The government will incur a loss of around Tk100 crore because of fluctuation in currency transaction rate in a telecommunication project funded through a soft loan of JPY8.04 billion by Japan International Cooperation Agency (Jica).
The Bangladesh government took the loan – worth Tk500 crore at the time of the contract – in Japanese yen (JPY) and the deal says the repayment and all work orders, except a small portion, have to be made in the same currency. As per the deal some work of the project can be run through the local currency.
However, the Bangladesh Telecommunication Company Limited (BTCL) has already issued a large portion of the work order under the Telecommunication Network Development Project in US dollar, submitting false information to the government and Jica, which, the BTCL authorities admit, will cause the loss.
Two members of the BTCL Board of Directors placed notes of dissent against the work order as it would violate the deal conditions, but the BTCL allegedly ignored that.
A detective wing of the government recently investigated the matter and found three BTCL officials and an official of the Japanese consultancy firm guilty.
When contacted, however, Project Director Ashok Kumar Mondal, who is one of the accused, claimed that it was the “only” mistake on their part and that some insiders and bidders were trying to make an issue of the mistake.
He expressed concern that this would ultimately damage the Bangladesh-Japan relationship.
Jica signed the deal to give Bangladesh JPY8.04 billion as a soft loan in 2006 at an interest rate of 0.01% with 10 years of grace period for the development of Bangladesh’s telecommunication infrastructure and installing fibre optic network across the country.
It fixed 30 years’ period for the repayment of the loan.
The contract was signed on June 29, 2006 on condition that the Bangladesh government would be eligible for the loan when Bangladesh Telegraph and Telephone Board (BTTB) would be turned into a company.
The BTTB was made a company – the BTCL – in 2008.
One part of the project involved upgrading the switching technology in the capital and Chittagong at a cost of JPY3.18 billion.
Five companies attended pre-qualification bidding and the BTCL chose only two, violating the condition of selecting at least three companies.
According to documents obtained by the Dhaka Tribune, the BTCL in June last year awarded the work order to Marubeni-KT, a joint venture of Japan and South Korea, for Tk253.29 million – for work in the country – and for $44.99 million – for work abroad.
The NEC Corporation of Japan had submitted tender and bid only JPY3.44 billion for the work abroad and Tk450 million for the local construction work.
According to the exchange rate at that time, $1 was JPY80, but now it is JPY105.
The project officials converted Marubeni-KT’s offer in dollar into yen and declared it the lowest despite the fact that Marubeni-KT was not even eligible for bidding as its offer was in dollars.
As the BTCL decided to pay in dollars, it now needs around Tk100 crore extra for the fluctuation in currency exchange rate.
Jalal Ahmed, additional secretary of the Finance Division and Brig Gen SM Farhad, both members of the BTCL Board of Directors, noticed the matter and forecast that the yen-dollar rate might fall again and Bangladesh might ultimately incur losses.
Brig Gen Farhad placed a written note of dissent at a board meeting on February 10, 2013, saying: “I disagree to approve the purchase proposal and issuance of Notification of Award before proper scrutiny of the total procurement process including evaluation by the BOD (board of directors).
“...a bid quoted in USD which was considered and evaluated is beyond tender specified terms. This brings loss of about Tk50 crores to the government and cannot be accepted.”
Jalal Ahmed also supported this view at the meeting.
Sources alleged that some BTCL officials had misinformed the ministry about the guidelines for procurement by leaving out a portion that forbade the use of any other currency except for yen and taka.
Initially, the BTCL and Japanese consultant Y Kawabata refused Marubeni-KT’s offer, but the Japanese firm later accepted the bidding a few days later and the BTCL approved it.
Y Kawabata is the representative of Japan Telecommunications Engineering Consulting Service, which was appointed as the consultancy firm for the project in 2010.
When contacted on Thursday, BTCL Managing Director Md Shah Newaz refused to make any comment on the matter.
Project Director Ashok Kumar Mondal said: “Different views can be placed in the board meeting, but in the end the board passed it.”
He, however, acknowledged that it was a mistake.
“It was a simple and honest mistake, there was nothing wrong about it; and the government gave us the go-ahead,” Ashok told the Dhaka Tribune at his office on Thursday.
Interestingly, the BTCL prepared the Bill of Quantity – a document on products required for sealing a deal under a project – after eight months of signing of the contract.
Under the second part of the project, the BTCL has not yet issued any work order for installing the fibre cable network in Dhaka and Chittagong cities.
The project ends in June 2015.
Project Director Ashok said: “It will be tough to complete the work by the stipulated deadline of June 2015. I have no idea what will happen if we cannot complete the work by this time.”
In the meantime, the BTCL faced a legal battle with one of the rejected bidders as in this case also the BTCL selected two firms for the pre-qualification round. The BTCL ultimately lost the fight.
In its verdict, the High Court observed that the BTCL had not come with clean hand. Later, as the state-owned company went to the Appellate Division, it upheld the High Court verdict.
When the Dhaka Tribune contracted Y Kawabata, he refused to comment and suggested talking to the BTCL.
Explaining his role in an email conversation with this reporter, Kawabata said: “I’m not a decision maker, so that we need consensus with BTCL authorities as well as JICA’s concurrence [to make any decision].”
Meanwhile, KT’s local agent has sued KT Corporation in a Dhaka court for not clearing its dues.
