Revised construction cost of Padma bridge rises by 27pc
Thursday, 2 August 2007
Shakhawat Hossain
The revised construction cost of the proposed Padma Bridge has escalated by almost 27 per cent putting the government in a difficulty to mobilise an additional amount of fund, official source said.
The fresh cost has been estimated by the World Bank (WB), a major financer that committed US$ 300 million for the mega project.
"The feasibility study estimated that the construction cost of the bridge in 2004 was US$ 1.26 billion, and the revised estimate as of 2007 may be as high as US$ 1.6 billion," said the WB paper on possible financing options for the Padma Bridge.
The WB has also suggested the government to identify the sources for mobilisation of the fund.
The government has committed to bear one third of the project cost, which is worth $480 million.
With the present interim government showing a positive attitude to complete the negotiation with the lending agencies, the Washington-based multilateral agency has suggested for more than dozen of funding sources in its paper.
The possible funding sources include imposition of levy on interest earned in national savings scheme and surcharge on utility services like telephone and electricity, rail fare, road permit and driving licences.
Such levy and surcharge were applied for the construction of the Jamuna Multipurpose Bridge (JMB) and those contributed $16 million per annum during 1986-1992 period.
The WB thinks the imposition of levy and surcharge will guarantee revenue amounting to $200 million over the six years of the construction period of the proposed bridge.
The WB said the government had to multiply the levy and surcharge at the time of construction of the JMB by 2.4 per cent.
The immediate past political government was, however, against the imposition of such levy and surcharge for construction of the Padma bridge, said a senior communication ministry official.
The ministry still prefers to look for other options, said the official.
The WB bank has various options such as issuance of government bond, securitisation of revenues emanating from the JMB, initial public offering (IPO) or bond issuance by a special purpose entity under the JMB, joint venture with foreign investors and construction under build-operate-transfer (BOT) basis.
The ministry official said the finance and planning adviser recently wanted to know the progress of a decision on securitisation of revenues emanating from the JMB.
The decision, according to the official, was that the IPDC would act as the private Financial Intermediary (PFI) and would make a loan to the JMB against the revenue stream from the bridge to be securitised.
The IPDC will then sell or assign this loan to the special purpose vehicle (SPV), which will issue the fixed income securities to finance construction of the Padma Bridge, the official added.
The Asian Development Bank (ADB) that is expected to lend $300 million has sought to preserve the right of selection of consultants for construction of the Padma Bridge.
Among other conditions, the Manila-based lending agency has sought assurance from the government on counterpart funding in time and restructuring of the Jamuna Multipurpose Bridge Authority as a separate division under a full-fledged secretary.
Apart from the two multilateral donors, the Japan Bank of International Cooperation (JBIC) has also showed interest to finance the mega bridge project that is expected to contribute to the national economy through boosting the gross domestic product (GDP) by 1.2 per cent.
The revised construction cost of the proposed Padma Bridge has escalated by almost 27 per cent putting the government in a difficulty to mobilise an additional amount of fund, official source said.
The fresh cost has been estimated by the World Bank (WB), a major financer that committed US$ 300 million for the mega project.
"The feasibility study estimated that the construction cost of the bridge in 2004 was US$ 1.26 billion, and the revised estimate as of 2007 may be as high as US$ 1.6 billion," said the WB paper on possible financing options for the Padma Bridge.
The WB has also suggested the government to identify the sources for mobilisation of the fund.
The government has committed to bear one third of the project cost, which is worth $480 million.
With the present interim government showing a positive attitude to complete the negotiation with the lending agencies, the Washington-based multilateral agency has suggested for more than dozen of funding sources in its paper.
The possible funding sources include imposition of levy on interest earned in national savings scheme and surcharge on utility services like telephone and electricity, rail fare, road permit and driving licences.
Such levy and surcharge were applied for the construction of the Jamuna Multipurpose Bridge (JMB) and those contributed $16 million per annum during 1986-1992 period.
The WB thinks the imposition of levy and surcharge will guarantee revenue amounting to $200 million over the six years of the construction period of the proposed bridge.
The WB said the government had to multiply the levy and surcharge at the time of construction of the JMB by 2.4 per cent.
The immediate past political government was, however, against the imposition of such levy and surcharge for construction of the Padma bridge, said a senior communication ministry official.
The ministry still prefers to look for other options, said the official.
The WB bank has various options such as issuance of government bond, securitisation of revenues emanating from the JMB, initial public offering (IPO) or bond issuance by a special purpose entity under the JMB, joint venture with foreign investors and construction under build-operate-transfer (BOT) basis.
The ministry official said the finance and planning adviser recently wanted to know the progress of a decision on securitisation of revenues emanating from the JMB.
The decision, according to the official, was that the IPDC would act as the private Financial Intermediary (PFI) and would make a loan to the JMB against the revenue stream from the bridge to be securitised.
The IPDC will then sell or assign this loan to the special purpose vehicle (SPV), which will issue the fixed income securities to finance construction of the Padma Bridge, the official added.
The Asian Development Bank (ADB) that is expected to lend $300 million has sought to preserve the right of selection of consultants for construction of the Padma Bridge.
Among other conditions, the Manila-based lending agency has sought assurance from the government on counterpart funding in time and restructuring of the Jamuna Multipurpose Bridge Authority as a separate division under a full-fledged secretary.
Apart from the two multilateral donors, the Japan Bank of International Cooperation (JBIC) has also showed interest to finance the mega bridge project that is expected to contribute to the national economy through boosting the gross domestic product (GDP) by 1.2 per cent.