Ctg Dev Authority faces mounting debt: Looks to grants and project cuts
While the government has provided some grants, the CDA must also contribute Tk753 crore from its coffers to complete the projects
The Chattogram Development Authority (CDA) is grappling with a massive debt burden as the costs of its three major infrastructure projects have risen by approximately Tk4,707 crore due to repeated delays.
Of the additional expenditure, the government is providing Tk1,665 crore as a loan, which will lead to at least Tk760 crore in interest in the long run.
While the government has provided some grants, the CDA must also contribute Tk753 crore from its coffers to complete the projects.
However, with limited revenue sources, the organisation faces uncertainty in repaying its debt and financing its share of the costs.
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Experts attribute the delays and subsequent debt burden to poor feasibility assessments, mismanagement and inefficiency.
The CDA now plans to cut costs where possible and explore new revenue streams from infrastructure projects to address the crisis. It has also sought government grants to help cover the growing financial strain.
Financial struggles and limited revenue
The three major projects contributing to the CDA's financial difficulties are the city's flood mitigation project (with an additional cost of Tk3,010 crore), the Chattogram City Outer Ring Road (with cost increased by Tk648 crore in the latest revision) and the Elevated Expressway (with approximately Tk1,049 crore cost increase).
According to the CDA's budget records, its primary sources of income include shop rents, savings fund interest, building construction approval fees, and revenues from land and property sales.
In the fiscal 2021-22, CDA's total revenue was Tk43.19 crore, while operating expenses amounted to Tk37.80 crore. The 2023-24 budget estimates revenue of Tk59.91 crore against operating expenses of Tk52.72 crore.
However, the organisation's finance department acknowledged that the CDA lacks the capacity to repay its enormous debt.
Some sources claim that, under its current financial structure, the CDA would need more than a century to clear its obligations.
"This organisation will meet the same fate as the Chattogram City Corporation, which operates under a heavy debt burden," an official said, requesting anonymity.
The city corporation currently has debts amounting to Tk450 crore and lacks the financial ability to repay them despite multiple revenue sources.
Subhash Barua, a transportation expert and vice-president of the Forum for Planned Chattogram, noted, "There were mistakes in everything from planning to management. Due to these mistakes, the cost has increased. The CDA does not have the capacity to bear the additional cost. Its past experience is also not matching. As a result, it is not possible to repay the debt even by collecting it from tolls."
Seeking grants to ease the burden
According to CDA documents, the original budget for the "Re-excavation, Expansion, Renovation and Development of Canals for the Purpose of Mitigating Waterlogging in Chattogram City" project was Tk5,616 crore. However, costs later surged by Tk3,010 crore, climbing to Tk8,626.62 crore.
The government has agreed to provide Tk1,503 crore of the additional expenditure as a grant, while the remaining Tk1,506 crore is split between a Tk753 crore government loan and Tk753 crore from the CDA's own funds.
The loan comes with heavy interest and given its financial constraints, the CDA has stated that the project cannot be completed without additional grants.
Ring road delays and potential toll collection
The Chattogram City Outer Ring Road project, initiated in 2011, remains incomplete after 13 years. The 15-kilometre road, running along the coast from Patenga to Sagarika, saw traffic begin using the main section in October 2020.
However, additional work – including feeder roads and road widening – has since been added.
Originally budgeted at Tk856.28 crore, the project cost has risen to Tk3,324.15 crore due to multiple revisions. Of the last Tk648 crore increase, the government has provided Tk388 crore as a loan.
The CDA currently lacks the capacity to repay the loan on this toll-free road. As a result, the authority is considering cost reductions, such as limiting land acquisition and road length, while also exploring the possibility of imposing tolls on heavy vehicles.
Elevated expressway faces financial viability concerns
The cost of the 16km Elevated Expressway from Lalkhan Bazar to Patenga has increased from Tk3,250 crore to Tk4,299 crore due to design changes and the addition of ramps.
To cover the added expense, the government will provide a Tk524 crore loan, which will accrue Tk130 crore in interest.
The CDA planned to repay this loan through toll collection. However, while initial projections suggested that more than 80,000 vehicles would use the expressway daily, current usage stands at fewer than 4,000 vehicles.
At less than Tk3 crore in annual revenue, loan repayment would take over 200 years after deducting operational expenses.
Regarding the cost increase and how the CDA plans to address it, Kazi Hasan Bin Shams, chief engineer of the CDA, told The Business Standard, "Tunnel interconnection and EPZ feeder road were added at the final stage of the Outer Ring Road project. Now some cutbacks are being made in the project. Then the cost will be reduced.
"And the collection of tolls from heavy vehicles plying on this road is under consideration. A proposal has been made to provide funds as grants for the waterlogging project. Tolls are being collected from the Elevated Expressway. It is expected that income will increase when the ramps are launched."
