Padma Bridge still shrouded in mystery

Shamsul Huq Zahid
The mist surrounding the much-hyped Padma Bridge is yet to go way. Rather signing of the Memorandum of Understanding (MoU) between the governments of Bangladesh and Malaysia last week has intensified it.

The most important factor, the source/s of finance for the cost-intensive project, under the MoU remains unclear. But it is more or less certain that the Malaysian government will not provide even a penny from its own coffer for the project. Prime Minister Mohd Najib Tun Razak after the signing of the MoU in Kuala Lumpur told reporters that his government would form a consortium of contractors for building the project and approach the Asian Development Bank (ADB) and the Islamic Development Bank (ADB) for funds for the project

Will these two donor agencies, which are independent entities, agree to finance the construction of the bridge without the World Bank that has suspended the disbursement of its funding worth $1.2 billion for alleged corruption in the bidding process? If Malaysian government fails to convince them, then it would have to arrange funds for the project from other sources that might prove very expensive.

It is unlikely that the ADB and the IDB would provide their promised funds for the bridge project without the participation of the WB. Their actions immediately following the WB’s decision to suspend the disbursement of its promised funds only strengthen such a notion. Besides, even if the ADB and the IDB agree to finance the project, there would be problem with the recipient of their funds. Who will receive it? Malaysian government? or the consortium of contractors? There is possibly no instance of providing funds by either of these institutions to any government for implementing projects in a third country. Neither of these institutions offers funds to private consortiums.

In all probability, the consortium of contractors itself would have to borrow funds from international financial sources at higher rates of interest. If that is so, the concept of BOOT (build, own, operate and transfer), as agreed under the MoU, might prove financially unviable for the consortium.

Experts say, making profit after the recovery of investment costs from this kind of expensive project is not possible. One has to keep in mind that the Padma Bridge is meant to facilitate better economic integration of the south-western districts with other parts of the county. In that case, toll to be charged on vehicles will have to be reasonable. Otherwise, the very purpose of building of the project will be defeated.

Concerned about the possible negative consequences, some leading economists and former policymakers have advised the government not to resort to any sort of adventurism in the case of Padma Bridge construction. They want the government to reopen negotiations with the WB for getting the funds that the latter had pledged to make available. Speaking at a function last Friday, they said the WB offers the cheapest source of development fund for the benefit of a least developed country like Bangladesh.

Besides, not everyone in the higher echelons of the government, apparently, feels the same way about the developments concerning the Padma Bridge project. If the communications minister is euphoric about the MoU with Malaysia, the finance minister is not. The latter prefers not to pass any comment on it since he knows the difference between soft funds provided by a multilateral lender and the cost of commercial borrowing.

The WB stance on the Padma Bridge projects remains yet another puzzle. The government has time and again asked the Bank to substantiate its allegation of graft taking in the bidding process. The recent developments in the SNC-LAVALIN, a large construction firm in Canada, and subsequent actions taken by the WB do indicate to the presence of certain irregularities in the bidding process. Following investigations by the Canadian police, the SNC-LAVALIN board has removed its chief executive officer and the WB has put one of the LAVALIN units, involved in the bidding of Padma Bridge, on its black list.

It remains a mystery to most people of Bangladesh why the Bank is not coming up with evidence/s in support of its allegation of graft-taking. Even the people who want the WB funding for the Padma Bridge fail to understand the difficulties on the part of the Bank in exposing the graft taker/s, if there is any. The WB should rather explain in public the constraints it is facing.

Zahidmar10@gmail.com

thefinancialexpress

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