Risks of Malaysia fund proposal over Padma Bridge
The finance division has pointed out five major risks in Malaysia’s initial proposal for the Padma bridge financing, and said they must be addressed if the proposal is to be accepted, according to a finance ministry official.
Though the deal has been described as a government to government agreement, the Memorandum of Understanding signed between the two countries shows that Malaysia will actually play the role of a facilitator, said the division after scrutinising the proposal.
In April, Datuk Seri S Samy Vellu, special Malaysian envoy to India and South Asia on infrastructure, and Obaidul Quader, communications minister of Bangladesh, signed the agreement in Kuala Lumpur.
The finance minister recently sent the draft MoU to the finance division for review. The division sent it back to the minister after analysing it, said a finance ministry official on condition of anonymity.
The finance division said it would take at least two years to construct the Padma bridge, but according to the MoU the deal will remain effective for nine months or a maximum of 12 months.
It means Malaysia will only play the role of a facilitator as there will be no scope for Kuala Lumpur to stay in the project till its completion, observed the division.
Another major concern about the MoU is that it does not contain direct or indirect commitment or indications of providing any type of grant or concession loans, it said in its observation.
The division said if it was not a government to government deal, it could have been processed under the government policy and strategy for Public Private Partnership.
Besides, the MoU contains no guidelines on how the money invested in the bridge’s construction will be paid back, how the fees/toll/charge for using the infrastructure will be fixed and what the maximum tenure of the concession agreement will be, it said.
Another concern arises from the provision for constructing the bridge under the build-own-operate-transfer (BOOT) system that will allow the contractor to have the project’s ownership.
The division said it would be more appropriate to construct the bridge under build-operate-transfer system instead of the BOOT system.
A delegation led by Malaysian envoy Samy Vellu came to Dhaka on August 5 and submitted a proposal on the concession agreement to the communications minister. Later, Quader told reporters that Malaysia would submit the final proposal in three weeks.
The Malaysian envoy also met Finance Minister AMA Muhith the same day, but the minister did not tell reporters anything about it.
The finance division on Sunday issued a guideline for the bridge division to open two bank accounts with Sonali Bank for people to deposit money there as a way of raising funds for the Padma bridge project.
The cabinet last month decided to open the two accounts — one for local and the other for foreign currency — to raise funds for the project.
The bridge division will inform the Prime Minister’s Office and finance and planning ministries about the amounts deposited with accounts every three months.
The planning ministry decided that 5 percent of the allocations in the development budget for all ministries and divisions except for agriculture and communications ministries, LGRD and power division would be diverted to the Padma bridge fund.