Padma Bridge Rail Link Project: Railway seeks one-year extension on loan tenure
Bangladesh Railway (BR) is seeking a one-year extension on its loan tenure for the Padma Bridge Rail Link Project as a means to avoid upward cost revisions resulting from hassles in clearing payments after the task is complete.
Md Kamrul Ahsan, director general of BR, made this request to the government of China through the Economic Relations Division (ERD) last month.
As per the loan-financing agreement signed between the ERD and officials of the Chinese embassy in Dhaka on April 17, 2018, the loan duration is set to end on May 12, 2024.
The extension was sought by BR as the contractor, China Railway Group Ltd (CREC), informed that it would not be possible to finish implementing the project within the stipulated deadline on May 4, 2024.
This is due to delays in land acquisition along the Dhaka-Mawa and Bhanga-Jashore sections as well as the shifting of utility lines.
In addition, there were changes to the plan, such as constructing railway underpasses instead of level crossings at the Tularampur and TT Para points, among other reasons, Ahsan said in a letter to the ERD.
So, if all tasks are completed as per the request of the contractor, additional time of four months will be required to pay the total cost, including the 85 per cent share of the Exim Bank of China, he added.
The government allocated Tk 3,500 crore for the project from foreign assistance in fiscal year 2023-24, which is to be spent within the loan duration.
Considering the rate of expenditure from project assistance in previous years, it will be possible to spend Tk 2,009 crore within the next 10 months before the deadline.
In that case, project assistance within the loan availability period amounting to Tk 1,910.43 crore will remain unspent within the stipulated timeframe, according to BR.
So, if the loan availability period is not extended as per the terms of the agreement, it will not be possible to spend the money allocated for the remaining works.
As such, the government of Bangladesh would have to spend Tk 1,910.43 crore, for which resources are not available in the sanctioned budget.
"We urged to increase the loan availability period by at least 12 months until June 2025 to complete all bill disbursements smoothly," said Afzal Hossain, project director of the Padma Bridge Rail Link, citing that they will complete implementation in due time.
According to him, they have overcome the land acquisition hassle, which was a lengthy process.
"This was done by virtue of cooperation from the concerned deputy commissioners to expedite the acquisition process," he added.
Hossain said that till June, overall physical progress was 80 per cent while financial achievement was 75 per cent.
According to ERD officials, they have already discussed with the embassy of China to extend the duration of the loan availability.
The Exim Bank of China was asked to wait until December this year to observe the progress of implementation, Hossain said, adding that if the progress is not as per their expectation, then the loan duration may be considered for further extension.
The Executive Committee of the National Economic Council approved the project at a cost of Tk 34,988.86 crore on May 3, 2016.
Of the total cost, the government is spending Tk 10,239.81 crore while the remaining Tk 24,749.04 crore is being financed by the Exim Bank of China.