Bridge div helpless in face of finance div loan rate claim

Delay spectre haunts Padma Bridge work
The multi-billion dollar Padma Bridge project has faced a setback triggered by a spat between the Finance and Bridge divisions on claiming higher interest rate for re-lending US$ 1.175 billion loan confirmed by three donors, officials said Monday.

Communications ministry officials said the finance division has charged four per cent interest rate from the bridge division for $1.175 billion in loan, confirmed by Asian Development Bank (ADB), Japan and Islamic Development Bank (IDB).

The row has delayed the subsidiary loan agreement between the bridge division and the finance division, which has affected disbursement of the aid by the donors for building the 6.15-kilometre Padma Bridge.

“We’ve requested the finance division not to charge additional rates. We are ready to pay the rate the donors have set in their loan deals with the government,” bridge division secretary Mosharraf Hossain Bhuiyan told the FE.

The finance division has claimed four per cent interest rate for lending $1.175 billion credit to the Bangladesh Bridge Authority (BBA), the project executing agency of the $2.9 billion Padma Multipurpose Bridge scheme.

As per government rule, the BBA will have to sign subsidiary loan agreements with the government’s fund holder, the finance division, for getting the $1.175 billion loan to construct the country’s largest bridge across the river Padma.

A bridge division official said, “As the aid agencies have provided the loans at a rate lower than charged by the finance division, we have requested the finance ministry not to charge additional rates which could affect repayment.”

“We hope that the finance division will consider our request and help us expedite the Padma Bridge project,” Mosharraf Hossain Bhuiyan said.

He said, “Since we do not have to pay additional interest rates for the $1.20 billion World Bank loan to the finance division, we have sought similar facilities for the $1.175 billion loans of ADB, IDB and Japan.”

The BBA has signed a subsidiary loan agreement with the finance division for getting the $1.20 billion loan provided by the World Bank to utilise in constructing the Padma Bridge, which will connect the country’s southwestern region with the central region.

Another bridge division official said the WB had asked the finance division not to charge additional rate for re-lending the money to the BBA.

“But the finance division claims extra lending rates for giving the confirmed aid of ADB, Japan and IDB — which we have denied to pay,” he said.

The Japanese government is providing nearly US$ 420 million loan for the Padma Bridge project to the government’s fund holder, the finance division, with only 0.01 per cent interest rate which will have to be repaid in 40 years.

The ADB has confirmed $615 million loan in June, of which it will provide $539 million credit from its hard-term lending wing with nearly 2.0 per cent rate having a maturity of 27 years, and another $76 million from its concessionary wing with 1.0 per cent rate for 32 years.

The government signed $140 million loan agreement with IDB in May this year. The loan has to be repaid at a rate of nearly 3.0 per cent, economic relations division (ERD) officials said.

The bridge division officials said if the differences with the finance division were not resolved soon, the Padma Bridge project implementation would be delayed further.

“I am hopeful that the differences will be settled before signing the subsidiary loan agreements with the finance division,” the bridge division chief Mr. Bhuiyan said.

FHM Humayan Kabir-thefinancialexpress

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