Bangladesh: SASEC Second Bangladesh–India Electrical Grid Interconnection Project

Lesson Report:

Bangladesh: SASEC Second Bangladesh–India Electrical Grid Interconnection Project

Lessons
Self Evaluation

Flexibility to address the need for design modifications during the implementation stage enhances the relevance of projects.

Against an estimated $183.2 million, the total project cost at completion amounted to $202.1 million. The cost increase was prompted by minor modifications to the technical design of the project components.  The modifications also required a longer implementation period than estimated at loan appraisal.  The modifications enhanced system stability and reliability and made the project more relevant.  They were addressed through loan reallocations and a 6-month extension in loan closing.

Project Cycle Stage

Objections from project-affected persons and ensuing legal challenges can have significant costs and other implications, making the early resolution of issues a priority.

Although it traversed mostly rural and agricultural land, the construction of a new transmission line under this project was objected to by some locals.  The objections were manifested between April 2017 and March 2018, delaying construction by 226 days. The issue was cleared when the High Court came out with a verdict in favor of the executing agency (EA).  The experience highlights the importance of engaging in extensive stakeholder consultations and information dissemination early enough to address issues and concerns that may impede implementation. Mitigation measures, including minimizing the slack time and cost implications of objections and complaints, should also be mapped out and implemented as soon as possible.

Project Cycle Stage

Delays in the engagement of safeguard consultants should be avoided, as these could lead to gaps in safeguards monitoring and reporting, with potential impacts on project implementation and performance

In the initial stages of the project, the absence of a safeguards consultant resulted in the EA unable to submit some semiannual safeguards monitoring reports. This was timely rectified and based on the monitoring reports produced during implementation, the project did not come across safeguards issues significant enough to alter its outcome or outputs.

Project Cycle Stage

mplementation and monitoring and reporting arrangements for all planned outputs should be clarified and agreed upon at appraisal.

Since some of the capacity building-related components under output 2 were linked to the transmission line and substation components under output 1, no separate arrangements for consultant engagement were made for output 2.  With the project management unit (PMU) focusing on output 1, the two output 1-related capacity building activities were implemented.  The others were not also due to the changed needs during implementation, but this was not brought to ADB’s attention.  In the absence of consultants, the EA should have included staff from relevant divisions in the PMU to at least help in output 2 progress reporting.

Project Cycle Stage

It is important to document changes in scope and make corresponding adjustments in the project design and monitoring framework (DMF).

The need for some project outputs can decline over time, leading to changes in scope. Such changes should be documented and reflected in the DMF to ensure that they are properly considered and would not compromise the validity and reliability of project monitoring reports and performance evaluation.

Project Cycle Stage

Participation of safeguards and financial management staff in review missions can enhance compliance to safeguards and financial covenants.

Not all safeguards monitoring reports were submitted under this project and the ADB loan disbursement records and latest audited project financial statement (APFS) remained unreconciled at project completion review mission. These non-compliances may have been mitigated through the participation of safeguards and financial management staff in review missions.

Project Cycle Stage

Unreconciled project accounts and ADB disbursement records necessitates auditing to continue until financial closure.

The project has been annually audited by independent external auditors. However, APFS covering only the physical implementation period may not capture all project-related expenses and loan disbursements.  To facilitate the reconciliation of ADB records with the APFS on which the auditors have provided a qualified opinion, financial auditing was continued until project financial closure.

Project Cycle Stage

In 2010, the governments of Bangladesh and India signed a memorandum of understanding to facilitate cross-border electricity trade between the two countries. In October 2013, the electricity grids of these countries were connected for the first time through a project financed by the Asian Development Bank (ADB).  Building on the success of the earlier project, ADB approved two loans, aggregating $120 million, for the SASEC Second Bangladesh–India Electrical Grid Interconnection Project in September 2015.  In support of the government of Bangladesh’s Vision 2021 goal of achieving electricity for all, the project was to upgrade the transmission capacity of the existing grid interconnection from 500 megawatts (MW) to 1,000 MW, allowing Bangladesh to import more electricity from India to meet increasing power demand.

The project’s expected impact was an increase in the availability and sustainability of Bangladesh’s power supply. Its anticipated outcome was an increase in the capacity of the cross-border power trade between Bangladesh and India. It comprised two outputs: (i) enhancement of the Behrampur–Bheramara power transmission link through (a) the installation of an additional asynchronous 400/230-kilovolt (kV) 500 MW high-voltage direct current (HVDC) back-to-back substation in Bheramara, and (b) the construction of a 12-kilometer (km), 230 kV transmission line from the Bheramara substation to the Ishurdi substation and associated facilities; and (ii) improved capacity of the Power Grid Company of Bangladesh (PGCB) on technical, project management, regulatory, trading and financial matters.

As some requirements were not considered at project appraisal, minor modifications were made to the design of the HVDC substation during the contract negotiation stage. The transmission line between the Bheramara and Ishurdi substations was also increased by 0.8 km. Although they increased the actual project cost by about 10% from the appraisal estimate, these modifications improved system stability and reliability and enhanced the relevance of the project.

At completion, the project fully delivered its modified physical output targets. However, since ADB loan funding was fully utilized to finance output 1, it was able to achieve only 2 of its 4 targets under output 2.  Achieved targets under output 2 were those directly linked to output 1. Nevertheless, as the PGCB’s capacity to manage its financial, regulatory, and project affairs has improved through the acquisition of additional staff, streamlining of processes, and training provided through other projects, non-achievement of the other 2 targets was considered an insignificant lapse in the overall project implementation.

Substantial achievement of output targets, evaluated at 98.4%, enabled the project to fully achieve its outcome target. Against a target of 5,000 gigawatt-hours (GWh), Bangladesh was able to import 6,674 GWh of electricity from India within 1 year. Overall, the project thus succeeded in achieving its envisaged impact of contributing to increased availability and sustainability of the power supply in the country.

The PGCB was the project executing agency.  It established a project management unit to take charge of day-to-day implementation.

Project ID
44192-016
Report Date
Main Sector
Country
Project Number
44192-016
Report Type
Project/Modality
Project loan
SDG
Goal 8: Decent Work and Economic Growth
Goal 9: Industry, Innovation, and Infrastructure
Loan Number
L3298 and L3299
Date Approved
29 September 2015
Source of Funding
OCR, ADF
Report Rating
Successful
Report Year
2021
Independent Evaluation, ADB
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