Japan to delay US$400m credit for Padma Bridge

FHM Humayan Kabir | Published: March 28, 2011 00:00:00 | Updated: February 01, 2018 00:00:00

FHM Humayan Kabir
Japan will delay providing US$400 million to the construction of Padma Bridge as Tokyo plans to scale back overseas aid and mobilise all resources to reconstruction of its quake and tsunami-battered economy. "Japan has formally informed us that it will process Bangladesh's loan package next financial year, which starts from this April," secretary of the Economic Relations Division M Musharraf Hossain Bhuiyan said. He said the credit deal was scheduled to be inked this month, but the devastating tsunami triggered by the earthquake prompted the Japanese authorities to delay the signing. "The deal will now be signed at a suitable time the next financial year," he told the FE. Tokyo, however, assured Dhaka of providing the full chunk of the credit it had committed for. Tokyo joined an international consortium of donors led by the World Bank last year to agree to bankroll the $2.9 billion Padma Multipurpose Bridge after the government sought soft loan from the development partners. On March 11 the country was hit by a 9.0 degree quake -- its worst since 1923 -- which triggered a 30 feet high tsunami that left a trail of devastations including a meltdown at a nuclear power plant in north-east Japan. The tragedy has killed more than 10,000 with another 15,000 still missing. The World Bank has said the triple disasters would cost the Japanese economy nearly US$235 billion and would take years to reconstruct. "Usually the Japan's cabinet approves overseas credit deals. But as the entire cabinet is now busy with rebuilding and rescue efforts, it will take some time to approve the credit," Mr. Bhuiyan said. A Japanese mission last month visited Dhaka and finalised modalities of the credit for the 6.15-kilometre long road-cum-rail bridge. The government plans to start constructing the bridge from later this year. In addition, the Japan also assured Bangladesh to lend another $240 million for Khulna water project and development of small and medium enterprises. Officials said the second credit deal would also be delayed. Japan is Bangladesh's largest bilateral donor. Its loans are hardly tagged with any conditions and the interest rate is very nominal, usually starting from 0.01 per cent. Communications ministry could not be contacted for comments on the Japanese decision to delay credit. But ERD officials said construction of the bridge would go ahead as planned. Development lenders World Bank, Asian Development Bank and Islamic Development Bank are three other lenders to the project. World Bank alone has committed to provide $1.2 billion. "Initially we had planned to sign one loan deal with the four donors. As the Japanese credit will take more time, we will now move for separate deals with other donors of the bridge," Mr. Bhuiyan said. He said credit from the Japanese donor -- Japan International Cooperation Agency (JICA) -- can be paid back at 0.01 per cent interest rate in 40 years with Bangladesh enjoying 10 years grace period. The government undertook the road-cum-railway bridge scheme over the river Padma at Mawa-Janjira point at a cost of $1.46 billion. The cost estimate has since doubled to $2.90 billion. Earlier this month, the board of the World Bank approved $1.20 billion loan for the bridge. The ADB and the IDB have also agreed to provide $615 million and $140 million soft loan for the project. The government said the bridge would narrow the inequality divide between the country's relatively developed central and eastern zones with the impoverished southern and southeastern districts.