Deal to be signed with Chinese company for $559m tied loan

---

FHM Humayan Kabir
Bangladesh has accepted a tied Chinese loan worth US$559 million for building a fertilizer factory in contradiction to the country's existing procurement law.
Officials said Saturday the government is going to sign the credit deal with a specific Chinese company for setting up the largest 577,500-tonne capacity factory fulfilling the terms and conditions of the lender.
As per the Public Procurement Act 2006, the government must invite tender for appointing contractor for setting up any factory or public purchases, they said.
Industries ministry officials said the Chinese government has selected the firm -- China National Complete Plant Import & Export Corporation Ltd. (Complant) -- for setting up the Shahjalal Fertiliser Factory in Sylhet.
"We will sit with the Chinese company on the second week of this month. Terms and conditions on the commercial issues for installing the fertiliser factory will be discussed," Industries Minister Dilip Barua told the FE.
The requirements, specification of the machinery and other technical and commercial issues for the proposed factory will be negotiated with the Chinese firm, he said adding: "As per the Chinese government's conditions we have to deal with its selected company."
"If our requirements are fulfilled we will sign the commercial deal for installation of the fertiliser factory," he said.
As the cabinet committee on economic affairs had given consent to sign commercial deal to avail of the Chinese government loan we will hold discussion with the specific Chinese company, Mr Barua said.
The state-owned Bangladesh Chemical Industries Corporation (BCIC) has undertaken the $616 million Shahjalal fertiliser factory scheme to cut the supply shortage of the agricultural input.
Bangladesh's existing fertiliser factories produce nearly 1.5 million tonnes of urea fertiliser against the annual demand for more than 2.8 million tonnes.
An economic relations division (ERD) official said the Chinese government has agreed to provide US$559 million credit. Of the amount, $325 million will come as "preferential buyers' credit" and $234 million as concessional loan.
The Bangladesh government has to repay the loan in 20 years, including five years as grace period, with two per cent interest rate. In addition, 0.2 per cent commitment fee and 0.2 per cent management fee will also be applicable.
BCIC has six other factories including Chittagong fertilizer factory with annual capacity of 5,61,000 tonnes, Jamuna with 5,61,000 tonnes, Ashuganj with 5,28,000 tonnes, Urea Fertilizer Factory with 4,70,000 tonnes, Polash with 95,000 tonnes and Natural Gas Fertilizer Factory with 1,06,000 tonnes.