A detailed market assessment is necessary to come up with reliable cost estimates. The actual costs deviated significantly from the original estimates, aggregating to only $29.35 million or 49% of the $60 million total estimated cost. This was mainly because of the nearly 30% drop in the actual cost of equipment realized through the international competitive bidding process, the reduction in the number of distribution transformers installed, and the reduction in the scope of underground cable installation actually undertaken. Of the total $48 million loan amount committed by ADB, only $25 million was disbursed and the rest progressively canceled. Unnecessary commitment charges were consequently incurred, a situation that could have been avoided had a detailed market assessment been done and reliable cost estimates made at project preparation.
Assam Power Sector Investment Program - Tranche 2