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China likely to pledge big to Bangladesh
By Rejaul Karim Byron
26 September 2016
The Daily Star (Bangladesh)
General,Business
DHAKA (The Daily Star/ANN) - The Chinese government has already shown initial interest to offer some $23 billion in soft loan for the implementation of 20 projects during the period between 2016 and 2020.
China may commit to a five-year comprehensive cooperation plan, including offering assistance in several billion-dollar projects, during Chinese president's visit in the middle of next month.
The Chinese government has already shown an initial interest to give around $23 billion in soft loan for 20 projects to be implemented between 2016 and 2020. A memorandum of understanding (MoU) is likely to be signed in this regard when Xi Jinping visits Bangladesh on October 13 or 14, finance ministry officials said.
The comprehensive plan may also include a commitment for increasing Chinese grant and long-term cooperation in disaster management.
All the related ministries will hold a meeting at the Economic Relations Division (ERD) on October 2 to discuss the latest situation of the 20 projects, which will later be finalised at an inter-ministerial meeting, said a finance ministry official.
Prior to that, on September 28 and 29, the ERD will sit with officials of the Chinese Exim Bank over signing of loan agreements for two of these projects. The two projects involve purchasing six ships from China with a loan of $184 million and setting up the Dasherkandi Water Treatment plant, with $280 million loan.
The loan agreement is likely to be signed during the Chinese president's visit, said an ERD official.
Bangladesh has already selected some Chinese companies to implement seven to eight of the 20 projects, said the finance ministry official, who chose not to be named.
The cabinet committee on economic affairs has given the go ahead to the line ministries for the implementation of the projects through those companies.
Bangladesh will try to sign the loan agreements within the next two years and start implementing the projects.
Since taking office in 2009, Prime Minister Sheikh Hasina visited China twice, the last time being in June 2014.
Bangladesh thereafter sent lists of dozens of projects to the Chinese government for soft loan. The Chinese side also made a verbal commitment for giving assistance to the tune of $10 billion, $20 billion and $30 billion. However, there was no official response.
During the Chinese president's visit, Bangladesh expects a large-scale commitment from him, the ministry's official said.
According to the primary indication from China about the projects it wants to fund, seven are in the power and energy sector, which would cost about $7.7 billion.
The projects include a 1,320-megawatt (MW) coal-based power plant at Kalapara sub-district at the Payra Seaport. An MoU was signed in this regard during Hasina's last visit to China, and the government is already acquiring land there to set up the plant.
Another project involves a 350MW coal-fired thermal power plant at Gazaria in Dhaka's Munshiganj, where China will provide $433 million. China may also give a soft loan to build an industrial park for setting up garment factories in Gazaria, where Chinese businesses will invest.
In the rail sector, China has shown interest in funding four projects costing around $6.21 billion, including the 172-kilometer Padma Rail link project.
The three other projects involve upgrading the rail lines from Joydevpur to Mymensingh, Joydevpur to Ishwardi and Akhaura to Sylhet.
In four projects under the roads and bridges division, Beijing may offer $6.65 billion. The projects include the Dhaka-Ashulia Elevated Expressway, Dhaka-Sylhet four-lane highway and Sitakunda-Cox's Bazar Marine Drive Expressway.
To attract Chinese investment, the Bangladesh government has already allocated two economic zones: Gazaria in Dhaka and Anwara in Chittagong.
China may offer soft loans to develop these zones as well, said another official of the finance ministry.
Over the years, China has invested trillions of dollars against treasury bonds in the US and countries in Europe. As interest rates on those bonds continue to fall, China is now eager to invest in developing countries, which will bring it profits through interest and also help it expand its businesses.
Bangladesh wants to take this opportunity but on easier borrowing terms, officials said.
At present, China charges 2 per cent interest on soft loans, with a repayment period of 15 years, plus five years of grace period. The loan also carries 0.2 per cent commitment fees and 0.2 per cent management fees.
In case of such loans, the Chinese government selects the contractor and stipulates that all materials for the projects be purchased from China.
Bangladesh will try to get the loan at 1 per cent interest and introduce a limited tender system, which is done in case of bidder selection under Indian soft loans.
Under the limited tender system, bidders from the respective country participate in the tendering process instead of being handpicked by the government.
With regard to the limited tendering process, China has already given its primary consent, sources said.
Since independence, China has provided Bangladesh $1,519 million in soft loans and grants. Of the sum, $916 million came in the last seven years from FY10 to FY16 alone.
It was $303 million in the preceding seven years from FY2002 to FY09.
