The government has sought more time to sign a financial agreement with the Chinese Exim Bank to fund procurement of six vessels for the Bangladesh Shipping Corporation (BSC), official sources said.
Recently, the Economic Relations Division (ERD) sent a letter to the Exim Bank seeking extension of the deadline until December 31st next which was due in November.
Officials said necessary preparation to sign the deal could not be completed until now as the ERD questioned the process and the authority of the BSC for signing a commercial deal with the CMC (China National Machinery Import and Export Corporation) on April 30 last.
Earlier, the Cabinet Committee on Economic Affairs (CCEA) had refused to approve the US$184.50 million commercial contract which was signed between the BSC and the CMC without consent from the ERD, the National Board of Revenue (NBR) and the Ministry of Law Affairs (MoLA).
The CCEA asked the BSC to submit its proposal again for approval with consent from the ERD, the NBR and the MoLA.
When contacted, an official at the BSC said following the CCEA directive, both the MoLA and the ERD raised several questions about the commercial contract and sought clarification.
Besides, the ERD has asked the BSC to change various clauses of the agreement which it found unfavourable to the state- run corporation.
The ERD called for bringing down payment of 30 per cent of total cost in advance to 10 per cent. Besides, it also sought a rise in fine to $5,000 from $3,000 each day in case of the CMC's failure to supply vessels timely.
On the other hand, the MoLA questioned the authority of the managing director of the BSC in signing the commercial contract with the CMC. It sought clarification of the capacity of the MD to sign the deal.
Beside, it also asked why the BSC did not take permission from the MoLA before signing the commercial contract.
The MoLA also asked the BSC to submit opinions of the Economic Relations Division (ERD) and the National Board of Revenue (NBR) to get the deal vetted.
The BSC official said these procedures are yet to be completed and thus a financial contract could not be signed by November.
Officials said since the corporation is getting one more month to sign the deal, the clauses of the commercial accord need to be re-checked by international legal experts.
They said one fifth of Chinese shipyards fail to delivery vessels in time. Many even take several years to supply vessels after the stipulated deadline is over. In this case, many European buyers do not take delivery of vessels and take refund of money with fines.
An official suggested re-checking of the clause of the commercial contract, relating to the refund of money, by international legal experts.
He said during the Ershad regime, the BSC signed a deal with the Pakistan Shipping Corporation for ship purchase and made a payment of significant amount. After coming to office, the next government did not take delivery of the ships.
However, even after two decades of the deal, the money is yet to be refunded because of flaw in the related clause of the contract. The ERD is still trying to get the money back, the official added.
When contacted, BSC managing director Moqsumul Quader told the FE, procuring vessels is very vital for the corporation for continuation of its operation.
He said the corporation will fall into deep trouble due to the lack of adequate number of vessels in case of a failure to sign the deal with the Chinese bank by December.
Replying to a query, he said the shipyard contacted for building the vessels is of international standard. There is no possibility of delivery failure, he added.
The state-owned Chinese Exim Bank and an international classification society organisation had surveyed the capacity of the shipyard. "Unless we agreed to have the vessels built by this particular shipyard, the bank may not have agreed to give the loan," Mr Quader said and added that the BSC also had to submit a feasibility report on repayment of the loan.
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