Uncertainty grips DEE project as Ital-Thai fails to manage fund

Munima Sultana The fund for the much-talked-about Dhaka Elevated Expressway (DEE) project has yet to be arranged even 10 months after the contract has been signed between the government and the bid winning Thai company. Sources said uncertainty still persists in the implementation of the US$ 1.2 billion DEE project on time as the Ital-Thai could not manage nearly 50 per cent of the project cost despite its attempts to avail it from various national and international financial channels. They said the company is already three months behind schedule for submitting its 'financial closure' to the Bangladesh Bridge Authority (BBA), the executing agency of the largest public-private partnership project in the country, due to not getting confirmation from any sources. According to the concessional agreement signed between BBA and Ital- Thai Development Company on 19 January, the winning company should submit the 'financial closure' by July 1 to start the construction of the 42-kilometre elevated expressway in August. Of the total fund, the Ital-Thai's share comprises 31 per cent equity and it will get 27 per cent from the government as VGF (Financial Gap Funding). Consultants said the company would receive VGF in three phases, first as per the agreement after completion of a physically visible structure, the second one in the middle of the project and the last after movement of traffic starts. "Managing 49 per cent of the foreign fund is important for the PPP project," said one of the consultants. Officials said the company's possibility for getting $100 million in fund from Bangladesh Bank's Investment Promotion and Financing Facility (IPFF) for foreign investors has become zero as the main financier of the $250 million fund, World Bank, has already shown negative attitude to the project funding. The central bank officials said as the World Bank considers the bidding of the DEE project as not being fair, the possibility has become totally nil. Sources said the company had applied for $100 million from IPFF, which is one-sixth of the company's total demand. BBA officials, however, said the company was still trying to arrange the fund from international agencies including Asian Development Bank (ADB) and from the local banks with foreign bank guarantee. "Ital-Thai has already begun the piling work at the site of Hazrat Shahjalal International Airport from its equity part," said an official claiming that there was no uncertainty in the project. The consultants, however, said the DEE project has yet to overcome complications created over meeting the main requirement of having Environment Impact Assessment (EIA) and Social Impact Assessment (SIA) reports for getting the fund. Apart from Bangladesh University of Engineering and Technology (BUET), Infrastructure Investment Facilitation Centre (IIFC) is working with the DEE project as consultant. "The contractor is not only behind schedule, there is also delay in handing over necessary land as acquisition could not be completed," said a consultant at BUET. Another consultant said there is also a conflict over the methodology to be followed to conduct the study for which the financiers are not showing interest. Elaborating on the conflict, he said, after a fund assurance comes from a financier, the EIA and SIA are done following the rules of the financier. "But in this case, there is conflict about whose guidelines to be followed to acquire land -- the financiers', the government's or any other options," said the consultant preferring not to be named. To acquire land, especially for the DEE, the government has already passed a law which has stopped the provision to go to the lower court by the land owners if they feel compensation is lower than the market value. But the government has land acquiring rules for other projects. BBA officials said to avoid the conflict with the land owners, the government now considers giving land against land, or flats, to cut down on its huge financial burden in connection with land acquisition.