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Tk1,000 crore Desco projects questioned

  • Published at 10:15 pm September 22nd, 2014
Tk1,000 crore Desco projects questioned

The audit department has come up with findings that the Dhaka Electricity Supply Company (Desco) has implemented two projects worth Tk1,081 crore, showing that the projects had made significant gains, which in fact were originally the results of an earlier project.

While evaluating “Upgrading and Expanding Distribution in Gulshan Circle” and “Strengthening Desco’s Distribution Network” projects, the audit department said the Desco’s claim of reducing system loss to 8.4% from 16.2% through these projects was incorrect.

The reduction of system loss was the result of the previous “Greater Dhaka Power Project” that increased Desco’s capacity by reducing a number of illegal connections and pilferage of legal users.

Desco’s current system loss stands at 8.41%, the same as it was in 2011 – before the two projects were completed.

The performance audit report also concluded that the authorities caused overspending of Tk392 crore because of delays in implementing the projects. Besides, unnecessary procurements were also made under the projects, according to the report.

The audit department placed its report in the last session of parliament through the president. The Public Accounts Committee of parliament would now discuss the report and make necessary recommendations.

The Projects

Between October 2005 and July 2006, the Desco authorities decided to implement the two projects mainly to reduce technical losses and non-technical losses such as system loss (theft and misuses).

A large number of goods were procured under the projects that aimed at constructing six new sub-stations and renovating six other sub-stations.

“Upgrading and Expanding Distribution in Gulshan Circle” project was stretched up to June 2012, raising its cost to around Tk595 crore from around Tk400 crore. Similarly, the cost of the “Strengthening Desco’s Distribution Network” project was increased to around Tk486 crore from Tk288 crore to finish by June 2012.

The projects eventually ended in July 2013, with a total cost of around Tk1,081 crore.

Assessing performance

The audit wing carried out the performance audit of the two projects for around four months — between April and August 2011 — to appraise their justification and achievements. The audit team visited the spots and reviewed the records of the projects.

By the time the auditing began, the Desco authorities had constructed only one of the six new sub-stations, leaving the projects almost unimplemented. They also could not renovate any of the sub-stations under the projects.

Desco’s system loss (theft and misuse) was 16.2% before the launch of the projects, while it reduced to 8.4% in July 2011.

“Desco’s system loss came down to half before the implementation of the projects,” said the audit report.

The project director admitted, the report said, that the system loss was reduced because of the previous Greater Dhaka Power Project.

“In fact, Desco’s capacity went up and the system loss came down owing to the reduction of non-technical losses such as theft,” the report reads, referring that different areas had varied degrees of system loss.

For instance, the system loss in Gulshan area with lower number of illegal connections was less than 3%, while it was over 10% in Pallabi, Mirpur, Kafrul and Kalyanpur in the capital.

It further said there was no method of calculating the individual losses caused by the technical difficulties and the system loss; these were counted combined.

The report said system loss reduction without constructing new six sub-stations and renovating the six sub-stations was not logical.

“The two project proposals state that the system loss would be reduced. But no documentary evidence in favour of the claim that the projects contributed to the reduction of the system loss was presented [to the audit team],” the report reads.

The audit also detected that the authorities went for unnecessary procurements for the two projects. For example, goods worth $354,000 were bought on February 18, 2010; but those remained unused as of May 2, 2011. Again, $3,045,900 was spent to procure 230,000 metres of cable on October 25, 2009; but only 10,127 metres of the whole lot was used as of May 2, 2011, leaving around 95% of the procurement unused.

However, ANH Akter Hossain, who was the power secretary when the projects were undertaken, told the Dhaka Tribune: “The audit report was not credible. They [the audit team] actually want money from the departments. Payment of money can change the report. Besides, they are not technical persons.”

On project delays

The audit report said delays in implementing the two projects increased their implementation cost to around Tk1,081 crore — over Tk392 crore more than previous estimates.

Desco and the Power Division said the projects were delayed as the donors confirmed the release of funds in September 2007, resulting in the increase of prices of the goods necessary for the projects.

Besides, Desco claimed that the civil aviation authority and the Dhaka Cantonment authority took three years to allocate the land for the projects. Again, the projects had another delay as the power source – Power Grid Company of Bangladesh – delayed construction of sub-stations in some places.

However, the audit department made a different observation.

“The same person, a deputy general manager (planning and development) of Desco, is the director of both projects. It is not possible for one person to discharge so many responsibilities,” the report read, stipulating that the project director could not take care of the projects properly.