Foreign firm\'s procrastination defers commencement plan

Munima Sultana | Published: August 24, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

Counting 25-year concessional period of the Dhaka Elevated Expressway (DEE) project is yet to start even though over six years have elapsed since agreement signing under public-private partnership (PPP).
Though both public and private parties had so far been blamed for not commencing the period, sources said limitations of the public sector were recently overcome through handover of the DEE land to the private partner by Bangladesh Bridges Authority (BBA).
But BBA, the public-sector partner, is yet to announce the concessional period for reasons not known, they said.
The BBA completed the process of handover of land to the private partner in February last.
Sources said BBA was taking time to get financial report or financial closure from the private partner, Italian-Thai Development PLC, wherein it is to state sources of funding for the first-ever PPP-based road-infrastructure project.
The Thailand-based company or concessionaire still could not manage 52 per cent of funds for the project to start the construction work full-fledged, they added.
The company has extended the deadline for submission of the financial closure innumerable times, the sources added.
Asked about the dilemmas, Project Director Quazi Ferdous said as there has been limitation on the part of the government, BBA has no option but to extend the time.
"We had to provide the time to the concessionaire as there were limitations from our side," he told the FE.
The PD, however, said the concessional period will soon be started as the company assured of providing the financial closure shortly.
It is learnt Ital-Thai Development PLC, the concessionaire of the PPP project, has yet not got big financiers to manage total 52 per cent of the construction cost worth US$ 1.2 billion.
The company was awarded the work with its offer of 21 per cent equity and 27 per cent vulnerable-gap funding. But the VGF would be provided by the government on completion of the first-phase works.
BBA signed the concessionaire agreement with Ital-Thai Development PLC in January 2011 under which construction was supposed to be started within six months by completing the two sides' obligations of land handover and submitting financial report or financial closure to each other.
But the project had to face a blow in 2013 as the government changed the 26-kilometre route of the DEE, compelling the two sides to sign a revised concessional agreement on December 13.
Amid such a situation, the BBA has invited the President of the Ital-Thai and set the final date for submission of the financial closure to speed up the process of construction work.
President of Italian-Thai Public Development Ltd Premchai Karnasuta met with the BBA officials and the Minister of Road Transport and Bridges while visiting the country on August 17-18.
Official sources said the BBA has set November as the final deadline for the Ital-Thai firm and asked the president to speed up the process of implementing the expressway.
The DEE project has been passing through a number of hassles since the project was taken up in 2009 by then Communications Minister Abul Hossain. The project was awarded to Ital-Thai without necessary studies, including feasibility study, route selection, land acquisition and resettlement plan.
The firm missed the first target of submitting financial closure in August 2011 as the Asian Development Bank and the World Bank as financiers refused to fund the project. The Bangladesh Bank as well as local banks also disapproved of its application for funds.
BBA officials said the concessionaire recently managed around Tk 14 billion from local sources, including banks and finance ministry's fund for infrastructure development.
But the company has yet to spend five to six per of the funds.
It is learnt that the company's effort to manage funds from China through giving sub-contract also didn't work.
Ital-Thai has to work in three phases to complete 26-kilometre expressway from the Hazrat Shahjalal International Airport to Sonir Akhra near Dhaka- Chittagong Highway with five connecting points to pick and drop traffic.
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