$2.6b loan deal for Padma rail link likely Apr 28 | 2018-04-23 | daily-sun.com

$2.6b loan deal for Padma rail link likely Apr 28

Hasibul Aman     22nd April, 2018 10:51:07 printer

Ending all uncertainties, loan contract for the much-hyped Padma rail link project is likely to be signed with China on April 28.

Railways Minister Mujibul Haque at a city function on Sunday said the two governments have completed all formalities and the loan agreement will be inked with China Exim Bank in Beijing.

“Work will start after the loan deal,” he said.

Officials of China Exim Bank, the financing agency, verbally informed Economic Relations Division (ERD) of the primary loan signing date last week following a prolonged loan negotiation, ERD officials said.

Earlier on Thursday, Economic and Commerce Counselor of the Chinese Embassy in Dhaka Li Guangjun at a press conference said a loan deal of $2.60 billion for the rail link project will be signed next week.

He also said the interest rate of the loan would be two percent and its repayment period would for 20 years, including five to seven years grace period.

Prime Minister Sheikh Hasina already gave nod to a summary of the loan signing last week, paving the way for the loan contract, official sources said.

“We’ve already got the loan signing permission from the prime minister. Accordingly, we sent a letter to China Exim Bank asking it to inform the ERD of date and place of the signing. In reply, they apprised us of the primary date,” said an ERD official.

He also hinted that the loan contract might be signed in Beijing in compliance with the interest of China Exim Bank.

Ecnec approved the 169km rail link project from Dhaka to Jessore on May 3 in 2016 at an estimated cost of Tk 34,988 crore, including Tk 24,749 crore expected loan from the Chinese government.

While approving the mega scheme, the government sought to establish a direct road link between the capital and southern and southwestern districts through the under-construction Padma bridge from the very first day of the bridge’s opening.  

A financing MoU was also signed with China during Chinese President Xi Jinping’s visit to Dhaka in October 2016.

But the loan contract faced a long delay because of various reasons, including interest-related complexities which were finally resolved after Principal Coordinator for SDGs affairs at PMO Abul Kalam Azad stepped in.

Earlier, the ERD hoped that the loan deal would be signed in November-December last year, but it did not happen as the Chinese authorities informed the ERD that the loan requires approvals of State Council as well as the Chinese President.

Before that even the ERD officials were not aware that the loan signing would require such approvals at that stage of the negotiation.

Finally, the loan approvals from the state council and the president came in February, clearing all the hurdles standing in the way of the loan deal, ERD officials said. 

They also said according to loan negotiations, the loan will come from China as preferential buyer’s credit (PBC) which means 85 percent of the project cost will come from China while GoB has to bear 15 percent.

In addition to 2 percent interest rate, Bangladesh has to bear 0.25 percent management fees and 0.25 percent commitment fees. Within 30 days of loan activation, the government has to pay $66,69,843.75 to Exim Bank as management fees, ERD officials said.

A new broad gauge line would be set up from Dhaka to Jessore in four sections. The government plans to start the rail services with the opening of the bridge after completing works from Mawa to Bhanga.

The new route will connect Dhaka with Jessore via Gendaria-Mawa-Bhanga-Narail. The government aims to complete the project within 2022.

Project sources said the principal work includes construction of 169km broad gauge main line, 43.33km loop and sideline, 23.37km viaduct and 1.98km ramps.

Other work includes construction of 66 large bridges, 244 minor bridges and culverts, a highway overpass, 29 level crossings, 40 underpasses, 14 new station building, development of six existing stations, and arranging computer-based railway interlock system signalling at 20 stations.

Apart from these, the railway will also collect 100 broad gauge passenger cars and acquire 1,700 acres of land.