Burdened with loan repayments for the construction of the Bangabandhu bridge, the Bangladesh Bridges Authority wants government grants, not loans, to build a two-lane tunnel beneath the Karnaphuli River.
A Finance Division official confirmed that the Bridges Authority had sought opinions on its proposal to use grant money and not credit for the tunnel. The Finance Division had proposed giving Tk1,460.62cr in loans for the project.
Bridges Division Deputy Secretary Zakir Hossain sent a letter in this regard to Finance Secretary Mahbub Ahmed, saying it would not be able to bear the added burden of a Tk1,460.62cr loan, sources said.
The autonomous Bridges Authority makes annual payments of Tk240cr on loans for the construction of the Bangabandhu bridge which will continue until 2034, the letter revealed.
It proposes beginning the Tk5,600.40cr Karnaphuli tunnel project by the end of the year.
On July 13, the Cabinet Committee on Economic Affairs approved the draft commercial contract to build a two-lane tunnel underneath the Karnaphuli River in a meeting chaired by Industries Minister Amir Hossain Amu.
Under the contract, China Communication Construction Company (CCCC) will get $706 million for its services, 20% of which will have to be paid before the company begins work on the project.
The amount will have to be paid according to the project schedule and 85% of the amount must be paid in foreign currency.
The government will finance the builder by borrowing the entire amount from China Exim Bank under a state-to-state arrangement.
The cost of borrowing will be lower than commercial rates.
The total project outlay will cross $1bn – lower than the cost incurred to build tunnels in Canada, Japan and China, according to the Bridges Division.
If calculated based on the amount to be paid to the Chinese builder, it will cost $103.67m to build each kilometre of the tunnel.
However, a Bridges Division official said if the total cost of the project were taken into consideration, the cost per kilometre would be $144.63m.
Canada’s Ottawa Tunnel cost $143.50m per kilometre, Japan’s Tokyo Bay Aqua-Line $361m and China’s Yantai-Dalian Tunnel $146m.