By Rejaul Karim Byron
26 September 2016
The Daily Star (Bangladesh)
General,Business
DHAKA (The Daily Star/ANN) - The Chinese government has already shown initial interest to offer some $23 billion in soft loan for the implementation of 20 projects during the period between 2016 and 2020.
China may commit to a five-year comprehensive cooperation plan, including offering assistance in several billion-dollar projects, during Chinese president's visit in the middle of next month.
The Chinese government has already shown an initial interest to give around $23 billion in soft loan for 20 projects to be implemented between 2016 and 2020. A memorandum of understanding (MoU) is likely to be signed in this regard when Xi Jinping visits Bangladesh on October 13 or 14, finance ministry officials said.
The comprehensive plan may also include a commitment for increasing Chinese grant and long-term cooperation in disaster management.
All the related ministries will hold a meeting at the Economic Relations Division (ERD) on October 2 to discuss the latest situation of the 20 projects, which will later be finalised at an inter-ministerial meeting, said a finance ministry official.
Prior to that, on September 28 and 29, the ERD will sit with officials of the Chinese Exim Bank over signing of loan agreements for two of these projects. The two projects involve purchasing six ships from China with a loan of $184 million and setting up the Dasherkandi Water Treatment plant, with $280 million loan.
The loan agreement is likely to be signed during the Chinese president's visit, said an ERD official.
Bangladesh has already selected some Chinese companies to implement seven to eight of the 20 projects, said the finance ministry official, who chose not to be named.
The cabinet committee on economic affairs has given the go ahead to the line ministries for the implementation of the projects through those companies.
Bangladesh will try to sign the loan agreements within the next two years and start implementing the projects.
Since taking office in 2009, Prime Minister Sheikh Hasina visited China twice, the last time being in June 2014.
Bangladesh thereafter sent lists of dozens of projects to the Chinese government for soft loan. The Chinese side also made a verbal commitment for giving assistance to the tune of $10 billion, $20 billion and $30 billion. However, there was no official response.
During the Chinese president's visit, Bangladesh expects a large-scale commitment from him, the ministry's official said.
According to the primary indication from China about the projects it wants to fund, seven are in the power and energy sector, which would cost about $7.7 billion.
The projects include a 1,320-megawatt (MW) coal-based power plant at Kalapara sub-district at the Payra Seaport. An MoU was signed in this regard during Hasina's last visit to China, and the government is already acquiring land there to set up the plant.
Another project involves a 350MW coal-fired thermal power plant at Gazaria in Dhaka's Munshiganj, where China will provide $433 million. China may also give a soft loan to build an industrial park for setting up garment factories in Gazaria, where Chinese businesses will invest.
In the rail sector, China has shown interest in funding four projects costing around $6.21 billion, including the 172-kilometer Padma Rail link project.
The three other projects involve upgrading the rail lines from Joydevpur to Mymensingh, Joydevpur to Ishwardi and Akhaura to Sylhet.
In four projects under the roads and bridges division, Beijing may offer $6.65 billion. The projects include the Dhaka-Ashulia Elevated Expressway, Dhaka-Sylhet four-lane highway and Sitakunda-Cox's Bazar Marine Drive Expressway.
To attract Chinese investment, the Bangladesh government has already allocated two economic zones: Gazaria in Dhaka and Anwara in Chittagong.
China may offer soft loans to develop these zones as well, said another official of the finance ministry.
Over the years, China has invested trillions of dollars against treasury bonds in the US and countries in Europe. As interest rates on those bonds continue to fall, China is now eager to invest in developing countries, which will bring it profits through interest and also help it expand its businesses.
Bangladesh wants to take this opportunity but on easier borrowing terms, officials said.
At present, China charges 2 per cent interest on soft loans, with a repayment period of 15 years, plus five years of grace period. The loan also carries 0.2 per cent commitment fees and 0.2 per cent management fees.
In case of such loans, the Chinese government selects the contractor and stipulates that all materials for the projects be purchased from China.
Bangladesh will try to get the loan at 1 per cent interest and introduce a limited tender system, which is done in case of bidder selection under Indian soft loans.
Under the limited tender system, bidders from the respective country participate in the tendering process instead of being handpicked by the government.
With regard to the limited tendering process, China has already given its primary consent, sources said.
Since independence, China has provided Bangladesh $1,519 million in soft loans and grants. Of the sum, $916 million came in the last seven years from FY10 to FY16 alone.
It was $303 million in the preceding seven years from FY2002 to FY09.
