The government is set to raise the cost of tannery relocation project by 100 per cent to Tk 1,078.71 crore because of its move to benefit tannery owners and the delay in implementation of the project.
The planning commission is likely to place today an industry ministry proposal to increase the cost of the Leather Industry Town project to Tk 1,078.71 crore from Tk 545.36 crore before the Executive Committee of the National Economic Council, headed by prime minister Sheikh Hasina, said officials of the commission.
The ministry now wants to complete the project in June 2016.
The project was initiated in 2003 by Bangladesh Small and Cottage Industries Corporation to build a leather town in an area between Savar and Keraniganj by shifting tanneries from Dhaka city by June 2012.
Although the project was initiated with an estimated cost of Tk 175.75 crore in January 2003 with an aim to complete it by 2005, the project cost was later revised to Tk 545.36 crore in the same year setting a target to implement it by 2010.
The tannery owners have shown reluctance time and again to relocate their leather processing units from the city, wmainly from Hazaribagh.
The industry ministry claimed that the project cost would now be increased again because of the delay surrounding the installation of central effluent treatment plant (CETP) and dumping yard.
It said the first revised project proposal set a target to install the CETP and other related facilities with a cost of Tk 396.70 crore, the estimated cost has now shot up to Tk 638.79 crore.
Sources in the industry ministry said that with the increase in project cost, the government is set to give more benefit to the tannery owners bowing down to pressure from them.
Although initially finance ministry wanted to give the 60 per cent of project cost as loan and 40 per cent as equity later it decided to give 20 per cent cost as loan and 80 per cent as equity.
It means, the tannery owners now have to repay only 20 per cent of the cost for installation of CETP in 15 years and other related installations instead of 60 per cent, said an industry ministry official.
The project cost also includes Tk 250 crore compensation package for the tannery owners who will shift their leather processing units to the leather town. The government will give the fund as grant.
Under the project the government has developed 205 plots on 199.40 acres of land and allocated among 155 industries in the fiscal year 2006-07 for moving their factories to the proposed location.
Green activists have been demanding immediate relocation of tanneries from Hazaribagh area to Savar to avert environmental pollution and health hazards.
At least 185 tanneries at Hazaribagh are releasing thousands of litres of untreated and highly toxic liquid wastes into the river Buriganga every day, posing a serious threat to human and animal health.