DHAKA-SYLHET EXPRESSWAY

China Harbour seeks 9.64pc hike in project cost

The China Harbour Engineering Company Ltd (CHEC) has sought a 9.64 per cent hike in the cost of the Dhaka–Sylhet Expressway project within a year of signing the deal.

With the hike, the cost of the project will increase to Tk 1,864 crore from the existing Tk 1,700 crore.

On October 2, CHEC sent a letter to the secretary of the Road Transport and Highway Division and placed the demand.

On October 10 last year, Bangladesh and China had signed a framework agreement to build the Dhaka–Sylhet four-lane expressway under a government-to-government (G2G) project. Under the agreement, the 226-km highway will be converted into a four-lane expressway.

Roads and highways department (RHD) chief engineer Ebne Alam Hasan had signed the agreement on behalf of the Bangladesh government, while CHEC president Tang Qiaoliang had signed for the Chinese government.

In the letter, CHEC mentioned that under the G2G project, the Chinese government funds the project, while the CHEC, as the contractor nominated by the Chinese government, is responsible for furnishing the project cost estimate and carrying out negotiations with the government until an agreement is reached.

The same exercise is practiced by other G2G projects in Bangladesh.

However, in case of the Dhaka–Sylhet four-Lane Project (DS4L), the cost estimate, together with the supporting documents submitted by CHEC, had not been appropriately examined and considered by the negotiation committee, the letter stated.

At the very beginning of the negotiation, CHEC submitted the cost estimate and rate analysis.

But these were ignored as the RHD has a pre-determined scheduled rate for project cost estimation. The CHEC had only been given the option to accept the pre-fixed price by the negotiation committee, the letter said.

The official concerned of the Road Transport and Highways Division, however, declined to comment on the matter.

It is a sensitive issue and the government will take a decision in this regard, he said.

The official, however, said that they have informed the higher authorities about the demand placed by CHEC as well as to the negotiating agency, Economic Reactions Division (ERD).

Even though CHEC has repeatedly stated through letters and raised the issue during the meeting that the price offered based on the RHD scheduled rate 2014–15 is too low and not workable, it has failed to convince the negotiation committee.

CHEC said that although it presented numerous justifications, comparisons and examples, the arguments were not taken seriously and not considered by the negotiation committee. “We feel the negotiation committee still believes that the RHD scheduled rates 2014–15 are workable, while the entire construction market in Bangladesh is aware that the RHD scheduled rates 2014–15 are far below the workable rate,” the CHEC letter noted.

The letter also mentioned that the only thing CHEC had heard from the negotiation committee was that all the contractors selected through international competitive bidding (ICB) exercises in RHD had been awarded the contracts with the same unit rate or even lower than the RHD scheduled rate and that the contractors

are comfortable with the unit rate offered.

CHEC pointed out that it repeatedly explained that most of the comparable projects were completed projects over the past few years and cannot be compared with the current market prices. Instead, the comparison should be made with the project completed cost and not the project contrail ward cost. Besides, the time required to complete the projects and the quality of the completed projects should also be taken into account to make a fair comparison.

CHEC also stated that describing their cost estimate as higher without considering the current market scenario was very unfair. It also added that the negotiation committee had asked them to accept a price that is not workable.

CHEC, however, expressed hope that the committee would make special efforts to study and evaluate all its explanations and the current market scenario to arrive at a better judgement on the project cost.

DHAKA-SYLHET EXPRESSWAY

China Harbour seeks 9.64pc hike in project cost

The China Harbour Engineering Company Ltd (CHEC) has sought a 9.64 per cent hike in the cost of the DhakaSylhet Expressway project within a year of signing the deal. With the hike, the cost of the project will increase to Tk 1,864 crore from the existing Tk 1,700 crore. On October 2, CHEC sent a letter to the secretary of the Road Transport and Highway Division and placed the demand. On October 10 last year, Bangladesh and China had signed a framework agreement to build the DhakaSylhet four-lane expressway under a government-to-government (G2G) project. Under the agreement, the 226-km highway will be converted into a four-lane expressway. Roads and highways department (RHD) chief engineer Ebne Alam Hasan had signed the agreement on behalf of the Bangladesh government, while CHEC president Tang Qiaoliang had signed for the Chinese government. In the letter, CHEC mentioned that under the G2G project, the Chinese government funds the project, while the CHEC, as the contractor nominated by the Chinese government, is responsible for furnishing the project cost estimate and carrying out negotiations with the government until an agreement is reached. The same exercise is practiced by other G2G projects in Bangladesh. However, in case of the DhakaSylhet four-Lane Project (DS4L), the cost estimate, together with the supporting documents submitted by CHEC, had not been appropriately examined and considered by the negotiation committee, the letter stated. At the very beginning of the negotiation, CHEC submitted the cost estimate and rate analysis. But these were ignored as the RHD has a pre-determined scheduled rate for project cost estimation. The CHEC had only been given the option to accept the pre-fixed price by the negotiation committee, the letter said. The official concerned of the Road Transport and Highways Division, however, declined to comment on the matter. It is a sensitive issue and the government will take a decision in this regard, he said. The official, however, said that they have informed the higher authorities about the demand placed by CHEC as well as to the negotiating agency, Economic Reactions Division (ERD). Even though CHEC has repeatedly stated through letters and raised the issue during the meeting that the price offered based on the RHD scheduled rate 201415 is too low and not workable, it has failed to convince the negotiation committee. CHEC said that although it presented numerous justifications, comparisons and examples, the arguments were not taken seriously and not considered by the negotiation committee. We feel the negotiation committee still believes that the RHD scheduled rates 201415 are workable, while the entire construction market in Bangladesh is aware that the RHD scheduled rates 201415 are far below the workable rate, the CHEC letter noted. The letter also mentioned that the only thing CHEC had heard from the negotiation committee was that all the contractors selected through international competitive bidding (ICB) exercises in RHD had been awarded the contracts with the same unit rate or even lower than the RHD scheduled rate and that the contractors are comfortable with the unit rate offered. CHEC pointed out that it repeatedly explained that most of the comparable projects were completed projects over the past few years and cannot be compared with the current market prices. Instead, the comparison should be made with the project completed cost and not the project contrail ward cost. Besides, the time required to complete the projects and the quality of the completed projects should also be taken into account to make a fair comparison. CHEC also stated that describing their cost estimate as higher without considering the current market scenario was very unfair. It also added that the negotiation committee had asked them to accept a price that is not workable. CHEC, however, expressed hope that the committee would make special efforts to study and evaluate all its explanations and the current market scenario to arrive at a better judgement on the project cost.