Going blanketly without tenders is worrisome

THE government appears, worryingly though, to grow into a habit of giving projects to foreign, and local, firms and companies without putting the job out to tender. The appointment of foreign contractors in at least seven big projects, involving more than $24 billion, are in final stages, as New Age reported on Wednesday, whereas the estimated annual development expenditure in the current financial year is $14 billion. The number of projects given without putting them out to tender was few before 2015 and involved small amount of loans but the number of projects effected in such a manner has grown, especially in the past one year, and such projects have come to involve big budgets and, therefore, huge loans, mostly in the energy and the transport infrastructure sector under a government-to-government or direct purchase scheme or the Speedy Supply of Power and Energy (Special Provisions) Act 2010, the validity of which has now been extended till 2020. All this has come to drain public coffers and harm the national interest as, in the absence of any competition in the process, the cost of projects runs higher than what they could cost if they were put out to international tender.
While the escalated cost of such projects adds to the country’s debt burden, because of unfavourable conditions tagged to such loans, such projects also come to weigh heavy on people in the form of taxes. For an example, as finance ministry officials said, Bangladesh’s debt burden might go up to $65 billion from the existing $24 billion with the completion of the Rooppur nuclear power plant in 2024. In cases of such projects, there is, moreover, no or limited scope for the country to ensure the quality of work as the loan conditions require the government to buy products and services, the cost of which is higher than the market price, from the country that gives the loans as it happens with supplier’s credit. The country that gives the money, in fact, receives higher dividend than the country which receives the money through such process of no competitive bidding. The interest rate and repayment duration in such projects are also often harsh in comparison with loans that donor agencies give. The government is reported to be doing all this on the excuse of fund constraints, with $20 billion in official development assistance remaining frozen in the pipeline.
There is no doubt that the country needs to undertake development projects, in any sector, and have them implemented properly for the advancement of the country and the government might, occasionally, need to take up projects without putting them out to tender, especially in cases of fund and time constraints as it happened in the establishment of power plants. But the government getting into the habit of giving all projects to foreign, and local, entities without putting them out to tender, in a blanket manner, would certainly be a worrisome beginning of an ominous regime.

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