87pc of $670m assistance deal is grant; bridge project gathers pace, tender awaits WB nod
Still recovering from a devastating earthquake and tsunami, Japan is giving Bangladesh $670 million financial assistance for three projects including Padma Multipurpose Bridge.
The assistance is the highest Bangladesh ever got from Japan in the last 40 years.
Eighty seven percent of the assistance is grant and the rest of the amount carries the lowest interest rate among all the loans Bangladesh ever received.
Around $450 million of the amount will be spent on Padma Multipurpose Bridge while the remaining fund will finance Khulna Water Supply Project, and small and medium sized enterprises (SME).
Economic Relations Division Secretary Musharraf Hossain Bhuiyan, left, and Japanese Ambassador in Dhaka Tamotsu Shinotsuka shake hands after signing the loan agreement for the Padma Bridge at the National Economic Council auditorium yesterday. Photo Courtesy: The Embassy of Japan
Economic Relations Division (ERD) Secretary Musharraf Hossain Bhuiyan, Japanese Ambassador Tamotsu Shinotsuka, and Chief Representative of Japan International Cooperation Agency (JICA) Takao Toda signed the Exchange of Notes and a Loan Agreement in the National Economic Council (NEC) auditorium yesterday.
Communications Minister Syed Abul Hossain, and Secretary of Bridge Division Mosharraf Hossain Bhuiyan were also present at the signing ceremony.
With the signing of the agreement with Japan, the majority of the financing for Padma Bridge has been ensured as the World Bank earlier approved $1.2 billion for the project. WB also committed to giving $300 million more.
Islamic Development Bank (IDB), and Asian Development Bank (ADB) are the two other co-financiers of the bridge project. The deal with IDB for $140 million will be inked on May 24 while the deal with ADB for $615 million will be signed in June.
The Bangladesh government will provide the rest of the fund.
The 6.15-kilometre four-lane Padma Bridge requires an estimated funding of $2.97 billion.
Within a span of just two and a half years, the Awami League government successfully acquired land for the bridge alongside ensuring the project’s financing, making the Padma Bridge scheme the fastest moving large infrastructure project in the country’s history.
Communications Minister Abul Hossain said after the tsunami had hit Japan, the media apprehended that Japanese assistance might become uncertain. However, with the signing of this agreement, there remains no obstacle to the implementation of the bridge project.
Replying to queries from journalists, the minister said, �A proposal has been sent to the World Bank for its concurrence to float tender for the construction of the bridge. If the concurrence comes today, we will start the work tomorrow.�
ERD Secretary Musharraf Hossain said Japan had pledged Bangladesh the loan package before it was hit by the tsunami, but it is still providing the assistance. Since independence, Bangladesh has received more than $10 billion in assistance from Japan.
Japan never fails to fulfil its commitment, he added.
Bridge Division Secretary Mosharraf Hossain said the biggest advantage of Japanese credit is that it may later turn into a grant. So far, Japan has provided loans to 32 projects, of which 17 were relieved of the debt.
Japanese Ambassador Tamotsu Shinotsuka said the concessionality of the loan is the highest with .01 percent annual interest rate, 10-year grace period, 40-year repayment period, and 87.07 percent grant element.
Tamotsu Shinotsuka hoped that the projects will be implemented smoothly and effectively, and that the people of Bangladesh will get maximum benefit from the projects.
In 2005, Japan initiated the feasibility study of Padma Bridge which will connect the South-western region — home to 25 percent of the total population — with the rest of the country.
Japan embassy in a press release yesterday said in the past Japan contributed to the building of five big bridges — the Jamuna, Paksye, Rupsha, Meghna, and Meghna-Gumti.
It said Padma Bridge will drastically lessen the travel time between Dhaka and Khulna from over 12 hours to approximately 3 hours. Escalated mobilisation of people and goods between the two cities will also improve the national GDP by .56 percent a year.