Govt gives in to WB pressure, finally
Saturday, 23 January 2010
FHM Humayan Kabir
The government has given in to the World Bank's pressure by sidelining its own procurement laws in favour of the lender's guidelines to purchase goods, works and services for projects financed by the donor, officials said Friday.
The about-turn came last week, ending a long running row between the authorities and the multilateral agency on controversial amendments last year to the Public Procurement Act 2006 that the bank says contravenes its own purchase rules.
The government initially rejected the World Bank's reservations and demand that it revised the aid deal and use the lender's guidelines in US$2.5 billion worth of projects now in various stages of implementation.
Last week, the authorities finally revised the aid deal, proposed by the World Bank in December last year, in which the project implementing agencies must obey the donor's purchase guidelines, bypassing the country's procurement law, the officials said.
The Economic Relations Division (ERD) secretary signed the revised agreement and sent it to the World Bank Dhaka office, a senior ERD official told the FE.
The revised contract paper said the project implementing agencies of the government must follow the WB guidelines that contradicted some provisions of the recently amended PPA, he said.
"We have sent the revised agreement to the World Bank Dhaka office to facilitate withdrawal of suspension on the local procurement relating to bank funded ongoing projects in the country," said the official.
The Washington-based lender in November 2009 sent a proposal to the ERD for revising the financial contracts on 24 projects involving nearly US$2.5 billion as it had reservation on some provisions of the government amended PPA.
In a letter to the finance minister, the lender also asked the authorities to "temporarily put on hold" the local procurement of the ongoing projects as the amendments made to the PPA, 2006 are not consistent with the Bank's procurement guidelines.
The donor in the statement in mid-November said introduction of lottery system, offer of development works costing upto Tk20 million to inexperienced contractors, rejection of bids with price above or below 5.0 per cent of the official estimate, and single stage two-envelope method for procurement of goods and works are not consistent with some fundamental provisions of the Bank's guidelines.
Following the months of row and delay in revision of the aid deal, the development project implementation suffered a setback as the government received only $215 million worth of assistance till December in the current fiscal 2009-10.
"There was delay in revising the aid deals as the law ministry took about one month to scrutiny the proposed revision by the global lender," the senior ERD official said.
The Washington-based lender annually disbursed $600 to $800 million over the past few years in the form of project fund and budgetary support credit.
Officials and experts told the FE that the development banks' move would badly affect the government's annual development spending, slowing down the growth of the country's Gross Domestic Product (GDP).
Former finance and planning adviser Dr Akbar Ali Khan said the donor's rejection of the amended procurement laws and rules would "jeopardise" the ADP (Annual Development Programme) spending target.
"The donors' instructions to follow their guidelines for all sorts of procurements will slow down every step of implementation in donors-funded projects. It means the government will have to seek donors' approval even for minor procurement," he said.
The government has a target to spend a record Tk305 billion under the ADP this financial year.
Donors-funded projects account for 54 per cent of the total spending, with majority of the fund coming from the WB and the ADB.
The government has given in to the World Bank's pressure by sidelining its own procurement laws in favour of the lender's guidelines to purchase goods, works and services for projects financed by the donor, officials said Friday.
The about-turn came last week, ending a long running row between the authorities and the multilateral agency on controversial amendments last year to the Public Procurement Act 2006 that the bank says contravenes its own purchase rules.
The government initially rejected the World Bank's reservations and demand that it revised the aid deal and use the lender's guidelines in US$2.5 billion worth of projects now in various stages of implementation.
Last week, the authorities finally revised the aid deal, proposed by the World Bank in December last year, in which the project implementing agencies must obey the donor's purchase guidelines, bypassing the country's procurement law, the officials said.
The Economic Relations Division (ERD) secretary signed the revised agreement and sent it to the World Bank Dhaka office, a senior ERD official told the FE.
The revised contract paper said the project implementing agencies of the government must follow the WB guidelines that contradicted some provisions of the recently amended PPA, he said.
"We have sent the revised agreement to the World Bank Dhaka office to facilitate withdrawal of suspension on the local procurement relating to bank funded ongoing projects in the country," said the official.
The Washington-based lender in November 2009 sent a proposal to the ERD for revising the financial contracts on 24 projects involving nearly US$2.5 billion as it had reservation on some provisions of the government amended PPA.
In a letter to the finance minister, the lender also asked the authorities to "temporarily put on hold" the local procurement of the ongoing projects as the amendments made to the PPA, 2006 are not consistent with the Bank's procurement guidelines.
The donor in the statement in mid-November said introduction of lottery system, offer of development works costing upto Tk20 million to inexperienced contractors, rejection of bids with price above or below 5.0 per cent of the official estimate, and single stage two-envelope method for procurement of goods and works are not consistent with some fundamental provisions of the Bank's guidelines.
Following the months of row and delay in revision of the aid deal, the development project implementation suffered a setback as the government received only $215 million worth of assistance till December in the current fiscal 2009-10.
"There was delay in revising the aid deals as the law ministry took about one month to scrutiny the proposed revision by the global lender," the senior ERD official said.
The Washington-based lender annually disbursed $600 to $800 million over the past few years in the form of project fund and budgetary support credit.
Officials and experts told the FE that the development banks' move would badly affect the government's annual development spending, slowing down the growth of the country's Gross Domestic Product (GDP).
Former finance and planning adviser Dr Akbar Ali Khan said the donor's rejection of the amended procurement laws and rules would "jeopardise" the ADP (Annual Development Programme) spending target.
"The donors' instructions to follow their guidelines for all sorts of procurements will slow down every step of implementation in donors-funded projects. It means the government will have to seek donors' approval even for minor procurement," he said.
The government has a target to spend a record Tk305 billion under the ADP this financial year.
Donors-funded projects account for 54 per cent of the total spending, with majority of the fund coming from the WB and the ADB.