Dhaka Elevated Expressway work stalled, no idea when it will resume

The construction work of the Dhaka Elevated Expressway has largely been halted in most of the areas since February of this year.

Although only a small number of workers were working in the Hatirjheel area, the work was halted there too for the last two months due to financial crisis.

As a result, the project is currently completely stalled for this rapid transit flyover.

Meanwhile, the Bangladesh Bridge Authority (BBA) is unable to say when work will resume.

The reason cited is that the expressway construction and management company, First Dhaka Elevated Expressway (FDEE) Limited, has failed to secure the necessary funding to continue operations.

Additionally, disputes regarding share transfers among the partners and contractor companies under FDEE have further complicated the situation.

After prime minister Sheikh Hasina resigned from her position on 5 August in the wake of a popular uprising and subsequently left for India, an interim government was formed.

In light of this changed circumstance, individuals associated with the project are urging that the costly initiative be completed as soon as possible to alleviate traffic congestion in the capital.

On 2 April, a reporter from Prothom Alo visited the work stations or stockyards near Kawla, Moghhbazar, and Kamalapur railway station. At that time, it was learned from those involved that work at the Kawla stockyard had been halted since February, while other locations had been inactive since March.

Subsequently, on 2 July, the correspondent visited the Moghbazar-Malibagh and Hatirjheel work stations, where limited work was still being conducted only in Hatirjheel. Most recently, on 18 September, it was found that work had also ceased there.

In this major public-private partnership (PPP) project, companies from Thailand and two based in China, in addition to Bangladesh, are involved in investment and construction. The three companies are Italian-Thai Development Public Company, Shandong International Economic and Technical Cooperation Group from China, and Sinohydro Corporation.

A company named FDEE Limited was formed by Italian-Thai to construct and manage the Dhaka Elevated Expressway. The share distribution among the three partner companies is 51 per cent, 34 per cent, and 15 per cent, respectively. The BBA acts as the executive body for the expressway.

Sources said the stay order issued by the court regarding the share transfer among the project's contractor companies was lifted by the Supreme Court's Appellate Division on 1 September.

Consequently, there are no longer any barriers to transfer shares among these companies. Therefore, using the issue of share transfer disputes as an excuse to halt work is no longer justifiable.

According to several individuals associated with the project, senior officials from the BBA have previously refrained from pressuring FDEE to begin work, citing ongoing legal proceedings. Moreover, the BBA has not taken a side in the court.

In a letter dated on 12 September, following the court's ruling on 1 September, the BBA urged FDEE to complete the Dhaka Elevated Expressway project by June 2025.

The letter, signed by project director AHM Shakawat Akhtar, said that for the past eight months, there has been minimal site activity. Due to internal issues among shareholders and lenders, there has been little activity for the last three months. Despite resolving land issues, there has been no progress in construction work in the specified areas. Such delays are deemed unacceptable, and if no quick progress is made, the BBA will have to take necessary actions as per the contract.

The letter urged FDEE to take swift and appropriate measures to finish the work within the designated time, stating that no extensions would be granted. The letter was labeled as "extremely urgent and important."

On 2 April, a visit to the Kawla yard revealed that no work was being conducted. Sources related to the project have said that FDEE's agreement for the project was made with two Chinese lenders: China Exim Bank and the Industrial and Commercial Bank of China (ICBC).

However, Italian-Thai failed to make timely interest payments. According to loan conditions, a company that fails to make interest payments can sell its share to another company.

When the Chinese firms expressed interest in acquiring shares, Italian-Thai did not agree. As a result, on 17 January, the two banks halted the disbursement of loan funds.

Italian-Thai subsequently sent an arbitration notice to the Singapore International Arbitration Centre. At the same time, it sought a court injunction against share transfers. On 12 May, the High Court lifted the stay on Italian-Thai's share transfer, but an appeal led to the Appellate Division reinstating the stay. Ultimately, on 1 September, the full bench of the Appellate Division lifted the stay order.

On 3 April, in response to an email from Prothom Alo, FDEE's managing director Vaskon Khanna stated that they planned to secure short-term loans to complete the construction work by 30 June.

Later, in a 1 July email response, FDEE acknowledged that work had been halted in most areas due to share disputes and financial difficulties and stated that they would secure funding to resume construction in August. The email also noted that there were disputes between Italian-Thai and the Chinese lenders and partners regarding share transfers without legal basis.

On 17 September, when a follow-up email was sent, the managing director did not respond. Four questions had been posed in the email: When will construction begin? Has the company secured loans to start the work? With the Supreme Court lifting the stay on share transfers, will shares be transferred to the other partners? What actions is FDEE taking to repay debts to various entities?

An analysis of FDEE's debts reveals that they owe over Tk 10 billion for purchasing materials such as rods, wires, and cement, as well as for paying employee salaries and contractor bills (as FDEE’s three partners are also working as contractors for the project).

In a statement to Prothom Alo on Friday, project director AHM Shakawat Akhtar said, "Preparations are underway to construct girders in Hatirjheel, which is why work is currently halted. A hearing on the arbitration notice from Italian-Thai is scheduled for the first week of October, and the BBA is waiting until then."

When asked if work would resume in October, the project director replied, "It is too early to say. The BBA has sent a letter to FDEE regarding starting work after the court lifted the stay on shares. The BBA will not grant any more time." When inquired about FDEE's failure to secure loans and their debts, he said, "That is their issue. It is not the BBA's concern."

According to the project agreement, the investor companies will cover 73 per cent of the construction costs for the expressway, while the Bangladesh government will provide the remaining 27 per cent, known as the Viability Gap Fund (VGF). When asked if the government would provide the VGF given the financial constraints that have halted work, the project director stated, "The matter of the VGF will be considered once the work progresses a bit more."

The total cost for the main construction work of the Dhaka Elevated Expressway project is estimated to be Tk 89.4 billion. The project was initiated in 2009, and formal construction began on 1 January 2020. On 2 September of last year, the stretch from Kawla to Tejgaon, near Shahjalal International Airport, was opened for vehicle movement, followed by the section from Karwan Bazar (FDC) on 20 March.

The project will start from Kawla and extend through Kuril, Banani, Mohakhali, Tejgaon, Mogbazar, Kamalapur, Saydabad, and Jatrabari, ultimately reaching the Kutubkhali area of the Dhaka-Chittagong highway.

*This article, originally published by Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam