FE Today Logo

PM gives nod to $2.67b Chinese loan

Padma rail project

Munima Sultana | April 16, 2018 00:00:00

All the formalities have been completed to get the highest amount of loan worth US$ 2.67 billion from China for Padma rail link project with the Prime Minister's seal of approval on Sunday.

Sources said Prime Minister Sheikh Hasina approved the summary of the Chinese loan before she left the country for Kingdom of Saudi Arabia (KSA) and United Kingdom (UK). She also directed the Economic Relations Division (ERD) to finalise the date for signing a deal in this regard.

The Chinese President's approval to provide the loan under preferential buyer's credit was received in February.

"All the formalities are now over. Now we have to confirm the date and the place of signing the loan agreement on the Bangladesh Railway's important project," said a senior official.

He said a Chinese EXIM Bank delegation which held a meeting with ERD and Bangladesh Railway (BR) on Thursday last proposed signing the loan agreement in Beijing at the end of this month.

However, both ERD and BR official sources said the place and date for signing the deal will be confirmed after getting reply from the Chinese side.

The ERD will send an email shortly in this regard, they said, adding that Bangladesh will propose signing the loan deal in the last week of April in Dhaka.

The Chinese loan for the Padma rail link project will bear 80 per cent of the commercial contract cost as proposed by a Chinese company.

The BR signed the commercial contract with China Railway First Group Co. Ltd in August, 2016 under the government-to-government arrangement for constructing 225-kilometre rail link on both sides of Padma Bridge. The contract amount is $ 3.13 billion.

However, the contract could not be executed afterwards as the loan deal as per the proposal was not signed during the Chinese President's visit to Bangladesh in October 2016.

However, it took nearly two years to settle the issue of loan category as Bangladesh wanted to get the total amount of loan under concessional and preferential loan arrangements.

According to EXIM Bank, its preferential loan covers 100 per cent of the project cost if the project cost ranges between US$ 300 million and US$ 400 million.

An ERD official, however, said terms and conditions of preferential buyer's credit is also similar to non-concessional loan.

The country's first combination of concessional and preferential loans was provided to $ 705-million Karnaphuli tunnel project under G-2-G arrangement.

The Tk 350-billion Padma bridge rail link project will establish rail-based connectivity with nine southern districts including Mongla port and Benapole land port through the country's longest 6.15-kilometre Padma Bridge.

According to the commercial contract, 225km rail routes on both sides of Padma Bridge will be constructed by June 2022.

The route will be established in four sections -- Dhaka-Gendaria, Gendaria-Mawa, Mawa-Bhanga junction via Padma Bridge and Bhanga-Jessore Bridge.

The third section, which is Mawa-Bhanga junction-Bhanga via Padma Bridge, has been planned to be completed by 2018 to run trains over the country's longest Padma Bridge on the inaugural day.

[email protected]

Share if you like