A Thai company engaged in the maiden expressway construction in Dhaka will finally have to transfer all shares to two Chinese partner firms as the duo wins an international arbitration, ending a deadlock.
Officials hope the arbitration verdict, delivered on October 20 in Singapore, is likely to mitigate the construction-fund crisis as 25 per cent of works on the US$1.2-billion First Dhaka Elevated Expressway (FDEE) have stalled since last February following continuing disagreement among the shareholders.
Sources have said Singapore International Arbitration Centre on October 20 discharged the status queue on share transfer of Italian-Thailand Development Public Limited ITD) to China Shandong International Economic and Technical Cooperation Group (CSI) and Sinohydro Corporation Ltd.
Both sides went to SIAC after the High Court in Bangladesh vacated on September 01 a case filed by the ITD authority against the Chinese firms' claim to entire stakes on the expressway due to its failure to pay instalment of the loan since January this year as per the agreement signed with two Chinese banks.
Bangladesh Bridges Authority signed a concessionaire agreement with ITD on January 19, 2011 but the Thai company signed contract with the two Chinese companies by compromising shares for failure to manage funds for developing the 19.7-kilometre elevated expressway from Airport to Kutubkhali on the Dhaka-Chattogram highway.
The fund-constrained Thai company sold out its 34-percent shares to CSI and 15-percent to Sinohydro Corporation respectively in 2019.
The Chinese duo, however, took the DEE-construction works as contractors and managed $861 million for the First DEE Company from The Export Import Bank of China (CEXIM) and the Industrial and Commercial Bank of China (ICBC).
As guarantors of each other, the Chinese lenders released the funds on condition that if any of the guarantors fails to pay due interest in time, another will pay it and the defaulter will adjust its share with two other companies within five working days in exchange.
As ITD could not manage any fund, CSI and Sinohydro claimed the share by paying instalment of their parts in stipulated time.
The Chinese banks stopped disbursement of the loans following the ITD failure and its disagreement to hand over its stakes in the public-private partnership project (PPPP).
Sources have said although ITD has to hand over entire shares to the Chinese, SIAC has conceded to delegate one ITD observer on the FDEE board of directors after the share transfer in good grace as for the contribution of the Thai company's investment and engagement in the DEE project from the beginning.
Buoyed by the breakthrough in the standoff, Project Director AHMS Aktar says, "With the verdict the project works may accelerate again as 25 per cent of works have yet to be completed."
He mentions that progress on the second-tranche works of the DEE was recorded 80 per cent and 3rd tranche 13 per cent. The first-tranche works from Kawla near Hazrat Shahjalal International Airport to Banani were completed and opened to traffic with toll-payment arrangement along with part of the second phase.
The FDEE takes toll from users of the partially-opened overhead expressway from Kawla to Farmgate and Karwan Bazar since September 03, 2023.
smunima@yahoo.com