Govt failed to spend full funds of ADB projects

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The government has failed to spend its Asian Development Bank (ADB) project funds in time due to significant delays in procurement and recruitment, according to an ADB study.

The finding comes as the ADB plans to lend $2.8 billion between 2009 and 2011 to be given on the basis of performance and fund-absorption capacity.

The proposed loan will be subject to regular performance-based assessment and will only finance large infrastructure projects that contribute more directly to ‘growth’, according to ADB documents.

The issue will be discussed in detail at a meeting between the government and ADB today, which will wrap up the assessment and planning of ADB programmes and evaluate the government performance in implementing projects.

The ADB study, which will be presented at today’s meeting, has found that none of its eight projects has fully disbursed the funds, with two projects in the energy and power sector missing the disbursement deadline.

The $180 million West Zone Power Development project has spent only 62 percent of its fund despite running over the target timeframe by 26 percent. The $50 million Dhaka Clean Fuel project has disbursed only 67 percent despite being 11 percent over its target period.

On the other hand, the massive $230 million Gas Transmission and Development project has disbursed only 2 percent of its project funds with 42 percent of its target timeframe elapsed.

With two-thirds of the time elapsed, the Road Network Improvement and Maintenance project has disbursed only 2 percent and the Chittagong Port Trade Facilitation project has spent only 4 percent.

Meanwhile, delays in major goods and works procurement range from 161 days to 462 days.

The Gas Transmission and Development project suffered a 462-day delay in procurement, when the normal period for contract signing being only 147 days instead of the 609 days already elapsed on the contract. The government has invited re-bidding for the project.

Delays in consultant recruitment range between 16 months to 27 months for ADB-government projects in 2007, says the ADB study.

Similar delays have forced deferral of the Clean Fuel Sector Development Programme and the Development of Transport Corridors for Trade Facilitation Project, with the ADB transferring the allocated $460 million from these two projects to next year.

However, these findings have not significantly affected the ADB’s plans give loans to Bangladesh over the next few years.

The ADB has proposed to lend $847 million for 2009, $815 million for 2010 and $820 million for 2011.

The proposal includes $610 million for the power and gas sector between 2009 and 2010.

Three of the major priorities for the sector include a new gas distribution company for the southwest, market-oriented pricing to ease financial pressure, and enactment of the Gas Act to regulate transmission and distribution of gas.

The transport sector will get proposed $1.2 billion in 2009 and $475 million for 2010. The transport loans will focus on better governance and improving regional connectivity, including plans to improve rail-links between Dhaka-Chittagong-Bogra, and with neighbouring countries.

The 2009 fund also has a large chunk going towards improving the capacity of Chittagong Port to better handle cross-border regional traffic and reforming the Mongla Port.

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