Bangladesh’s feasibility study fallacy
A recent white paper on Bangladesh's economy has reported that seven mega-projects drained Tk 80,569 crore (approximately $7 billion at today's rates) more from the state coffer than the initial estimates due to cost escalations and time overruns.
Unfortunately, not only mega projects show such appalling scenarios. Most government initiatives with public money (note "public money") would miserably fail post-project performance evaluation. It is not only time and cost overruns; the justification for undertaking them in the first place is often flimsy at best and dubious or non-existent in some cases.
For all latest news, follow The Daily Star's Google News channel. We have recently seen several media reports about the unviability of the Karnaphuli tunnel project. Was a feasibility study not undertaken before the country's highest policymaking body approved the project? Did the study not include elaborate cost and benefit streams, return on investment, and an environmental and social impact assessment (ESIA)? The outcome is a 27 percent cost overrun and a white elephant eating up taxpayers' money. The revenue is far below, and the cost is much higher than those stated in the feasibility study.
The Dohazari-Cox's Bazar Railway Project's price tag shot through the roof, as its cost at completion was almost nine times the initial estimate! Then, it exposed the sorry state of the standards by which Bangladesh conducts ESIAs. The alignment ran through floodplains without adequate cross-drainage arrangements, resulting in massive damage to the tracks immediately after completion as monsoon waters rushed down the hills, hitting it with full force. Interestingly, the parallel-running roads have been operating satisfactorily for several years. Certainly, an economic feasibility study, including a rigorous ESIA, was conducted before an international financial institution (IFI) approved the loan for the railway project.
Hailed as an all-weather link that connects Itna, Mithamoin, and Astagram upazilas in Kishoreganj, a 30 km road running through a huge natural water body ("haor") has instead been wreaking havoc, causing untimely flooding and damaging crops on thousands of hectares of land. The road has impeded natural water flow into the rivers through the haor, causing waterlogging and flooding, which was never seen before in the area. Gobbling up Tk 874 crore (about $100 million at 2022 rates) from public funds, the road has adversely impacted local livelihoods, which depend on fishing when the land is inundated and farming at other times, making both difficult. Littering has become another problem as visitors mindlessly dump waste in the water. The project, reportedly undertaken at a president's behest, also had a feasibility study and ESIA conducted prior. However, it simply glossed over such adverse social and environmental impacts and cooked up its economic viability to get through the government's checkbox-ticking approval process.
The list is endless. Project preparatory studies are never conducted with the professional rigour, ethical standards, or integrity they deserve, whether funded by the government, IFIs (such as the World Bank or the Asian Development Bank) or bilateral financing agencies. The post-project evaluation mechanism is a routine instead of a systemic process of problem identification, lesson learning, and improving next-time exercise.
The Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Finance requires project completion reports, which has also become a useless exercise and another form of public money wastage. Has the government ever asked the implementing agency, the consultant, or the contractor why their work was unsatisfactory? Was the outcome of any study ever questioned when such studies turned out to be grossly faulty? Has the responsible agency or persons ever been made accountable?
All these lead to another question, which is more to the point. Was any project dropped because the economic feasibility study found it infeasible, or the ESIA reported that it would have adverse impacts if implemented?
Let's delve deeper into the project screening process. In a classic case of potential conflict of interest, the same organisation (government, IFI or a bilateral financing agency) that intends to extend the fund usually pays for the feasibility study (which includes an ESIA). Such a study will be inherently biased and likely find the project feasible, toning down the adverse social and environmental impacts with impractical mitigation measures and monitoring mechanisms. A glaring case is the Rampal Coal-Fired Power Plant, located next to the Sundarbans, a fragile ecosystem, which anyone with common sense will consider an environmental disaster in waiting. A Greenpeace study reported that the plant would cause at least 6,000 premature deaths and low birth weights of 24,000 babies during its 40-year life. Burning five million tonnes of coal annually, the power plant would be among Bangladesh's largest sources of air pollution. The ritualistic feasibility study and its ESIA (commissioned by those with a stake in its go-ahead) played on like actors in a meticulously scripted sequence, producing volumes of reports without mentioning these unpalatable facts.
How can Bangladesh screen out projects that are infeasible, detrimental to the environment, and harmful to society? What mechanism will facilitate utilising public money more efficiently and sustainably? I will mention two broad measures in this piece, though there will be others. First, a performance audit mechanism should be set up, and accountability should be instilled in the relevant government implementing agency, its officials, and all external parties involved. Second, all feasibility studies should be conducted independently, without bias following the highest professional standards and ethics.
Ultimately, reform is a bitter pill that must be swallowed if the intent is sincere.
Dr Sayeed Ahmed is a consulting engineer and the CEO of Bayside Analytix, a technology-focused strategy and management consulting organisation.
Views expressed in this article are the author's own.
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