Complexities surrounding the terms and conditions and the lack of confidence in the foreign builder have made implementation of the Rajuk's largest apartment project involving Tk 53 billion at Uttara Residential Model Town uncertain, officials said.
They said the complications surfaced during the recent meeting between Rajdhani Unnayan Kartripakkha (Rajuk) and a Malaysian delegation over striking the master agreement on the scheme for building 8,400 apartments.
Both parties (Bangladesh and Malaysia) could not reach any consensus over the master agreement as the foreign builder made some demands like providing bank guarantee and allowing sub-contractors, which the Rajuk found hard to meet, the meeting insiders said.
Besides, a section of Rajuk officials said they are yet to know who will actually execute the housing project -- the Malaysian government or the Malaysian private sector -- as it found none from the Malaysian Works Ministry present at the previously held meetings.
When contacted, Rajuk Chief Engineer Md. Hafizur Rahman Munshi said they discussed with them several days ago the master agreement covering all the major aspects of the scheme including financial matters, mode of payment, timeframe, type of infrastructure and facilities.
Munshi, however, said they didn't finalise it as the Malaysian delegation made some demands particularly on financial maters, which needs more calculations and discussions.
"Hopefully, we'll be able to reach a consensus over the master agreement at the shortest possible time," he said.
Seeking anonymity, a meeting source said they demanded bank guarantee before reaching the agreement but the Rajuk in its history never provided financial guarantee to any one. Rather the city development authority is used to receiving it from the builders.
He said they also wanted a provision in the master agreement for allowing sub-contractors, which was strongly opposed by the Rajuk as the main objective of the project is to attract foreign direct investment (FDI).
"If Rajuk allows sub-contractors, then there will be a scope for implementing the project through using local funds," he said, adding that the flats in the categories of 1250 sq ft (square feet) and 1050 sq ft will be built on Industrialized Building System (IBS), a mechanism that was never applied in the country in the past.
"So, it will not be easy for the local firms to properly follow the IBS that the country is not used to," he said.
At the same time, providing bank guarantee to the Malaysian builder has another risk in the form of loosing control over them. If the relationship between the two friendly countries deteriorates in future and the builder may go back halfway through the construction work, according to him.
"Then we can do nothing in this connection. So, we need to be more calculative for the interest of Rajuk and the country. Even the Ministry of Public Works is not willing to take the responsibility of bank guarantee," he added.
Another senior official involved with the project said the commercial negotiation committee recommended paying bank guarantee in seven slabs. The committee felt that an amount equivalent to 15 per cent of the contract value (Tk 8.0 billion) could be given to the Malaysian counterpart in the form of financial guarantee with commencement of the work.
"We, as a protective measure, we proposed that the Malaysian side would not be allowed to encash the bank guarantee without the consent of Rajuk but they did not agree to it," he said.
He said the city development authority is making further calculation with regard to the issue of bank guarantee, which will cost the Rajuk a good amount of money in the form of bank interest.
He said they had requested the Ministry of Public Works of taking the responsibility.
According to the sources, the Rajuk Chairman at a meeting expressed his dissatisfaction after finding that no officials from the Malaysian works ministry or the Malaysian embassy in Dhaka present at the meeting.
The Malaysian government will build a total of 8,400 apartments in Block-B and Block-C under G2G (government to government) arrangement while the Rajuk through local construction firms will construct 6,636 apartments in Block-A, according to the project profile.
It said the flats will be built with the model of Industrialized
Building System (IBS) and also will have facilities like solar system, rainwater harvesting and Sewage Treatment Plant (STP) to make those environment-friendly.
The project is believed to play a significant role in providing modern accommodation facilities to a large number of families who do not have enough money to own living space in the overpopulated city where prices of land and flat are going up abnormally.
The Rajuk will seek fresh applications for 9,000 plus apartments as nearly 6,000 flats will be kept ready for the successful applicants who had applied earlier for flats.
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