Economists would argue that the low success rate reflects a rational assessment of risk, with the returns from a few successes outweighing the losses of many failures. Instead, it should work towards developing the capacity to implement all these projects on time and within their original budgetary requirements.Įresh Omar Jamal is assistant editor at The Daily Star.The evidence is disturbingly clear: Most major business initiatives-mergers and acquisitions, capital investments, market entries-fail to ever pay off. That's why the government should avoid falling into the trap of being overly-optimistic about them. In fact, if we continue along our current trajectory, they even have the potential to do more harm than good. The bottom line is that Bangladesh is not guaranteed to benefit greatly from the megaprojects that are currently in the pipeline. The opportunity cost that arises from this is by no means insignificant, and it adds up over time. Therefore, it is essential for the government not to be wasteful with these foreign loans, and to find some way to increase the tax-GDP ratio, which has proven to be a Herculean task so far.Īnother factor that should not be overlooked is that because the fast-track megaprojects grab a large chunk of the budgetary allocation set aside for the Annual Development Programme (ADP)-for example, in FY2021-22, 10 such projects grabbed nearly one-third of the Tk 225,324 crore ADP-the Planning Commission cannot provide adequate funds for many other small, medium and big projects, per their own admission. Bangladesh's foreign loan composition has already started to change, with concessional loans from multilateral lenders being replaced with costlier bilateral loans-with higher interest rates and shorter grace periods-because of the country's graduation from the low-income bracket. According to eminent economist Debapriya Bhattacharya, Bangladesh's debt situation may become somewhat tricky in 2024-2025 if the government fails to increase its revenue base now, as the repayment schedule for many of the costly loans would begin then. Repayment of the loans we have taken for these projects also become more problematic. In the end, the burden falls on the end consumers, who are deprived of the timely delivery of services, while the cost of the services to be delivered by the project rises. Because development projects in Bangladesh have a tendency to go through multiple phases of revision, resulting in cost escalation and delays, when juxtaposed against the initial projection of expected outcomes, the majority of them fail to achieve their targets. These are some examples of how public expenditure is not paying off the promised economic utilities. The same thing happened with the Rampal power plant. However, even though the first reactor has been installed, no electricity transmission line has been designed or built yet, and so, even if the reactor is ready, it will not be able to move into production, and the government will have to pay capacity charges against the idle plant. If we look at the RNPP project, it was originally supposed to start generating 1,200MW of electricity in 2021 and 2,400MW by 2022.
Perhaps because of this lost revenue, even before implementing the toll rates previously fixed for the expressway, the government is already planning to increase the toll rates-a move that will push up transport costs.
But with the toll plaza not yet ready, the expressway is still not able to generate the expected revenue. For example, the 55km Dhaka-Mawa-Bhanga Expressway is the most expensive highway in the country and the world, where more than Tk 200 crore has been spent per kilometre. One important but oft-ignored thing is that design and implementation mistakes delay the revenue-generation phase of megaprojects. Does Bangladesh face similar risks? Perhaps not, if it can overcome the various challenges to its ambition, such as maintaining economic diplomacy between the major infrastructure financiers, avoiding debt traps, ensuring project transparency and construction timelines, and spreading economic development evenly across the country.
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