Exchange rate fluctuation, more precisely the devaluation of taka against dollar, has been cited as the main reason for huge cost differential between the original project proposals (PP) and the revised ones.

Other reasons for cost rise, revealed in the official synopsis, include increased taxes and duties, extension of consultancy services and interest on loan during the construction period.

The revised cost of Barapukuria Coal Mine project saw a Tk 543.76 crore rise over the cost estimated in 1993 when the project was conceived.

And the cost of Madhyapara Hardrock Mining Project, originally conceived in 1978 at Tk 48.86 crore, has recently been revised at Tk 1045.77 crore.

Exchange rate between taka and dollar alone has raised the cost of Barapukuria mine project by Tk 298.64 crore. Fiscal policy changes in the forms of increase of VAT and other taxes added Tk 106.08 crore while extended consultancy services and bank commissions accounted for Tk 39.10 crore.

Another Tk 44.93 crore was carried over from the original PP to the revised one as the cost agreed between the contracting company and the government.

Interest on loans during the extended construction period added Tk 55.01 crore.

These factors together inflated the cost of Barapukuria Coal Mine project from Tk 887.36 crore to Tk 1431.12 crore. The project is scheduled for completion in 2004.

The original PP for the Madhyapara Hardrock project estimated the cost at Tk 48.86 crore in 1978, which was raised to Tk 687.44 crore in the first revision in 1993. The second revision by ECNEC put the figure at Tk 798.43 crore in 1998, but again escalated to Tk 1045.77 crore in the third revision in 2002.

Exchange rate fluctuation contributed Tk 103.07 crore to the cost increase, followed by changed tax and duty regimes adding Tk 57.92 crore, extension of consultancy Tk 7.41 crore, interests on loan Tk 68.50 crore and other overhead costs Tk 247.33 crore.