China offers $1b for 5 projects
But favours hard loans; wants to pick bidders for their projects; unhappy with slow project implementation
Rejaul Karim Byron
China at a state-level meeting has primarily expressed its interest to finance five projects involving more than $1 billion as Bangladesh sought $5.14 billion assistance for 28 projects.
China also offers its assistance in a mix of buyer's credit and concessional loans, which have hard terms, against Bangladesh's request for soft loans.
Since 1975, China has given Bangladesh $1.5 billion finance, of which $978 million had been hard type loans.
The country also said in future Bangladesh should submit feasibility study reports to it for all its proposed projects, and then China would have its own feasibility study before deciding which schemes to finance.
China also expressed its unhappiness about Bangladesh's poor project implementation under Chinese fund.
The Chinese side also said the contractors for the projects to be assisted by China have to be selected from China which is an internationally accepted process.
China conveyed these suggestions earlier this month following a meeting of the Bangladesh-China Joint Economic Commission (JEC) held in Beijing on July 28.
Economic Relations Division (ERD) Secretary Mosharraf Hossain Bhuiyan headed a nine-member Bangladesh team at the meeting, while Vice-minister Chen Jian led a nine-member Chinese delegation. The last JEC meeting was held in Dhaka in May 2005.
Bangladesh team sources say China primarily expressed its interest in the projects of Seventh Bangladesh-China Friendship Bridge on the Arial Khan river in Kazirtek, Madaripur, Bangladesh-China Friendship Exhibition Centre, Shahjalal Fertiliser Factory, digital telecommunications networks at the metropolises and Pagla-Keraniganj Water Treatment Plant.
Mosharraf Hossain Bhuiyan told The Daily Star the JEC meeting has been successful, but its final success would depend on active implementation of the meeting decisions.
He said ERD in this regard has already started discussions with the ministries concerned.
Mosharraf added, "We requested the Chinese government to give soft loans instead of suppliers of buyers credit. If soft loan is available, approval and implementation of the project become easy. The approval process of suppliers or buyers credit is very complex."
The ERD secretary quoting the Chinese vice-minister said, "The Chinese government requested the Bangladesh side to prioritise the projects and inform them."
"However, the Chinese minister said the projects which were already being discussed may be considered on priority basis," he added.
The Chinese state bank the Export Import Bank of China last week also relayed the terms and conditions to Bangladesh.
Both sides signed an Agreed Minutes on Bangladesh's proposal on the projects and other issues.
Sources say the Chinese side agreed to conduct a feasibility study on the construction of Kazirtek Bridge which was confirmed by the signing of a Letter of Exchange on July 28.
The Chinese side would send an investigation team to Bangladesh for the project.
On the Bangladesh-China Friendship Exhibition Centre, the Bangladesh delegation accepted that due to the strict restriction on height, the net height for nearly 50 percent of the indoor space will be lower than 12 metres. The Chinese side also agreed to make a new design of the project.
The Import and Export Bank of China will send an expert team to re-evaluate Shahjalal Fertiliser Plant and report review conclusion to the Ministry of Commerce of China.
In September 2006 the Import and Export Bank of China and the Ministry of Finance of Bangladesh signed a general loan agreement on a preferential buyer's credit worth $211 million as part of preferential buyer's credit worth $400 million provided by the Chinese side and the agreement expired in August 2008.
The Bangladesh side proposed to provide the proposed loan to the "Introduction of 3G and Expansion of 2.5G Network" project instead of "Installation of Digital Telephone Exchanges in Metropolitan cities and Important District Headquarters and Upazila Growth Centres" and to provide soft loan for the project.
The Chinese side noticed the request of the Bangladesh side.
Sources say at the JEC meeting the Chinese side expressed dissatisfaction saying in the past changes have been made several times in selecting project and implementation in Bangladesh. Indonesia, on the other hand, started project implementation at the same time and completed implementation of all China-aided projects, but Bangladesh could make almost no progress.
The sources say at the meeting they also said Chinese grant would not meet Bangladesh's emergency needs. In this regard the Chinese government has its own limitations. In case of getting assistance of big amount Bangladesh would have to take loans from the Chinese banks.
They also told the meeting the feasibility study of the project for which Bangladesh sought assistance should first be done by Bangladesh. If the result of the study is positive then Chinese authorities may conduct their study.
They also said what kind of grant China would give to commercial projects depends mostly on the profitability of the projects.
The deficit against Bangladesh is the highest in China-Bangladesh trade. China has already given Bangladesh duty free market access for 84 commodities, but in reality there is no demand for these items in the Chinese market.
For this, at the JEC meeting Bangladesh sought duty free access for another 34 commodities in the Chinese market. China has not given any specific assurance in this regard but said it would consider the matter.
China has offered incentives like free booth to participating exhibitors from Bangladesh in the South Asian Countries Commodity Fair in Kunming by the end of this year.
The ERD high officials say they would write a fresh letter to the Chinese government requesting to inform how much assistance Chinese government is willing to give for the 28 projects and what are the terms and conditions.
After knowing how much assistance would be available the Bangladesh government would try to collect the gap in required fund from other sources.
Bangladesh was seeking Chinese assistance in introducing 3G telecom network and expansion of 2.5G network at an estimated cost of $211 million, construction of the second Padma bridge at an estimated cost of $579.21 million, Pagla/Keraniganj Water Treatment Plant at a cost of $267 million, North Dhaka (East) Sewerage Treatment Plant and associated sewerage system at a cost of $121 million and the second Meghna bridge on Dhaka-Chittagong Highway at an estimated cost of $125.36 million.
Dhaka will formally request Beijing to provide $1.4 billion to implement the Ganges Barrage Project and $88.12 million for restoration of the flow of the Buriganga river and for a project for prevention of river pollution, says the list of projects to be discussed at the talks.
Earlier, Bangladesh requested China to provide $560 million for implementing the North-West Fertiliser Company Limited project.
China however proposed a mixed credit scheme for the project, to which Bangladesh responded by urging China in June this year to provide the assistance for Shahjalal Fertiliser Company in Fenchuganj instead.
At the talks in Beijing, once again Bangladesh will request for a financial assistance of $600 million for the much-awaited Rooppur Nuclear Power Project. In February 2007, ERD sought the assistance from China, but a response is yet to come.
The national ICT infrastructure network for the Bangladesh government phase-2 at an estimated cost of $130 million, construction of a single line metre gauge railway track from Dohazari to Cox's Bazar through Ramu, and from Ramu to Gundum at an estimated cost of $210 million, a railway bridge with provision of dual gauge double track over the Jamuna river at an estimated cost of $172 million, Karnaphuli tunnel at an estimated cost of $289 million, and construction of Barapukuria 125 megawatt coal-fired thermal power station at a cost of 47.4 million are the other projects expected to be discussed.
The Daily Star - Details News
