KL explains Padma Bridge financing plan

FE Report Malaysia has, in principle, accepted all the terms set by Bangladesh for construction of the Padma Bridge (PMB). It is now awaiting Bangladesh's final endorsement of their interest-free 2.3 billion US dollar investment proposal, Malaysian Prime Minister's special envoy Seri S Samy Vellu told newsmen at a press conference in Dhaka Friday. Mr Vellu said his country would construct the main part of the bridge, do the river training work (RTW) and bear the entire cost. He said during a series of negotiations held between Malaysia and Bangladesh, both the sides had reached a preliminary agreement at the final negotiations held in Dhaka on February 20 and 21. "We have reached an understanding on the government-to-government (G2G) collaboration. But the government of Bangladesh has not yet categorically accepted anything," he, however, admitted. The Malaysian High Commission organised the first-ever press conference to make clear what it said misleading reports so far published in the media of both the countries. "We have never met the Bangladesh press. As we have come to the final stage, we should give a very clear picture about what has happened during all these 18/19 months," he said. The special envoy highlighted the agreed terms signed by the two sides in February and said the entire cost of $ 2.3 billion has been proposed to be borne by the Malaysian government for the two components - main bridge and RTW as a mark of friendly relations. Mr Samy Vellu said they have proposed 26 years as concessional period excluding three years' time for construction of the bridge and 18 months more for the RTW. Though the Malaysian proposal has given the right of toll fixation to the government of Bangladesh, it proposed profit sharing at the ratio of 70:30 respectively after paying interests to the bank. The Malaysian government will take the toll revenue for five years for paying the interest on bank loans after completing the construction. He said the 'concessionaire' (contractor) and the EPC (engineering, procurement and construction) contractor would be selected on the basis of procurement rules set by the Malaysian government. But the actual cost would be determined by the EPC and approved by the Malaysia-Bangladesh technical committee to be formed soon. According to the proposal of $2.3 billion, the cumulative revenue has been estimated at $ 8.3 billion until the end of concessional period. The concessionaire's revenue of 70 per cent would be $ 5.20 billion and the government of Bangladesh $ 2.19 billion. When asked about the stand of the Bangladesh government, he said it has not yet accepted the proposal and the negotiations will continue. Commenting on the Bangladesh Finance Minister's rejection of the Malaysian proposal, the special envoy, however, said the minister was not the part of the negotiation. "He was not aware of the proposal." "I can't make the Finance Minister happy. He does not know A or B of this. He was not a party from the beginning. I deal with the Prime Minister directly and after that, I deal with the minister who is in-charge of this," he commented. He said the government of Bangladesh would now communicate to the Finance Minister as there is an understanding that has come after the negotiation between the two sides. He said there is a possibility of reducing the cost of the PMB project. The concessionaire will pay value-added tax and other relevant taxes to the Bangladesh government as per the National Board of Revenue rules. Answering a question whether the Malaysian proposal is based on G2G arrangement or public-private partnership (PPP), Mr. Samy Vellu said after an understanding signed at the government level, the Malaysian government has come forward to finance two components of the PMB. But the procurement part would be done as per Malaysia's own PPP rule, he added. The special envoy made some media reports clear saying that Bangladesh Bank had contacted its Malaysian counterpart for making queries about a particular individual and his company. He said Malaysia joined the PMB project as the concessionaire to assist the Bangladesh government to complete the bridge which will connect the two parts of the country permanently. Asked about Malaysia's capacity to construct the 6.15 kilometre bridge, the envoy said his government had built the longest north-south expressway and other projects in Malaysia. Meanwhile, it is understood that a Malaysian consortium led by Tan Sri Halim Saad of Markmore Group will be implementing the project, reports UNB. The Padma Bridge is a 6.15 kilometre multipurpose road-rail bridge across the Padma River, which on completion will be the largest bridge in Bangladesh. The bridge will connect Louhajang in Munshiganj to Shariatpur and Madaripur, linking the south-west of the country with its northern and eastern regions.