Slow progress triggers over 54% fund cuts for 4 metro projects

The Road Transport and Highways Division (RTHD) has proposed a deduction of Tk4,539.26 crore, representing 54.21% of the original allocation in the current fiscal year for four under-construction metro rail projects due to slower implementation progress.

Following deliberations in a meeting of the Budget Working Group and the Budget Management Committee, the division offered an allocation of Tk3,834 crore for all of the projects of the Dhaka Mass Transit company Limited (DMTCL) under the revised Annual Development Programme (ADP).

At the beginning of the fiscal year, the four projects were initially allocated Tk8,373.26 crore in the original ADP including Tk3,063 crore from the government fund and Tk5,310 crore from foreign loans.

However, in the first four months of the current fiscal year, Tk701 crore, only 8.37% of the allocation was disbursed, including Tk314 crore from the domestic and Tk387 crore from the foreign sources.

The proposal of allocation cuts has already been submitted to the Economic Relations Division (ERD) and the Planning Commission, RTHD officials say.

Analysing data from the past four years reveals a consistent pattern of substantial initial allocations for metro rail construction projects at the start of each fiscal year, followed by significant reductions in the revised ADP.

Transportation experts say the persistent shortfall in implementation compared to the original allocation poses a challenge for completing the projects on schedule.

According to them, prolonged delays in implementation over the years will not only extend the project timelines but also escalate overall project costs. Consequently, the benefits derived from these projects are expected to be delayed further.

Dr Hadiuzzaman, transportation expert and professor in the Department of Civil Engineering at Buet, told TBS that unrealistic targets are set, and projects are devised without considering the existing challenges in the context of thorough studies, leading to a failure to complete the work on time.

He said if substantial allocations are reduced every year, it impedes the project's progress. Consequently, it takes more time to realise the project's benefits, and the implementation cost also rises.

He further said the DMTCL authorities show more interest in securing allocations rather than focusing on effective implementation.

MAN Siddique, managing director of the DMTCL, told TBS that the issue of allocation cuts now depends on the decision of the officials of the commission.

Responding to a question regarding the completion of these projects at the stipulated time with a reality of frequent fund cuts, he said, "I am responsible for the supervision of operation. The project directors are responsible for project implementation. You may contact them."

However, project directors attribute the failure to spend the allocated funds to the complexities of land acquisition and challenges in obtaining approval for procurement proposals from the lender.

Project-wise analysis

According to RTHD officials, the four metro rail projects are experiencing a significant reduction of 62.52% in the allocation of foreign loans, with a comparatively lower deduction of 39.80% from the government's funds.

Project-wise analysis reveals that the MRT Line-1 project, encompassing an underground section from Dhaka airport to Kamalapur via Natunbazar and an overhead metro rail from Natunbazar to Purbachal, is facing a substantial deduction of Tk2,911.75 crore.

With the deduction amounting to 74.46% of the allocation, the project's completion by the scheduled deadline of December 2026 has become uncertain.

Allocation from the Japan International Cooperation Agency (Jica) loans under the project is set to be downsized to Tk240 crore from the original allocation of Tk2,700 crore. Failure in implementation leads the authority to return Tk2,460 crore from the lender's fund.

MRT-1 Project Director Abul Kashem Bhuiyan told TBS that the intricacies of land acquisition and challenges in gaining approval for procurement proposals from the lender as the key factors behind the failure to spend the allocated funds.

The MRT Line-6 project has also experienced a 41.81% reduction in the allocation for the current financial year. A revised allocation of Tk1,993 crore has been proposed, down from the original allocation of Tk3,425 crore.

Similarly, in the MRT Line-5 (northern route) project, there has been a reduction of Tk100 crore from the initial allocation of Tk880 crore. This project aims to construct a 20-km metro rail from Hemayetpur in Savar, passing through Gabtali, Mirpur-10, and Natunbazar.

Md Aftab Hossain Khan, project director of MRT Line-5 (northern route), told TBS, "We have initiated work on a package that relies on foreign equipment. A shipment with equipment has arrived from Vietnam, but two more ships are expected in June. Bills cannot be issued until these equipment are utilised. The new fiscal year will arrive before the bills can be settled. Due to this, the allocation is being reduced in the current financial year."

A technical assistance project was initiated in 2019 to conduct a feasibility study and detailed design by 2023 as part of the formulation of an investment project to construct MRT Line 5 (southern route). The project's duration has been extended until June 2024.

Approximately 61% of the project's allocation is also proposed to be reduced, from Tk158 crore to Tk62 crore. Consequently, suggestions have been made to maintain the allocation for the preparatory project in the next financial year as well.

Director of the technical project, Md Abdul Wohab, told TBS, "The approval of the main investment project is not yet final, but some work on the survey project will be carried out in the next financial year."

Projects not completing on time

Analysis reveals that the MRT Line-1 project, approved in 2019, had advanced only 3.39% by the last financial year against a projected expenditure of Tk52,561 crore. If the entire revised ADP allocation is utilised, progress will reach 5.29% over five years.

The Road Transport and Highways Division has projected an allocation of Tk11,735 crore for the project in the next three financial years. If spending aligns with this projection, progress would only reach 27.62% by June 2027. However, the project is scheduled to be completed by December 2026.

The MRT Line 5 (northern route) project, approved in 2019, is scheduled to conclude in 2028. Presently, Tk1,812 crore has been expended out of the total project cost of Tk41,239 crore. Only 28% of the total project cost allocation until FY 2026-27 has been finalised. Consequently, an extension of the project duration will be necessary.

Md Aftab Hossain Khan, project director of MRT Line 5 (northern route), said that the allocation will be augmented in the upcoming years if the project progresses at full speed. To ensure completion by 2028, the projected allocation for each year may need to be increased.