The Roads and Highways Department (RHD) authorities are allegedly trying to provide extra facilities to Chinese contractors for constructing a four-lane road stretching from capital’s Rampura to Demra.
With the deprivation of hefty amount of tax and tariff, the country will have to incur a loss of around Tk 710 million (71 crore).
Sources related to the project said, the issue of providing extra facilities to the China Communication Constructor Company (CCCC) and China Road and Bridge Corporation (CRBC) has been detected by the cabinet committee on economic affairs (CCEA).
As a result, CCEA returned the proposal twice on 9 December and 27 January respectively.
RHD took an initiative in 2015 to construct an alternative connecting road between Dhaka-Chattogram and Dhaka-Sylhet highways.
As per the design, the road will start from the vicinity of Rampura Bridge and move in two separate lanes--one lane will go to the Chittagong road intersection of Dhaka-Chattogram highway through Amulia and the other will go to Narayanganj’s Tarab of Dhaka-Sylhet highway.
With the flyover of 9.5 kilometres and two local roads, the total length of this road will be 13.5 kilometres. The project will probably be implemented--by December of 2024--under the venture of public and private partnership (PPP).
The expenditure of this project has been estimated at Tk 20.94 billion (2 thousand and 94 crore). Another project of Tk 12.10 billion (one thousand and 210 crore) is underway for land acquisition, rehabilitation and other ancillary works.
The government will bear the entire cost of Tk 33.04 billion.
According to the plan, contractor firms with their own money will build the main and local roads within four years under PPP scheme. The government will repay the money along with profits to the contractors in 21 years since the inauguration of the road.
There are several methods under the PPP project to return the money to the investors. Bangladesh will pay the loan every six months under Base Availability Payment (BAP).
However, RHD usually gives the work to the contractor who proposes the lowest amount of money for the work.
Under this method, the road will be controlled by the contractor firms for the next 21 years while the government will only collect toll money.
Tax and tariff complexity
RHD offered a tender in November 2018 to select the contractor firms. In July 2019, four Chinese organisations submitted their financial and technical proposal to the RHD.
In exchange of the project implementation, CCCC and CRBC jointly proposed to take TK 2.15 billion a year as ‘BAP’.
China Railway Construction Investment Group (CRCIG), China Civil Engineering Construction Corporation (CCECC) and Max Infrastructure Limited (MIL) also jointly participated in the tender. They proposed to take TK 2.12 billion per year.
And the proposal of China State Construction Engineering Corporation (CSCEC) was TK 3.64 billion.
RHD source said they selected the CCCC and CRBC as the lowest bidder even though the joint tender of CRCIG, CCECC and MIL was Tk 33.7 million less than that of CCCC and CRBC.
Under this situation, if the contractor is appointed as per the choice of the RHD, the government will have to spend an additional amount of Tk 710 million in 21 years.
Sources related to tender evaluation said the government is supposed to get advanced tax and tariff on the amount of money to be paid to the contractor. But CCCCL and CRBC selected by RHD have not mentioned the issue of tax and tariff in their proposals.
So, an uncertainty has surfaced over whether the government or the constructor will pay the tax and tariff. On the other hand, CRCIG, CCECC and MIL also have not mentioned the matter of tax and tariff in their proposal.
A senior RHD official on condition of anonymity told Prothom Alo that tariff and tax cannot be included under the process in which 'BAP' is calculated. In that case, the government ultimately has to pay the tax and tariff which is applicable for the contractors selected by RDH. If the thing is so, they will no longer be the lowest bidder.
Due to this complexity, the PPP authorities under the prime minister's office formed a three-member committee in 2018. In December 2019, the committee gave a report with recommendations.
It recommends that if CCCCC and CRBC are considered as the lowest bidders, they will have to give a written commitment after the inclusion of VAT and tax in the proposal.
According to the road transport and bridges ministry, the RHD sent the proposal to the cabinet committee for approval on 9 December without obtaining a clear written commitment from the selected contractors.
So, the committee sent it back without approval. The RHD then sent a letter to the contractor in this regard and the contractor responded on 31 December.
On 27 January, the proposal was again placed in the committee for approval. This time also the committee sent back the proposal as the matter was unclear.
According to RHD sources, the local agent of the selected contractors is SHACO, a company of former communication minister Syed Abul Hossain.
ABM Sertajur Rahman, executive engineer of RHD, who is in charge of overseeing the project, told Prothom Alo that the cabinet committee had some observations on the implementation of the recommendations made by the PPP authorities on taxes and tariff. For this they have sent back the proposal. The preparation to send it again to the cabinet committee is underway.
He hopes their proposal will be approved in the cabinet committee soon.
Toll rate for vehicles
RHD has fixed a list of tolls for different kinds of vehicles. If a lorry uses the road, it will have to pay Tk 432. If it gets off the road in the middle, it will have to pay Tk 32 per kilometre.
The total toll for a bus has been fixed at Tk 325.
Each bus has to pay Tk 24.10 per kilometre while the toll for a minibus is Tk 16.10 per kilometer and Tk 217 for the whole road. The toll for each car has been fixed at Tk 75.60 with per kilometre at Tk 5.60.
The government will get the entire amount of toll. However, the income from advertisements in different places on the road will be shared equally between the government and the contractors. It is estimated that some 30,000 vehicles will pass through this road daily in 2025.
*This report, originally published in Prothom Alo print and online edition, has been rewritten in English by NH Sajjad.