Tanners seek $1.0b JICA loan for relocation to Savar

Ismail Hossain | Published: February 18, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

Tannery owners are trying to get $1.0 billion loan from Japan International Cooperation Agency (JICA) for meeting the cost of relocation from the city's Hazaribagh to Savar.
Recently, they wrote a letter to the JICA for providing the financial assistance as the owners are unable to relocate around 200 tanneries on their own.
"We dearly need long term loan with lower interest rate for the relocationâ€¦ we can't bear all costs of relocationâ€¦ if we do we can't run our business," President of the Bangladesh Finished Leather, Leather Goods & Footwear Exporters Association (BFLLFEA), Mohammad Abu Taher, told The Financial Express Monday.
Earlier, they also met Bangladesh Bank Governor Dr Atiur Rahman seeking financial assistance.
"We met with BB Governorâ€¦ he did not assure us of anything, but he said he would try to find a way for us," he said.
The tanners and government signed a memorandum of understanding (MoU) in October last to ensure relocation of Hazaribag tanneries to the Savar Tannery Estate.
According to MoU, the government has decided to provide Tk 2.5 billion as compensation to the tanners for relocation and give Tk 6.63 billion (80 per cent) out of the total project cost.
However, the owners will have to pay the remaining Tk 1.65 billion (20 per cent) in instalments.
Mohammad Abu Taher said though it is not final yet, the tanners may get half of the compensation of Tk 2.5 billion before relocation.
"The amount or compensation is so small, Tk 2.5 billion was promised 10 years ago, now the amount is not enough," he said.
According to the first MoU signed in 2003, the government was scheduled to bear the cost of setting up of the central effluent treatment plant (CETP) and pay Tk 2.5 billion as compensation to the tanners for relocation.
But, according to a MoU signed later in 2007 between the two parties, the CETP was due to be constructed by the government. The cost of the CETP was to be paid by the tanners in instalments over a period of 15 years.
In the meantime, the cost of the CETP and other expenses have increased manifold. So tanners have been demanding a new agreement.
The second revised project proposal, which was approved by the ECNEC on August 13 this year, includes new components such as solid waste management, sludge power generation systems and sewage treatment plant. These will make the CETP more effective and eco-friendly.
The original project cost doubled in the second revised proposal because of the delay. The cost now stands at Tk 10.78 billion, whereas in 2007 the ministry had estimated the cost at Tk 5.45 billion in the first revised project proposal. The scheme was originally approved in 2003 with an approximate cost of Tk 1.75 billion.
Tannery owners have also plan to build a modern township on around 50 acres of land in the city's Hazaribagh area after relocation of their factories to Savar to meet the relocation cost.
"We have discussed the issue in our forum and decided to construct a planned housing project in the area under a joint venture or a single initiative," Mr Taher said.