Govt yet to sign WB aid revision deal
Sunday, 10 January 2010
FHM Humayan Kabir
The World Bank's aid deal revision proposals, held up for nearly two months, have affected aid flow and project implementation as the lender asked the government to suspend local procurement before amendment of agreements, officials said.
The Washington-based lender in late November, 2009 sent a proposal to the Economic Relations Division (ERD) for revising the deals of 26 projects worth nearly US$2.5 billion due to its reservation to some provisions of the recently amended public procurement act (PPA).
Finance ministry officials said the proposed aid revisions deal of the bank has not been signed by the government yet.
ERD officials said the aid flow from Bangladesh's largest fund providers has dropped significantly this year as the government has received only $188 million in assistance in the first five months of the current fiscal.
In a letter to the finance minister in November the global lender has asked the government to "temporarily put on hold" local procurements for its 26 ongoing projects, saying the amendments made in the PPA are not consistent with the WB's guidelines.
The WB has raised objections to several key amendments such as lottery system to break a tie in bidding, handing development works to inexperienced contractors and rejecting bids priced above or below five per cent of the official estimate.
The move from the Washington-based donor came when the government amended the country's procurement law on November 4 in parliament.
ERD officials said in early December last year they sent the World Bank's financial deal revision proposal for 26 projects to the law ministry for vetting.
"The revision proposal is still pending for decision of the law ministry," ERD Secretary M Musharraf Hossain Bhuiyan told the FE.
In the letter, the global lender said the amendments to the PPA 2006 are not consistent with some of the fundamental provisions of the Bank's Procurement Guidelines regarding economy, efficiency, transparency and fairness.
A World Bank official in Dhaka Saturday said they are waiting for the counter signature of the government for amending the financial deals of the 26 ongoing projects.
"Our country director has signed the revision proposal and sent it to the ERD for counter signature about one and a half months ago. But we are yet to receive it," the officials said.
A senior official in the Local Government and Engineering Department said the procurement suspension of the WB-funded projects has created obstacles to the overall project implementation of the LGED, a major public fund spender.
The ministries and divisions of the government have sought lower project aid, to be disbursed by the donors for implementing ADP in the current fiscal, due to complexity on the PPA issues, a senior planning commission official told the FE.
"As disbursement of funds from the donors has become more complex due to the ongoing row over the procurement law, they have sought more fund from the government's own resources," he said.
During July-December period this fiscal the project implementing agencies have spent only 28 per cent of Tk 305 billion ADP, only four per cent higher than the same period last year, planning commission officials said.
The World Bank wanted changes in aid deals of 26 projects, including $350 million Siddhirganj peaking power plant, $109 million emergency cyclone recovery and restoration work, $210 million rural transport improvement project and $149 million Dhaka supply and sanitation work.
In addition, the bank is also seeking revised deals on $300 million health, nutrition and population sector programme, $250 million enterprise growth and modernisation project, $150 million second primary education development programme and $102 million water management improvement project.
The World Bank's aid deal revision proposals, held up for nearly two months, have affected aid flow and project implementation as the lender asked the government to suspend local procurement before amendment of agreements, officials said.
The Washington-based lender in late November, 2009 sent a proposal to the Economic Relations Division (ERD) for revising the deals of 26 projects worth nearly US$2.5 billion due to its reservation to some provisions of the recently amended public procurement act (PPA).
Finance ministry officials said the proposed aid revisions deal of the bank has not been signed by the government yet.
ERD officials said the aid flow from Bangladesh's largest fund providers has dropped significantly this year as the government has received only $188 million in assistance in the first five months of the current fiscal.
In a letter to the finance minister in November the global lender has asked the government to "temporarily put on hold" local procurements for its 26 ongoing projects, saying the amendments made in the PPA are not consistent with the WB's guidelines.
The WB has raised objections to several key amendments such as lottery system to break a tie in bidding, handing development works to inexperienced contractors and rejecting bids priced above or below five per cent of the official estimate.
The move from the Washington-based donor came when the government amended the country's procurement law on November 4 in parliament.
ERD officials said in early December last year they sent the World Bank's financial deal revision proposal for 26 projects to the law ministry for vetting.
"The revision proposal is still pending for decision of the law ministry," ERD Secretary M Musharraf Hossain Bhuiyan told the FE.
In the letter, the global lender said the amendments to the PPA 2006 are not consistent with some of the fundamental provisions of the Bank's Procurement Guidelines regarding economy, efficiency, transparency and fairness.
A World Bank official in Dhaka Saturday said they are waiting for the counter signature of the government for amending the financial deals of the 26 ongoing projects.
"Our country director has signed the revision proposal and sent it to the ERD for counter signature about one and a half months ago. But we are yet to receive it," the officials said.
A senior official in the Local Government and Engineering Department said the procurement suspension of the WB-funded projects has created obstacles to the overall project implementation of the LGED, a major public fund spender.
The ministries and divisions of the government have sought lower project aid, to be disbursed by the donors for implementing ADP in the current fiscal, due to complexity on the PPA issues, a senior planning commission official told the FE.
"As disbursement of funds from the donors has become more complex due to the ongoing row over the procurement law, they have sought more fund from the government's own resources," he said.
During July-December period this fiscal the project implementing agencies have spent only 28 per cent of Tk 305 billion ADP, only four per cent higher than the same period last year, planning commission officials said.
The World Bank wanted changes in aid deals of 26 projects, including $350 million Siddhirganj peaking power plant, $109 million emergency cyclone recovery and restoration work, $210 million rural transport improvement project and $149 million Dhaka supply and sanitation work.
In addition, the bank is also seeking revised deals on $300 million health, nutrition and population sector programme, $250 million enterprise growth and modernisation project, $150 million second primary education development programme and $102 million water management improvement project.