Tuesday, September 25, 2018 04:03:39 PM
After a long dramatic row over the World Bank (WB) funding of the much awaited Padma Bridge Project, the World Bank agreed that it should not have withdrawn from the Padma Bridge Project for the allegations of internal corruption. It was for the country concerned to deal with such allegations. The World Bank could only raise them. The Finance Minister AMA Muhith expressed happiness that the World Bank has changed its policy and realised the mistake.
We also agree with World Bank's change of policy for the simple reason that the World Bank is to stop its own corruption and see others cannot misappropriate the loan money. Any kind of corruption cannot justify depriving the people of useful projects. We have to further mention that both sides took corruption allegation as a challenge. Bangladesh forced a Minister to resign. That shows that the government was ready to cooperate to stop corruption in the project.
An ECNEC meeting on August 20, 2007 headed by the then Chief Adviser Fakhruddin Ahmed approved the Padma Bridge Project with a cost estimation of Tk 10,161 crore. On January 11, 2011, the ECNEC chaired by the incumbent Prime Minister Sheikh Hasina approved the revised plan with a nearly double cost of Tk 20,507 crore for the project. The WB Board on February 24, 2011 approved a $1.2 billion financing deal out of a total cost of $2.9 billion. WB committed to contribute half of the total project cost at a lower interest rate. WB was supposed to provide $1.2 billion at an interest rate of 0.75 percent to be repaid in 40 years with a 10-year grace period. If the normal loan amortization schedule applied, the government would have had to pay $249 million in interest in 40 years. WB interest rate is very low in contrast to other proposal. For this WB's credit facility is very important.
However, the Washington-based global lender tried to get the attention of the Bangladesh government on some misdeed during the tender process of the Padma Bridge scheme as it smelt a fraud at the tender procedure in April 2011. The Bank claimed that it had some reliable allegations of financial irregularities regarding the tender process. First, the World Bank warned the government on the misdeeds and alleged 'conspiracy for corruptions' and insisted on initiating prosecution against persons said to have been involved. Bangladesh government here also was ready to prosecute some, but that did not satisfy the World Bank's existing policy.
Now after the change of policy and recognising mistake we see no reason why the World Bank should not take up the Padma Bridge Project so vital for the people of Bangladesh for more than one reason.
The government failed to ease the World Bank's concerns, but in the meantime, about two years have passed. The government later seemed in a mad rush to arrange the funding for Padma Bridge construction from other sources. The new Communication Minister in his typical mannerism told and retold stories of managing funds for the dream Bridge. There were tales of funds coming from Malaysia or China - except WB - or even through popular subscription from within the country. It turned to be even an election pledge for the voter less Jan 5 polls.
After long search of two years for alternative funding a Chinese company Sinohydro bagged a contract for $780 million for the Padma River training project last month. But the company later on admitted it is under temporary suspension by the World Bank over an accusation of fraud. Backed by an influential political lobby, Sinohydro offered a price of around Tk 8,778 crore, about Tk 4,000 crore less than the sums quoted by the other two bidders - Korean Hyundai and Belgian Jan De Nul. The two companies later informed the government that the Chinese firm had concealed information about the WB suspension and was ineligible to contest. The same irregularities occurred again. So the arrangement with China is far from convincing.
It would be a better opportunity for Bangladesh to construct Padma Bridge at a most cost effective manner reducing our ultimate debt burden in foreign loans. The World Bank has also realigned its approach to tackling corruption in the project, as it said in its latest Country Assistance Strategy Progress Report. "When evidence of corruption comes to light, its response should not be to disengage, but to engage differently", the report clarified.
Using the credit line from the WB for the project (Padma Bridge) will benefit Bangladesh in more than one way. They are at the minimum: i) a minimum rate of interest (0.75 pc per annum); ii) longer repayment period (40 years); iii) a 10-year grace period; iv) amortization or rescheduling the installment in unforeseen forced conditions; v) ensure participation of world class firms in the project bidding/construction; vi) use of the state-of-the-art technologies, and vii) eventually longer life span of the bridge so constructed.
There is no doubt that apart from lower cost the World Bank is the best equipped for the size of Padma Bridge Project. The government must do what is best for the country. China is also our friend and it will not be too difficult to avoid any misunderstanding.