Dhaka, KL sign MoU on Padma BridgeShakhawat Hossain
Malaysian public and private agencies will invest US$ 2.3 billion for building the Padma Bridge and other infrastructure projects in Bangladesh under a memorandum of understanding the two countries signed in Kuala Lumpur on Tuesday.
Communications Minister Obaidul Quader and Dato’ Seri S. Samy Vellu, Malaysian government’s Special Envoy for India and South Asia signed the MoU in the presence of Malaysian Prime Minister Dato’ Sri Mohd Najib Tun Razak, according to a press-release issued by the ministry of communication in Dhaka.
Prime minister Sheikh Hasina spoke to her Malaysian counterpart over telephone soon after the signing, said the press release.
Both the prime ministers described the event as ‘historic’ and renewed their commitment to work more closely in future, said the communication ministry press release.
It said Malaysia would prepare and submit the technical and financial proposals for building the Padma Bridge on build, owned, operate and transfer contract, better known as BOOT.
The MoU would remain valid for nine months, it added.
The MoU resulted from Bangladesh government’s efforts to find an alternative funding source for building the bridge across the River Padma, after the World Bank suspended its $1.2 billion credit for the prestige project.
The WB withheld disbursement of the credit 10 months back following allegations of corruption in the bidding process.
Construction of the 6.1 kilometre rail-cum-road bridge suffered set backs, said officials.
It was an election pledge of ruling Awami League that it would complete the bridge in its present tenure in office.
Earlier in the week, Finance Minister AMA Muhith said that the government would seek the release of the WB credit through negotiations.
He had ruled out the possibility signing an MoU with Malaysia for building the bridge.
The Dhaka- KL MoU followed six months old hectic negotiations between a ‘section policy makers of the ruling party’ and Malaysian government officials.
Towards the close of the last year, Kuala Lumpur -based infrastructure companies UEM Holdings, Binapuri and Eversendai Corporation Bhd expressed their willingness to build the bridge with borrowings from Dubai-baaed lenders, said sources.
The consortium wanted the right to collect toll for 50 years.
It wanted a guarantee of subsidy in the event of lower-than-expected earnings, quarterly forecast on traffic flow for 25 years, duty-free import of construction materials, tax holiday and immunity from laws concerned with environmental and human rights issues.
Experts fear the arrangement might prove costly requiring Bangladesh to shoulder a debt liability of $10 billion for half a century.
They said the liability could reach a maximum of $11.9 billion as the consortium would borrow at three per cent interest rate from the international money market for the bridge.
Former caretaker government adviser Akbar Ali Khan and Bangladesh Institute of Development Studies research director Zaid Bakth described the conditions as much harder and the rate of borrowing from commercial sources as much higher than offered by development partners.
The WB, ADB and JICA lends at less than one per cent a year.
Besides, the repayment period of their credit is longer, they said.
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