‘Chinese contractors enter innocuously but then turn stern’
Loans from China are indisputably more costly than loans from the World Bank, Asian Development Bank (ADB) or Japan International Cooperation Agency (JICA). Loans from the World Bank, ADB and JICA include grants but China does not provide such facilities with loans.
Ahsan H Mansur, executive director of Policy Research Institute (PRI), a non-government research organisation, said this when asked about the construction of a new elevated expressway with Chinese credit. The government is constructing the Dhaka-Ashulia elevated expressway at a cost of around Tk 175.53 billion. The construction work has started this month.
The project is being implemented under the G2G (Government to Government) initiative with China. Chinese government will pay Tk 109.50 billion out of the total cost of Tk 175 billion. The government has to pay 2.4 per cent interest on the principal loan as well as service and commitment charges.
Ahsan Mansur questioned whether the cost of the Dhaka-Ashulia highway will be limited to Tk 175 billion till the end, and said that the Chinese contractors enter innocuously but then turn stern. He meant that Chinese companies show lower costs while taking up contracts and but later the costs soar. They do so by colluding with government officials.
He said contractors from the Organisation for Economic Cooperation and Development (OECD) do not get contract work in Bangladesh as they do not pay bribes due to strict rules.
In the Dhaka-Ashulia Expressway project, the government will not have to repay the principal interest and principal for the first five years. However, the country will have to pay commitment fee. The entire amount will have to be repaid in instalments in the next 15 years from May, 2027. The World Bank, JICA and ADB loans usually have a grace period of 10 years.
Regarding the grace period of the loan, Ahsan Mansur said the grace period and payment period of Chinese loans are short. Whereas, at times the period for loans of the World Bank and other organisations extends to a maximum of 30 to 40 years. Therefore, loans from other source cost less than from China.
Ahsan Mansur pointed out that projects implemented with Chinese credit have mixed experience. He said that a busy road has almost been stalled inordinately due to the BRT project. People have been suffering immensely. There has been no respite. Even in developed countries, big projects are taken up but they arrange alternative facilities for the people. Not only the contractors, but those who are in charge of managing the projects, are responsible for this failure.
Ahsan Mansur said that any new mega project should be well thought-out during the economic crisis, adding, “I do not approve of projects like Rooppur, Padma Bridge rail link or Cox’s Bazar rail project. However, the Dhaka-Ashulia expressway needs to be constructed.”