Fuel-dollar volatility hinders development

Mahfuja Mukul: Almost every development work of the country has more or less foreign currency involvement. Purchase of necessary materials, transportation or consulting costs are to be paid in dollars. The goods of a project from abroad have to be transported by ship or plane. Energy is important there as well as dollars. Volatile dollar and oil markets around the world since the Russia-Ukraine war. It has a direct impact on the development of the country. Project cost-time is increasing.
Project stakeholders say that the cost of implementing the project is increasing gradually due to the increase in dollar and fuel prices. Ship fare increased. Many products are also delayed in leaving foreign ports.
According to Planning Commission sources, the increase in dollar and oil prices is affecting all the projects. The Planning Commission is informed by letter about these matters. Besides, a dollar rate is fixed at the time of taking the project. Maybe there are projects that start implementation at the dollar rate of Tk 80 to Tk 85. But now it has increased from Tk 110 to Tk 115. Transport costs have also increased along with the increase in the prices of many construction materials. These have affected the project. A letter is being sent to the Planning Commission informing about many such problems.
The work of the project is going on with the assurance of starting train movement from Dohazari to Cox’s Bazar on December 16, 2022. If this route is opened, the train will reach Cox’s Bazar from Dhaka at the earliest. However, the project cost may increase by more than Tk 500 crore due to incidental factors including the increase in the value of the dollar. The work progress till July this year is 73 percent. The tracks, loops, angles, glass of the railway station stuck in Shanghai and the oyster-shaped structure
of the iconic railway station in Cox’s Bazar are yet to reach the country. As a result, the work did not progress.
According to Bangladesh Railway sources, these goods will come to the country from China by sea. Due to rise in fuel prices, ship fares have increased. Besides, the shipment is not matched with additional fare. Many parts of the project are also operated on diesel in the country. As the dollar price increases, the price of construction materials including rod-cement is also increased. These construction materials are used in ongoing projects.
The total cost of the project is Tk 18 thousand 34 crore. Out of this, Asian Development Bank (ADB) will give Tk 13 thousand 115 crore. As ADB will repay the loan in dollars, many costs have been reduced. However, if the project was implemented with government funding, it would have created a major crisis, the concerned claim.
Project director Mofizur Rahman told Daily Industry that the cost of implementing the project is increasing gradually due to the increase in dollar and fuel prices. Ship fare increased. Many products are delayed from overseas ports. ADB will repay the project loan in dollars. Because of this, I survived, otherwise there would have been many problems. Still, the rise in the value of the dollar has pushed up the prices of rods and cement. Hundreds of equipment run on oil under the project. Due to these reasons, the cost is increasing.
Funded by the Bangladesh government and Japan’s development partner JICA, the expenditure on the ‘Upazila Management and Development (UGD) Project’ is increasing by Tk 211 crore 50 lakh. At the same time, the term is also increasing by two and a half years. The amendment proposal of the project has been sent to the Planning Commission.
The reason for revision of the project is said to be additional funds of Tk 144 crore 65 lakh due to change in foreign currency exchange rate, which needs to be reconciled with the project cost. Apart from this, the expenses of VAT, IT, consultancy, salary and allowances, office rent etc. sectors have been newly determined and coordinated.
At the time the project was approved, Japan’s allocation for the consultancy sector was 865 million yen, which is Tk 56.19 crore. Due to change in currency exchange rate, it has increased to Tk 65 crore 64 lakh, which is Tk 9 crore 44 lakh more than the previous allocation.
In this context, a senior official of the project said that the reason for the increase in the consultant cost is that the number of public months has increased according to the daily calculations of the consultants. That is why the expenditure in this sector is also increasing. Tk 144 crore increased due to change in currency exchange rate. Also, many upazilas could not spend the whole amount even after receiving their allocated money, it was returned. Again, the government’s VAT-tax money has also been added. As a result, planning ministry approval is required to coordinate it.
The construction of Bangabandhu Sheikh Mujibur Rahman Tunnel under the Karnaphuli River in Chittagong is almost complete. As of June, the progress of the project is 87 percent. At this stage, the cost of the project is said to increase by at least Tk 800 crore due to the decrease in the value of rupees against the dollar and the addition of some new infrastructure. Tk 500 crore is increasing in the price adjustment sector due to the increase in dollar value.
Sub-Project Director (Approach Road, Service Facilities and Environment) of Bangabandhu Sheikh Mujibur Rahman Tunnel Construction Project (Karnaphuli Tunnel Project) Abul Kalam Azad said that the work of our project is at the final stage. The impact of dollar and oil price increase on the project. Much of the equipment is imported from abroad. Tk 500 crore will be required in the price adjustment sector.
Secretary of Planning Department Mamun-al-Rashid told that if the dollar rate and fuel prices affect the project, the project must be revised. There is an opportunity to increase the cost by revising the project. Later it has to take approval from ECNEC meeting. Moreover, there is no opportunity for bulk allocation to meet the additional expenditure in this sector.