Chinese loan deals for four projects hopefully this year

With development projects losing steam for the ongoing pandemic and several months of shutdown, the Economic Relations Division (ERD) hopes to get four back on track by getting loan agreements signed with China this fiscal year.

Sources at the ERD said talks were underway for availing $2.4 billion in loan for the four, including one on constructing an elevated expressway connecting Dhaka and Ashulia.

A point to note, the final decision is still out there as negotiations on the details are yet to begin.

The four are among 27 projects for which China assured providing a loan of $20 billion as per a memorandum of understanding styled “Strengthening and Production Capacity Cooperation” signed during Chinese President Xi Jinping’s visit to Dhaka in October 2016.

Till date, the deal has been sealed for seven of them involving a loan of $6.65 billion, of which $1.54 billion has been disbursed.

The latest two had been signed by the ERD last fiscal year, one bringing $1,402.93 million for an “Expansion and Strengthening of Power System Network” project under Dhaka Power Distribution Company.

The other brought over $970.02 million for a “Power Grid Network Strengthening Project” under the Power Grid Company of Bangladesh.

The agreement for the Dhaka-Ashulia expressway project was supposed to be signed in the second half of last fiscal year but because of the onset of the pandemic in China, it did not materialise, ERD officials said.

About the four in the pipeline, Md Shahriar Kader Siddiky, joint secretary to the Asia Wing of the ERD, said the loan proposal for the expressway, which would turn out to be very effective, has attained preliminary approval from the Chinese authorities.

Once this approval was available in writing, official formalities would begin, including vetting and final negotiations, he said, reminding that it took time for such official formalities to be carried out by both sides in finalising loan agreements.

Speaking of which, this loan application was sent to the Chinese authorities on October 25, 2018.

The Tk 16,901 crore expressway project first got approval from the Executive Committee of the National Economic Council (Ecnec) in 2017, with 65 per cent of the cost expected to be borne from a Chinese loan.

The project documents say the work was supposed to have begun in 2019 and finish in June 2022.

In tune, a contract was signed on the construction’s design review and supervision in June 2019 between Bangladesh Bridge Authority and a joint venture of three companies from Spain, South Korea and Bangladesh.

Once completed, the 24-kilometre expressway will connect Hazrat Shahjalal International Airport to Abdullahpur, Ashulia, Dhaka Export Processing Zone and Chandra on a highway which connects the northern part of the country.

It will also act as an extension of a 26-kilometre Dhaka elevated expressway linking the airport to the Dhaka-Chittagong highway near Shanir Akhra.

Of the remaining three projects, the “Establishing Digital Connectivity” one, approved by the cabinet committee on economic affairs, has had a preliminary loan application sent to the Chinese embassy on December 27, 2018 seeking a $837 million loan.

The project involves, among other things, bringing two lakh small institutions, including educational institutions, health centres, post offices and agriculture offices, under digital connectivity to boost trade and economic activity in remote areas.

It also plans to set up 10,000 “points of presence” at business growth centres across the country to expand digital financial services and e-commerce.

The embassy’s update on it was that the loan has got preliminary approval and it has received the name of a Chinese contractor whom China wants to get the project contract.

On another application seeking a $276.25 million loan for the construction of a “Rajshahi WASA Surface Water Treatment Plant” approved by the Ecnec, the embassy said the Chinese authorities were “evaluating” it.

The last Ecnec and cabinet committee on government purchase-approved project seeking a $125.12 million loan for establishing six full-fledged stations for Bangladesh Television has got initial approval from China.

Now the embassy was waiting to be informed by its government of the Chinese contractor nominated to get the contract.