The project that has zero return!

The Roads and Highways Department (RHD) has taken up a Tk 4.28 billion project to widen an existing road in Laksmipur, officials said on Friday.

They said the state-run road developer had originally estimated Tk 420 million costs for expanding the 3.65-kilometre road.

But the final cost was raised almost 10 times as much to Tk 4.28 billion.

The rest of the project funds will be spent on land acquisition, car purchase, honorium to the committee members, the installation of traffic signals, design, earthen work, utility shifting, purchase of stationary, festival expenditure, etc.

The department, in its calculation, showed the net present value (NPV) of the project is negative, the benefit cost ratio (BCR)" and internal rate of return (IRR) are zero.

A senior government official said the RHD has already taken up the project Laksmipur town connecting road and Laxmipur-Char Alexander-Sonapur-Maijdee road construction project" and sent it to the Planning Commission (PC) for approval.

He said it had proposed spending less than 10 per cent of the total fund for widening the road and the remaining 90 per cent money for related work.

The Project Evaluation Committee (PEC) of the Planning Commission (PC) has raised a series of observations on the project.

It said the cost for widening an existing road seemed abnormally high.

"If the road construction cost becomes too high, its financial and economic viability will have to be checked. We are scrutinising the project proposal," a Commission official said.

The road developer will widen the 1.65km-long Laksmipur city connecting road and the first 2.0-km of the Laksmipur-Char Alexander-Sonapur-Maijdee road through the project.

A senior RHD official said it would require Tk 3.72 billion, or 87 per cent of the total cost for land acquisition and rehabilitation alone.

"Since the lands are situated in urban areas, costs are high. So, we have been forced to seek higher funds for the project," he said.

According to the RHD, it has set aside Tk 8.12 million for 19,806 cubic metre of earthen work for widening the existing road.

It has proposed purchasing one truck and one motorbike at Tk 3.75 million under the project.

The RHD has sought Tk 35 million for building the road divider, Tk 149.17 million for constructing RCC drains on both sides of the 3.65km road, Tk 11.71 million for building two box-culverts.

Superintending engineer of the RHD (Noakhali Zone) Abdur Rahim said the Commission has given observations with regard higher land acquisition costs.

Since the cost seems to be high, the Department is now rethinking the project, he told the FE.

Asked about the viability of the project, Mr Rahim said, "The road widening work is important to reduce the congestion in Laksmipur city."

Since some commercial buildings will have to be acquired for widening the road, the land acquisition cost has gone up, he added.

Economist Dr Mirza Azizul Islam said if the rate of return from a project becomes negative, it should not be taken up.

"The public pay taxes for the development of the country," he said. "If their hard-earned money is spent on a project that has negative return and less important than other schemes, it should be scrapped," he added.

He said the Planning Commission and the Implementation Monitoring and Evaluation Division (IMED) should strictly scrutinise the projects before giving approval.

The Prime Minister-led Executive Committee of the National Economic Council (ECNEC) should not endorse these types of projects, Dr Islam said