Overestimated project costs lead to unutilized loan amounts and wastage of commitment fees. At appraisal, the investment program was estimated to cost $920.0 million, comprising ADB loans of $730.0 million (79.4%) and government contributions of $190.0 million (20.6%). At completion, the program cost totaled $669.3 million, of which ADB provided $253.8 million (37.9%). ADB’s aggregate financing share was reduced substantially because of: (i) significant cost underruns; (ii) participation of the French development agency, AFD, and the German development bank, KfW, as cofinanciers, and accounting for 14.2% of the total actual cost; (iii) cancellation of tranche 4; and (iv) use of the executing agency’s funds instead of the ADB loan for the payment of tranche 3 civil works contracts that extended beyond the loan closing date. The cost underruns could have been prevented through reliable cost estimates at appraisal, which would have reduced the risk of loan cancellations and wastage of commitment fees.
Power Transmission Investment Program