Most of the contractors are foreigners who are paid in dollars. Additional money is being required due to price hike of dollars to pay the contractors. Moreover, the cost of project is increasing due to increasing the import cost.

Some Tk 170 billion has been allocated in the budget this year to pay the installments of foreign debt while the allocation for the payment of interest is Tk 72 billion. So under the current situation, the allocation has to be increased, the stakeholders believe.

When asked whether there is a risk of paying foreign debt due to the depreciation of taka, speaking to Prothom Alo, planning minister MA Mannan said certainly there is a risk, but the government is cautious. The government has taken initiative to reduce expenditure.

He also said the economy has advanced expectedly in the last 11-12 years. Who knew the Russia-Ukraine war would break out just after the onslaught of coronavirus? The situation has worsened suddenly. May be such situation will prevail several more years and this period has to be passed cautiously.

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There are allegations of undertaking mega projects. When asked whether risk intensified due to this, the planning minister said, "We were ambitious. Developing countries must be ambitious. For this, a section of people may blame the government. But the government took the right decision at that time."

Debt installment eating up profit of Bangabandhu Bridge

Bangabandhu Bridge was opened in 1998. A total of Tk 37.45 billion was spent to construct the bridge. A total of 600 million dollars were borrowed from World Bank, Asian Development Bank and Japan International Cooperation Agency (JICA). Deals on loans from these international lenders were signed in 1994. At the time, price of a dollar was Tk 40.7 and the loan totalled 25.73 billion in taka.

A total of Tk 67.13 billion has been collected as toll from the Bangabandhu Bridge till October last year. Money from the toll collection is being spent for salaries and allowances of employees and maintenance for the bridge. Besides, installments of debt are being paid. Profits from the Bangabandhu bridge is being eaten up by the installment of debt. The payment of the loan of this bridge is supposed to end on 15 December 2033.

Chinese loan on high interest

In terms of money, Padma Bridge Rail Link project is the largest in the history of rail. A rail line is being constructed at a cost of Tk 392.46 billion from Dhaka to Jashore via the Padma Bridge. Under the project, a total of 215 kilometers including the main rail line and connecting line will be constructed. Sources said the expenditure of the project may increase further.

China is financing in this project. A deal of 2.67 billion dollars has been signed in 2018 with the Exim Bank of China for this project to be implemented under the government to government (G2G) scheme.

Some 2.40 per cent interest including service charge has to be paid. The contract firm China Railway Group has been appointed for the construction. A deal on a loan of 3.14 billion dollars was signed with them. During the signing of the deal, the price of dollar was Tk 78.85. In a span of four years, the price of dollar has increased. As a result, additional money is being required to pay loan and the contractor.

In accordance with the conditions of the loan, the contract firm selected by China has been given the work. Instead of calling open tender, the appointment has been given through the bargaining on the rate proposed by the contractor. Over Tk 800 has been estimated for filling earth of one cubic meter in this project. On the contrary, Tk 400 has been estimated for the similar work in another project during the same period. Besides, estimation has been made that the price of equipment will increase by 30 per cent every year.

Under the G2G system with China, Bangabandhu Tunnel is being constructed under the Karnaphuli River in Chattogram. In the beginning the cost was estimated at Tk 84.46 billion. Later the cost increased to Tk 103.74 billion. Due to the impact of dollar price hike, Tk 7 billion more will be required to purchase scanner and construct thana bhaban on both sides and fire service station. The government signed a deal of 710 million dollars with the Chinese Exim Bank in 2018 to implement the project. At the time the price of dollar was Tk 80.

Rooppur power plant with Russian funds

Rooppur nuclear power plant is now the largest project in the country. The estimated cost of this project is Tk 1130.92 billion. A loan of Tk 11.38 billion dollars is being taken from Russia for the implementation of the project. In this regard, a 20-year deal was signed with Russia on 26 July 2016. The payment along with interest has to be paid in 10 years since 2026.

When the deal was signed with Russia in 2016, the price of dollar was Tk 78.40. The work of Rooppur power plant started in 2019 and was scheduled to end in 2023.

Loan from ADB and JICA

In the communication sector, Bangabandhu Rail Bridge and Dhaka Metro Rail Project (Line-6) are being implemented with the loan from JICA. Annual interest of these two projects is one per cent. The loan along with interest is supposed to be paid by 30 years.

Bangladesh Railway is implementing Bangabandhu Rail Bridge Project with an estimated cost of Tk 97.34 billion. In the beginning, JICA was supposed to provide Tk 77.24 billion. Now the cost reached Tk 167.81 billion. Now JICA will provide Tk 121.49 billion. Contractor has been appointed from Japan.

Around Tk 220 billion is being spent for the implementation of metro rail. JICA was supposed to provide Tk 160 billion. Meanwhile, the cost increased to Tk 334.72 billion. Japan will provide Tk 197.18 billion. Alongside the increase of volume of work, price hike of dollar has raised the cost of the project. The loan agreement was signed with JICA in 2013 to construct the metro rail. At the time price of dollar was nearly Tk 78.

At the finance of ADB, the largest rail line project is being implemented from Dohazari of Chattogram to Ramu of Cox's Bazar and from Ramu to Ghumdhum. During the approval in 2010, the cost was estimated at Tk 18.52 billion. The cost now increases to Tk 180.34 billion. A loan agreement of 1.50 billion dollars was signed in 2017. At the time, the price of dollar was Tk 82.70.

Indian loan

Under the three lines of credits (LoCs), deals of 7.36 billion dollars were signed with India in the last decade. The period of Indian loan payment including grace period is 15 years. The rate of interest is one per cent. So far one billion has been released. Meanwhile, 100 million dollars have been paid. If any more loan is taken, that will have to be paid by 2032. Indian loan is being released since 2010. Meanwhile, the price of dollars has gone up.

About big projects speaking to Prothom Alo, project expert Fouzul Kabir Khan said the government is interested in mega projects and big loans. The expenditure of these projects is normally inflated due to the corruption.

The amount of loan that the Economic Relations Division shows in dollars is actually much higher due to the depreciation of taka. An analysis should be carried out as to how much ultimately have to be paid against the amount of existing loans. Otherwise, it is not a good policy that you will take loan and spend it.

He said, "Inward remittance and garments export mainly supply foreign currency for Bangladesh. None of these two is under our control. In case of crisis in these two sectors, there will be a trouble. For this, policy should be not to take loans in high interest rate and not to undertake unnecessary projects."

*This story has been published in the print and online edition of Prothom Alo and rewritten in English by Rabiul Islam

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