Lack of overhaul in mega projects leaves room for waste, corruption: Economists

Economists have voiced concern over the interim government's failure to overhaul ongoing development projects, especially mega ones, leaving room for continued waste and corruption. Despite calls for major overhauls, many previously criticised mega projects have been carried into the next proposed budget for the fiscal 2025-26.

In his televised budget speech today (2 June), Finance Adviser Salehuddin Ahmed said due to the government's ongoing austerity measures, the pace of development projects has slowed, and the release of promised foreign loans has also faced delays.

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), said the new budget lacks clear policy direction or reform regarding mega projects.

"This continues the previous government's approach, where project numbers outweigh quality, leaving room for waste and corruption," he said, noting that many of these projects do not reflect actual needs.

He said the government missed the chance to reassess and drop unnecessary or overpriced components, which could have enabled more targeted funding for near-completion projects. 

"Even with limited revenue, the government is pursuing mega projects requiring massive funds – yet no reality-based review was undertaken to scrap non-viable ones," Mujeri added.

Professor Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem) and a member of the committee behind the White Paper on the State of Bangladesh's Economy, said, "We clearly stated in the white paper that many ADP projects have abnormally inflated costs. Most were initiated under the previous government and are now being continued, with only a few dropped – no real reforms have taken place."

He added, "We had hoped the interim government, despite its limited time, would at least review these overpriced projects. There was an opportunity between September and December to reassess funding for long-criticised projects, but instead, they've been allocated fresh funds in the new budget. Past unjust decisions are now being institutionalised."

Allocation for mega projects drops slightly

The total allocations for ongoing mega projects have been reduced in the Annual Development Programme (ADP). Unlike before, the interim government has not approved an excessive number of new projects.

But it has approved two new mega projects – the construction of Bay Terminal for Tk13,525 crore, and the construction of a new rail-cum-road bridge next to the existing old bridge over the Karnaphuli River at Kalurghat, costing Tk11,561 crore.

A review of the 16 mega projects included in the ADP reveals that their combined allocation for the upcoming budget is slightly lower than in the revised budget.

In the new ADP, these 16 mega projects have been allocated Tk38,773 crore, compared to Tk41,388 crore in the revised ADP of FY25.

In the proposed budget, the Rooppur Nuclear Power Plant has received the highest allocation among all mega projects, with Tk10,012 crore earmarked – up from Tk9,454 crore in the current fiscal year's revised ADP.

The MRT-1 metro rail project (Airport to Kamalapur via Purbachal) also saw a significant increase in allocation – from Tk4,043 crore in the revised FY25 ADP to Tk8,631 crore in the proposed FY26 budget.

Additionally, the Matarbari deep seaport project has been allocated Tk4,068.08 crore, compared to Tk2,570 crore in the current revised ADP.

Speaking at various recent events and press briefings, Planning Adviser Wahiduddin Mahmud said most mega and infrastructure projects taken during the previous government's tenure face two major issues – design flaws and inflated costs.

He said while many of these flaws and cost estimates have been revised, the projects are being continued to avoid further waste that might result from halting them mid-way.

However, he also questioned the viability of some projects, citing Payra Port as an example, saying it will never function as a real seaport and will likely serve no purpose. He similarly criticised the BRT (Gazipur-Airport) project and the Karnaphuli tunnel project.

Wahiduddin further revealed that the former director of the Matarbari power plant project fled the country with unresolved audit objections amounting to Tk6,571 crore.

He added that to reduce reliance on foreign loans, the government has refrained from initiating any new mega projects.