175.53 billion. The project is being implemented with a loan from China under a government-to-government (G2G) arrangement. Like other G2G projects, no bidding process was followed for contractor selection. The relevant authorities of China and Bangladesh appointed the China National Machinery Corporation (CMC) as the contractor based on mutual agreement.

Experts in communication infrastructure believe that if contractors had been appointed through a competitive bidding process instead of the G2G method, the construction cost of the Elevated Expressway would have been significantly lower. They point out that the Dhaka Elevated Expressway project, which is similar and almost the same length, is being implemented for BDT 89.4 billion under the Public-Private Partnership (PPP) model. In contrast, the Dhaka-Ashulia Elevated Expressway project is expected to cost nearly double that amount.

Not only is the high cost a concern, but the Ashulia Expressway project has also come under scrutiny due to large commissions paid under the guise of securing work. Even while still in the planning stage, the contractor, CMC, signed a contract with Epic Solution in Bangladesh. The agreement stipulated that Epic Solution would assist CMC in obtaining the work in exchange for a 6 percent commission on the contract value, amounting to approximately BDT 7.5 billion. Recently, allegations of breach of contract between the two companies have brought this issue to light in court. Infrastructure experts and economists have termed such G2G agreements "unethical" and "unprecedented."

They argue that this kind of visible or invisible commission trade is prevalent in nearly all projects in the country, benefiting project officials as well as various levels of bureaucrats and politicians. They believe that if project work were awarded through competitive bidding, costs would decrease. Moreover, the method used to implement G2G projects is largely unsuitable for a country like Bangladesh.

Regarding the matter, infrastructure expert and Professor Dr. Hadiuzzaman of Bangladesh University of Engineering and Technology (BUET) told Bonik Barta, "We often hear that there is an invisible commission system in place from the government's Planning Commission to various individuals and institutional levels for large projects in Bangladesh. Our development partners are also likely aware of this. As a result, various types of invisible commissions are often considered in the cost estimates of projects, which effectively contributes to increasing project costs. When we compare it with any neighboring country, whether it’s rail projects or road construction, we see that the construction cost per kilometer in Bangladesh is typically three to four times, or even more, than normal. In many cases, the construction costs for such infrastructure in Bangladesh are even higher than those in European countries."

He said, "In any infrastructure construction or procurement, competitive bidding allows for work to be done at reasonable prices. However, G2G projects do not allow for any opportunity for competitive bidding. On the contrary, the lending country often adds various conditions to implementing such projects, increasing costs. Almost everything is effectively imposed on us by the lending country, contractors and consultants, machinery used in construction, and construction materials. This raises project costs and reduces opportunities for Bangladeshi contractors, consultants, and engineers. Overall, I would say that implementing G2G projects is not justifiable in the socioeconomic context of Bangladesh."

Another major project being implemented under the G2G method in Bangladesh is the Padma Bridge Rail Link. The Railways Ministry is spending BDT 392.46 billion on this project. Since it is a G2G project, no bidding process was followed for contractor selection. Based on mutual agreement, the China Railway Engineering Group (CREC) has been appointed as the contractor. In terms of monetary value, this is the largest project in the country's communication infrastructure sector. The railway construction cost per kilometer in Bangladeshi currency exceeds BDT 2.3 million. Observations from various international organizations have indicated that the Padma Bridge Rail Link project is the most expensive among the various rail projects (non-urban heavy rail projects) being constructed or completed in the Asia-Pacific region.

Another project implemented using the G2G method is the Karnaphuli Tunnel. The construction cost of the tunnel exceeds BDT 105 billion, with China as the lending country. No bidding process was followed here either, and the contractor appointed based on mutual agreement is China Communications and Construction Company Limited (CCCC).

In addition to the G2G method, several projects have been implemented in the country’s communication infrastructure sector with loans from various development partner organizations. Many of these projects are still ongoing. While the bidding process was followed for contractor selection in these projects, experts disagree that the process can be considered competitive.

Another professor from BUET, Dr. Shamsul Haque, cited ongoing projects funded by the Japan International Cooperation Agency (JICA) as examples. He said, "JICA has provided loans for various projects in Bangladesh, including the metro rail and railway bridges. They have also acted as consultants in each project, preparing the designs and cost estimates. They have even prepared the bidding documents. In most projects, it has been observed that certain conditions have been included in the call for bids that only benefit institutions associated with JICA. As a result, these interested parties end up winning the contracts. Ultimately, the competitiveness of the bidding process is questionable."

Work on MRT Line-6, MRT Line-1, and MRT Line-5, Northern Route of Dhaka, is currently underway with the funding of JICA. Apart from these three metro rails, JICA is also financing an independent rail bridge under construction parallel to the existing multi-purpose bridge on the Jamuna River. Infrastructure experts are questioning the high construction cost of these four mega projects. They also blame the non-competitive bidding process in these projects as one of the reasons for the high price.

In addition to JICA, another major development partner in Bangladesh is the Asian Development Bank (ADB). The organization is funding several road and rail projects in the country. Other organizations have financed various projects, including the World Bank, the Korea International Cooperation Agency (KOICA), and the Asian Infrastructure Investment Bank (AIIB). Neighboring India is also one of Bangladesh's key development partners. Through India's Line of Credit (LOC), several projects in the communication infrastructure sector have been implemented, with several more still ongoing.

Professor M. Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), commented that development partner countries and organizations exert various pressures in the bidding processes of projects implemented and ongoing in Bangladesh. He told Bonik Barta, "In many cases, we see that the countries providing loans for development projects in Bangladesh impose certain rules regarding procurement. For example, in projects under India's Line of Credit (LOC), there is a condition to source 65% of construction materials from India. We have often observed deviations from various procurement rules, and there are reports of corruption as well. Due to these factors, the construction cost increases, and there are also allegations of compromises in the quality of work."

He said, "In Bangladesh, the bidding process has been largely made online, with many regulations added. However, we often see deviations from these rules. The bidding process does not happen in the competitive manner it is supposed to. Only a few firms can participate in the bidding process. If we cannot break free from these issues, we will suffer in the future just as we have in the past."

Most projects in the country's communication infrastructure sector are implemented under the Ministry of Road Transport and Bridges and Railways. Responsible officials from these two ministries did not wish to comment on the lack of competitive bidding in contractor selection.