• Thursday, May 28, 2020
  • Last Update : 09:43 pm

China to give $700m for six development projects

  • Published at 11:32 am July 25th, 2017
China to give $700m for six development projects
China has assured the government of providing a fund of $700 million for six development projects, including the country's Power, ICT and Infrastructure sectors, officials have said. They said it is a part of Chinese President Xi Jinping's promise to offer Bangladesh $24 billion for 27 development projects during his visit two years ago. China wants to boost bilateral economic ties with Bangladesh. Sources in Economic Relations Division (ERD) said the Chinese authority in a recent letter to the division said they would disburse the fund by December this year. Each of the total 27 projects will have separate agreements that will bring in separate funds. Bangladesh has already sent a list of priority projects to China in January this year. After finishing scrutiny of the six development projects, China will start disbursing fund. Of the six projects, two Power plants will get $3 billion, Padma Bridge rail link $3.10 billion, Info Four network $1.56 billion, BTCL $1.60 billion and Single Point Mooring Terminal $5.00 billion. ERD Secretary Kazi Shafiqul Azam told the Dhaka Tribune China has assured funding primarily for six development projects and a deal will be signed shortly. Another source in ERD said funding for the development of Dhaka-Sylhet four-lane highway is almost at the final stage. All district and upazila level government offices will be brought under broadband network through the Info Four project, it said, adding that modernisation of optical network project will be done to improve telecommunication network across the country. The single point mooring project has been taken up to supply fuel oil from Maheshkhali to Karnaphuli. According to the ERD source, some loan will carry a 2% interest rate while some 3%. The loan will be paid within 15 years with a five-year grace period. It said 70% of $2 billion loan for Power plants will be paid with 3% interest rate while the remaining 30% will have 2% interest rate. Generally, Chinese debt is more expensive than donor agencies while loan payment conditions are also a bit difficult. Apart from this, the Bangladesh authority can raise no question about the quality of work due to lack of competitive bidders. Economists discourage China financing to implement development projects for these reasons. Former finance adviser to caretaker government Mirza Azizul Islam said: "Chinese debt is expensive and the pressure on the government to pay interest will increase." According to him, all necessary purchases required to implement the projects have to be done from China while contractors will also be nominated by the Chinese authority. The World Bank and the ADB currently provide loans for Bangladesh at 1% interest rate with a 25 to 30 years of payment period. However, to implement the project with the loan of these two lenders, their policies are compulsory to follow. Therefore, irregularities in such foreign-assisted projects are very low because of strict rules. Japan debt is the cheapest among those drawn from development partners of Bangladesh. Japan lends only at 0.25% interest. According to ERD source, the six projects will be implemented in line with previous regulations set by the Chinese government that agreed to implement the projects through a limited tender. It said according to the Chinese bidding policy for Bangladesh, it will allow only a limited number of bidders only from China, and offer them the project work. No such project has been implemented under limited tender before.
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