ERD asked to finalise loan deals with foreign lenders

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FHM Humayan Kabir
The communications ministry Thursday asked the economic relations division to obtain firm loan commitments from the lenders including the World Bank as it wants to float tender for Padma Bridge construction early next year, officials said.
Communications minister Syed Abul Hossain at a meeting with ERD secretary M Musharraf Hossain Bhuiyan Thursday directed the ERD to finalise loan deals pledged by major donors for the project.
"The minister has asked us to get firm commitments of the loans from the foreign lenders. Based on the loan confirmation, the Bridge Division will float tender for building the bridge," a senior ERD official told the FE.
A few months back, ERD sought additional US$650 million to make up for the shortfall in funds from the major donors including World Bank, Asian Development Bank (ADB) and Japan, as the project cost had swelled up to $2.4 billion from the estimated $1.8 billion.
The five lenders including the Islamic Development Bank (IDB) and UAE's Abu Dhabi Fund had pledged to cough up only $1.22 billion dollars for the 6.15-kilometre road-cum-railway bridge over the river Padma.
It left the government with the daunting challenge of mustering $1.18 billion from domestic sources.
Communications ministry officials said donors including the WB and ADB at a meeting with officials of the Bridge Division last month expressed willingness to increase the amount of loans to nearly US$1.7 billion from their earlier commitments of $760 million.
Though the assurance comes as a big relief for the government, which has been struggling to generate enough funds to get the $2.4 billion project launched by the middle of next year, the donors are yet to confirm their investment formally to the government.
"We are yet to get any formal assurance from the donors on their additional funding pledge. The communications minister Thursday directed us to obtain firm funding assurance and finalise the loan process," the ERD official said requesting anonymity.
He said: "We will seek formal fund commitments from the donors. After getting those, we will go for negotiations to sign the loan agreements."
Out of the $1.18 billion fund shortage, the government has decided to mobilise $550 million from the domestic sources through selling bonds -- an option considered "not viable" by the World Bank.
The rest $650 million fund shortfall will have to be mobilised from the lending agencies.
The cost of country's largest infrastructure project was initially estimated at $1.8 billion but it hit $2.4 billion dollars mark on enhanced cost of construction materials and a decision to build the bridge on steel-truss.
New Zealand-based Maunsell Aecom, which is designing the project, added electric train tracks, improved safety requirements, wider railway approach bridge and tourism facilities, forcing the authorities to revise the budget upward.
The consulting firm submitted the "scheme design" of the proposed project to the Bangladesh Bridge Authority in October this year.
In the design, the length of the Padma Multipurpose Bridge has been estimated at 6.15 km and the width 21.10 metres.
Till now Bangabandhu Multipurpose Bridge over the river Jamuna is the country's largest bridge, with the length of 4.80 kilometres. It was constructed in 1997 at a cost of nearly one billion dollars.
The Awami League government has made Padma Bridge one of its top priority projects and it wants to finish the construction by 2013, a year before its five-year tenure expires.