$7b more Korean soft loan for metro, highways expected
Total 11 projects have been selected for the implementation of the expected EDPF financing after several rounds of discussions with the South Korean authorities
$7b more Korean soft loan for metro, highways expected
ECONOMY
Saifuddin Saif
06 January, 2023, 11:00 pmLast modified: 07 January, 2023, 01:57 pm
Total 11 projects have been selected for the implementation of the expected EDPF financing after several rounds of discussions with the South Korean authorities
After receiving assurance for $3 billion in development loans in five years, between 2022 and 2026, from the Economic Development Cooperation Fund (EDCF) of the Export-Import Bank of Korea, Bangladesh now expects another $7 billion from the development cooperation agency's new window – Economic Development Promotion Facility (EDPF) – in the 2023-2027 period.
The government wishes to get $1 billion to $1.5 billion from the EDPF – a fund designed to support large infrastructure projects in developing countries – every year as this loan is much cheaper compared to that from any other development aid agency, officials of the Economic Relations Division (ERD) have said.
Eleven projects under Korean EDPF
Total 11 projects have been selected for the implementation of the expected EDPF financing after several rounds of discussions with the South Korean authorities, they told The Business Standard, adding that the projects include the Dhaka-Chattogram Expressway, southern route of MRT Line -5 and MRT Line-4 in Dhaka, and Dhaka Ring Road.
Among the other projects are the Eastern Refinery Limited Unit-2, the Construction of Workshops, Fueling facilities, and a Depot for Broad Gauge Rolling Stock at Daripara, the Construction of Rail-cum-Road Bridge across the River Karnaphuli, Uttara sanitation improvement, up-gradation of the Barishal-Patuakhali-Kuakata road to a 4-lane highway with service lanes on both sides, and the 5th Health, Population, and Nutrition Sector Programme.
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EDPF loans are comparatively costlier than EDCF loans and yet are cheaper than those of all other development partners except for Japan. But, Japan disburses its loans in its own currency while Korean loans are disbursed in the US dollar.
The interest rate on EDPF loans is 1%, while the maturity period is 30 years including a seven-year grace period.
On the other hand, interest rates on EDCF loans range between 0.01% and 0.05%, with a 40-year repayment period and a 15-year grace period.
Only Korean contractors are allowed to bid for and participate in the projects implemented with EDCF loans. However, the opportunity to participate in tenders for projects under EDPF loans will remain open.
MRT-5 to be funded jointly by ADB and Korea
According to ERD sources, the Asian Development Bank (ADB) will jointly finance the MRT-5 project with Korea. Apart from this, co-financing will also be discussed for some other big projects, they said.
The construction of the Karnaphuli rail–cum road bridge, and the Uttara sanitation improvement project will use both EDCF and EDPF loans, they continued.
The sources further said that the ERD was making efforts to get the framework agreement on Korea's EDPF loans by this year.
A senior official of the ERD told TBS that preliminary development project proposals (PDPP) for some of the 11 projects selected to be implemented with the EDPF loans have not been completed yet. But the Korean government has expressed interest in financing the projects, he claimed.
ERD officials said Korea has already agreed to jointly finance the MRT Line-5 project with the ADB.
Under the project, a 12.8-km subway from Gabtoli to Aftabnagar West and a 4-km flyover from Aftabnagar Centre to Dasherkandi will be constructed. The feasibility study of the project was completed last November. Now various types of survey and engineering design work are going on. Eighty percent of the engineering design work has been completed, based on which the project proposal is being prepared.
The Korean Eximbank is interested in providing loans for the construction of the metro rail route from Dhaka's Kamalapur to Madanpur in Narayanganj. The loan offer will now require approval from the government of South Korea, according to officials of the ERD and the Road Transport and Highways Division.
MRT Line-4 proposal to be made for the Korean govt
Bangladesh will soon send a formal proposal to the Korean government to finalize the loan for the around the 16-km route, officially known as the MRT Line-4, they added.
Sources at the Dhaka Mass Transit Company Limited (DMTCL) – the state-owned implementing and owing company of the metro rail project – said the MRT Line-4 will run via Kanchpur and its Kamalapur-Jatrabari portion is likely to be underground.
In addition, a bridge has to be built over the River Meghna in Kanchpur, while the Kanchpur-Madanpur portion of the route will be elevated.
According to the people concerned, the installation of the second unit of the Eastern Refinery Limited could not be implemented yet despite the initiative being taken about 12 years ago. The government expects that Korea will bear a significant portion of the project cost – estimated at Tk19,769 crore.
Other projects including the Dhaka-Chattogram Expressway are said to be still in the initial stage.
$3b EDCF loan likely to be signed this month
ERD officials said the framework agreement with Korea for the $3 billion EDCF loan could be signed in January this year. However, the projects will be implemented after the separate loan agreements are made based on the projects.
Among the projects that will be implemented with the financing of EDCF funds, are the Procurement of CNG Single Decker AC Buses for the BRTC, the Establishment of a Modern International Training Institute for Dhaka Wasa, the Construction of a Railway-cum-Road Bridge across the River Karnaphuli at Kalurghat, and the Establishment of a Multi-disciplinary and Super Specialised Hospital at BSMMU (2nd Phase).
$200m 750-bed super special hospital second phase at BSMMU
With the construction of the first super specialized hospital under the auspices of Bangabandhu Sheikh Mujib Medical University almost to an end, the proposed 750-bed second medical facility along with the BSMMU and Birdem General Hospital will turn Shahbagh into a "hospital hub" in the next five years, say officials at the Economic Relations Division.
Funded by South Korea, the $200 million project will facilitate general surgery, gynecology, surgical oncology, and ENT and eye treatment. The hospital will also have a 50-60 bed dialysis center with 10 beds dedicated for children, said the officials.
Zulfiqar Rahman Khan, project director of the slated super specialized hospital, hopes the management of this medical facility "will rival" that of Square Hospitals or Evercare Hospital Dhaka [previously Apollo Hospitals] – two expensive private medical facilities in Bangladesh.
"Patients go abroad mostly for the hospital environment and medical services there. But we too have specialized doctors and can provide patients with better healthcare. If the medical skills and management could be put together in a hospital at home, the tendency of going abroad for treatment would certainly go down," he told TBS.
