Failed Procurement: Locomotives to cost more than double now
By failing to buy 70 locomotives over the last 11 years, Bangladesh Railway (BR) has shown how the non-implementation of a single project can hurt the organisation's overall services and cause huge financial losses.
When BR took on the project to purchase 70 meter gauge (MG) locomotives in August 2011, the cost was estimated at Tk 1,946 crore, with a deadline of June 2017.
The long-delayed project will be cancelled now as the authorities have failed to find a suitable financer.
In this given situation, BR has prepared a new project to buy 30 locomotives (MG) at a cost of Tk 2,247 crore, which is Tk 301 crore more than the original cost of the 70 locomotive project.
A BR official said the cost hike was caused by the rise in the dollar rate and the cost of materials over time. The locomotives in both projects have almost the same features.
However, cancelling the project will worsen BR's locomotive crisis, which is already bad because about 70 percent of the locomotives have passed their economic life.
According to the latest documents from BR, the state-run transport agency has 171 MG locomotives, of which 82 percent are old or "overaged". And of its 92 broad-gauge (BG) locomotives, 55 percent are overaged.
Apart from the 70 locomotive project, the Implementation Monitoring and Evaluation Division (IMED) last month suggested suspending another project to overhaul 21 MG locomotives
Meaning, the two long-delayed projects will now be cancelled and no allocation was given to these projects in Annual Development Programme (ADP) for the next fiscal year, officials said.
These two projects were initially taken to mitigate the growing crisis of rail engines.
On May 6, BR Director General Quamrul Ahsan told The Daily Star that the cancellation of the two projects would cause serious problems because it would take four to five years to buy new locomotives under a new project.
MONEY DOWN THE DRAIN
The deadline for the 70 locomotive project was extended twice before the project went through a major revision in 2018, when the cost jumped to Tk 2,659.33 crore with the deadline reset for June 2024.
In October 2018, BR signed a deal with the South Korean Hyundai Rotem Company for the procurement of the locomotives. As per the agreement, the company was supposed to arrange the required funds.
But in 2021, Hyundai sought to pull out of the project after the government asked it to manage soft loans instead of non-concessional ones, as agreed by both sides earlier.
As such, the IMED on April 5 suggested the projects be ended.
Meanwhile, the project authorities have already spent Tk 5.15 crore on the works with no locomotives to show for it.
NEW PLAN
In this given situation, BR has prepared a Pre-Development Project Proposal (PDPP) for procuring 30 MG locomotives and sent it to the Railway Ministry last week to forward it to the Planning Commission and Economic Relations Division, BR sources said.
As per the PDPP, a total of Tk 2,247 crore would be required for the project, of which Tk 1,545 crore is expected to come from foreign loan while the government will bear the rest. BR is discussing the South Korean fund in this regard.
The deadline for the project is June 2026.
Furthermore, BR is planning to buy 30 more MG locomotives with Asian Development Bank (ADB) financing.
Currently, it is implementing the Chattogram to Cox's Bazar Rail Link Project with an ADB loan, of which the project does not require $400 million.
Now, BR wants to use this $400 million and take an additional loan under the same ADB project to buy 30 MG locomotives and 100 MG carriages, said another official, wishing anonymity.