Former caretaker government advisor Akbar Ali Khan on Sunday asked the government to put priority on economic considerations instead of emotions to build the Padma bridge.
“It won’t be right for the government to take steps emotionally leaving economic aspects aside in this time of globalisation,” he said at a seminar organised by Economic Reporters’ Forum (ERF) and BRAC Executive MBA on financing big projects.
The World Bank cancelled its pledged $1.2 billion credit for the $2.9 billion Padma bridge project on Jun 29 saying it had ‘credible evidence’ of corruption that took place in the project.
Eventually, the government announced that the biggest infrastructural project of the country to date will be built with its own funds and local aid.
But Akbar Ali Khan, a former secretary, said building the bridge with own funds will not be easy. “Even if Bangladesh wants to build it with own fund, it won’t find any better contractor.”
“It is known that large contractors usually don’t want to work in any project in developing countries that do not have World Bank funding,” he added.
Former Advisor to the caretaker government Dr. Akbar Ali Khan today (Sunday) said that any decision on Padma Bridge
project should not be made on the basis of emotion.
“Any decision on Padma Bridge should be made on the basis of reality, not on emotion. The government should move cautiously on the issue,” he told a seminar at Brac University jointly organised by Economic Reporters’ Forum (ERF) and the EMBA Forum of the university.
Dr. Khan, also former finance secretary and Bangladesh’s alternative director at the World Bank, said if the government goes for implementing the mega bridge project through its own funding, no internationally reputed contractor will come to work for the project.
“Even if we want, they will not come if World Bank is not involved with our projects. They will come if the World Bank is involved, because they want prompt decisions.”
He also said if a reputed contractor is not assigned for the work, it will take about 10 years to complete the bridge instead of 3 years.
The river will not remain in its current position either, he pointed out. He said the project cost will go up as a result of own-financing.
The seminar titled: “Financing Large Projects in Bangladesh” was also addressed by former commerce minister Amir Khasru Mahmud Chowdhury, Vice Chancellor of Brac University Dr. Ainun Nishat, former finance secretary Siddiqur Rahman, former power secretary Dr. Foqzul Karim Khan, former secretaries Karar Mahmud Hasan and Abdul Mobin.
Former caretaker government’s Advisor Dr. Mirza Azizul Islam presided over the function while former Citibank Bangladesh chief and Brac University teacher Mamun Rashid presented the keynote paper at the seminar.
Dr. Akbar Ali khan said when there is a move for large projects, normally small projects lose attention. So there should be priority in selecting the large project.
“I see huge enthusiasm for large projects and I fear that we are losing sight of the basics of the economy. Bangladesh is lagging behind when it comes to executing a number of large projects at a time,” he added.
He questioned the government’s capacity for financing the Padma Bridge project from domestic sources. “There is talk of doing this ourselves but we are paying 10 times the interest rate for funds from internal sources compared with financing from international sources.”
Referring to an IMF survey, Akbar Ali Khan said Bangladesh is more capable of taking loan from international sources than domestic sources. He said when we need confirmation by the foreign banks while taking loan from domestic bank, how can we think of the financing from domestic sources, he questioned.
He said it seems many foreign companies are coming for Padma Bridge project, but no reputed company will come if World Bank or Asian Development Bank is not involved with the project.
He said China despite having huge foreign currency reserves involves World Bank to implement large projects in order to get the confidence of the globally reputed contractors.
Amir Khasru Mahmud Chowdhury said the consequences of domestic financing will be as disastrous as what is happening in the case of rental and quick rental power plants.
He said the whole economy came under pressure of subsidy for implementing rental and quick rental with financing from local banks.
“Now, banks are facing liquidity crisis and inflation goes up. The same will happen in Padma Bridge case.”
Mirza Azizul Islam said the country needs corruption free regime to raise money from alternative funding.
Dr. Ainun Nishat said if the Padma bridge project is financed from own sourcing, the project’s cost will overrun.
Abdul Mobin said some say Padma bridge project will be financed from capital market. But capital market is highly dependent on banking sector. When banks withdrew investment, it just collapsed.
Siddiqur Rahman said Dhaka-Chittagong highway project is the best example of financing a project from own sourcing. This project has taken10 years, but its work is still not finished.