Because of the delay in completion, the park could not apply for a Leather Working Group (LWG) certification
The project duration of the Leather Industrial Park in Savar is set to be extended for the eighth time, as the remaining 2 percent construction of the central effluent treatment plant (CETP) has not been completed even in two years.
The Bangladesh Small and Cottage Industries Corporation (BSCIC) – which has been implementing the project since January 2003 – recently sent a proposal to the Planning Commission to extend the duration of the project till June 2020.
Because of the delay in completion, the park could not apply for a Leather Working Group (LWG) certification.
On condition of anonymity, a leather entrepreneur told The Business Standard, "A completely functional CETP is mandatory for LWG certification. The construction of the CETP has remained on hold since 2017. We are gradually losing foreign market share because of this."
Speaking to The Business Standard recently, industries ministry Secretary Md Abdul Halim said that the government is working hard to achieve LWG certification for the park.
More than 95 percent of the tanneries and leather industries used to be housed in the Hazaribagh area of Old Dhaka. This particular industry is notorious for producing a large quantity of liquid and solid waste. However, there was no system for disposing of the waste properly.
The pollution created by the tannery industry was causing severe damage to the area and also to the Buriganga River.
The BSCIC started construction of the Leather Industrial Park in Savar in 2003 on 200 acres of land to resolve the environmental crisis. The project was supposed to have been completed in December 2005, within three years of inception.
But BSCIC could not complete it even after 16 and a half years, and the project duration has been extended seven times since then. In 2017, the project duration was extended until June 2019.
The duration for completing the park was extended four times, without increasing project costs. The other three times, both cost and duration were increased. In the latest proposed amendment, the deadline for completion was extended until June 2020.
In the proposed amendment, BSCIC stated that the project duration should be extended for completing the construction of the CETP, Sewage Treatment Plant (STP) and dumping yard for solid waste.
A CETP with four modules and three dumping yards will be constructed under the project.
The Planning Commission has completed scrutiny of the proposed fourth amendment to the project. The proposal will be tabled at the meeting of the Executive Committee of the National Economic Council (Ecnec) on Tuesday, said commission officials.
According to the new proposal, the project costs is dropping by Tk63 crore compared to the third time it was amended.
The original cost of the project was Tk175.75 crore. It increased to Tk545 crore after the first amendment, Tk1,079.71 crore after the second amendment. The costs did not increase in the third amendment.
In the proposed fourth amendment, the project costs will decrease to Tk1015.56 crore, a 5.85 percent drop.
It is mandatory to get a recommendation from the Implementation Monitoring and Evaluation Division to extend only the duration of any project. Ecnec's approval is required to increase project costs.
The executive director of the Policy Research Institute, Ahsan H Mansur, told The Business Standard "BSCIC lacks the capacity to implement large projects. However, they are taking on big projects regardless.
"The duration of a project as large as the Leather Industrial Park has been increasing for years for this reason. The delay is also causing financial losses for the investors."
The entrepreneurs however continue to shift their factories from Hazaribagh to Savar.
The Savar Industrial Park currently features 205 industrial plots under six categories. So far, 154 factories have shifted to the park, and 123 among them have partially begun production. The lack of a CETP in the area is hindering both production and business.
According to the Bangladesh Export Promotion Bureau, the country exported leather and leather products worth around $1,020 million in the previous fiscal year.
In the first five months of the current fiscal year, Bangladesh exported $391 million in the sector, down from $434.7 million in the corresponding period in the last fiscal year. Export earnings dropped by 10% during this period.
To help boost leather export, Ibnul Wara, managing director of Austan Ltd – an LWG certified tannery based in the Dhaka Export Processing Zone – recently requested the government to approve the tannery owners' application for setting up a private effluent treatment plant.