Dhaka-Ashulia Elevated Expressway: Bangladesh pays first foreign bill in taka

[Bilal9]

Bangladesh has made the first payment for a mostly foreign loan-funded project in the taka, ushering in another mode of better preserving foreign currency reserves.

The project is on constructing a 24-kilometre elevated expressway connecting Dhaka to Ashulia at a cost of Tk 17,653 crore, or around $1.2 billion.

China is providing 85 per cent of the cost as a loan at 2 per cent interest, payable in 20 years, including a grace period of five years. The remaining 15 per cent is being borne by the Bangladesh government.

The Export-Import Bank of China is paying the loan part in US dollars to the Chinese contractor, China National Machinery Import & Export Corporation, which is implementing the project. The Bangladesh government will reimburse the bank.

As for the 15 per cent of the Bangladesh government, Shahabuddin Khan, the project director, said, "We convinced them (the contractor) to accept the bill in the taka as they will have some spending to do in Bangladesh."

"They accepted our proposal taking into consideration the present context," he told The Daily Star last week.

According to him, over 250 Chinese citizens, including engineers and staff, and 1,000 Bangladeshis are now working on the project.

To address a demand-supply gap in the foreign exchange market, the Bangladesh Bank has sold foreign currencies and allowed the depreciation of the taka.

Owing to higher import bills compared to combined receipts from export and remittance, the foreign exchange reserves plunged to $29.92 billion on May 31 from $42.20 billion on the same day last year, data from the central bank showed.

Prime Minister Sheikh Hasina inaugurated the construction in November last year and the first payment of Tk 1,339 crore, or $130 million, was made in October. Of the sum, the Bangladesh government's portion amounted to Tk 34 crore.

The next payment of Tk 600 crore, or $58.25 million, will be made in June and of it, the Bangladesh government will pay Tk 90 crore.

"This will continue until the situation pertaining to the foreign currency reserves improves," said Khan.

Once completed, the expressway will connect Hazrat Shahjalal International Airport with Abdullahpur, Ashulia, Baipail and Dhaka Export Processing Zone on the Nabinagar-Chandra highway and ensure quick entry and exit from and to the capital.

It will connect up to Kutubkhali under Jatrabari Police Station in Dhaka.

Over four crore people from 30 districts, including the northern districts, will benefit from the expressway as it will make the movement of people and goods easier and quicker.
Read more

Dhaka-Ashulia elevated expressway: Time, cost gallop even before work starts​

The expressway project document forecasts a 0.217 per cent boost to the country's gross domestic product.

More than 5 per cent of the project has been implemented and it would reach 8 per cent by the end of June.

"We have a target to complete 30 per cent of the overall project by next fiscal year," Khan said.

If it happens, it would be the first bill payment in the local currency for a mostly foreign loan-funded project, confirmed Md Masudul Haque, joint secretary to the Foreign Aid Budget and Accounts wing of the Economic Relations Division.

Read more

"If the same could be done for all such projects, it will turn out positive for the country and help save some foreign currencies."

This has been made possible through fruitful negotiations with the contractor, believes Prof Selim Raihan, executive director of the South Asian Network on Economic Modeling.

"It is a positive initiative and it will help reduce pressure on the forex reserve."

"This initiative will also help money circulation and the local suppliers will benefit entirely. If this arrangement can be introduced to the projects funded by foreign loans, it will bring a positive impact on the economy in the long run."

 

[Bilal9]

Dhaka-Ashulia elevated expressway: Time, cost gallop even before work starts​

Work for the Dhaka-Ashulia Elevated Expressway project is yet to formally start but the deadline for the mega project is to expire in just over a month.

The government had approved the project in October 2017 and the deadline for completion of the 24km expressway was set for the end of June, 2022.

The project authorities have sought four more years and an additional Tk 651.72 crore, according to project documents.

If the revision proposal, which is expected to be placed at the next Ecnec meeting on Tuesday, is approved, the project deadline will be extended to June 2026 and the total cost would be Tk 17,553.04 crore.

The authorities said the major reason for the delay in project implementation was the long time Chinese authorities took to approve the $1.1 billion loan.

The Chinese contractor is expected to start construction work formally from next month and as per contract it will get five years and two months for completion of the work, Project Director Shahabuddin Khan told The Daily Star yesterday.

In that case, the deadline for the project may be further extended as the contract period will exceed the project deadline.

"Yes, we may have to extend the deadline further but we will try to complete the work within four years," Shahabuddin said.

Once built, the expressway will connect Hazrat Shahjalal International Airport with Abdullahpur, Ashulia, Baipail and Dhaka Export Processing Zone (DEPZ) on the Nabinagar-Chandra highway.

Vehicles will have to pay toll, said project officials.

It will allow people from 30 districts to enter and exit the capital quickly and easily. It is also expected to boost the country's gross domestic product by 0.21 percent, show project documents.

Another expressway -- the Dhaka Elevated Expressway -- is being constructed to link the airport to the Dhaka-Chattogram highway at Kutubkhali point. The revised schedule for opening the 20km expressway is June 2023.

Once both elevated expressways are operational, people from the country's northern, western and south-western regions will be able to avoid the capital's perennial traffic jam as they will go from one side of the city to another without having to enter city streets.

Trucks and lorries, which are now barred from entering the city during the day to curb traffic jams, will also use the expressways.

Under the project, 10.83km of ramps, two 1.95km long flyovers, 14.28km of four-lane roads and 18km of drains on both sides of the expressway will be built, said project officials.

WHY THE REVISION?​

In October 2017, the ECNEC gave the go-ahead to the project at the cost of Tk 16,901.32 crore.

This project was one of 27 for which China assured of providing a loan of $20 billion as per a memorandum of understanding signed during Chinese President Xi Jinping's visit to Dhaka in October 2016.

In August 2017, Bangladesh Bridge Authority (BBA) signed a contract with China National Machinery Import and Export Corporation to implement the project.
But the project work could not begin as the loan application sent to the Chinese authorities in October 2018 remained pending.

The loan agreement was finally signed in October last year and the loan was activated early this month, Shahabuddin Khan said.

However, the contractor firm -- which already hired three Chinese sub-contractors -- will formally start work once the disbursement of the loan starts, the PD said.

"We hope the loan disbursement will start from next month and thus the 62-month contract period will start from then," he added.

He, however, said the contractor has already done preparatory works and 90 percent of the land required for the project has already been acquired.

Although the Chinese government was supposed to give loans for all commercial contracts and three other components, they will provide loans for 85 percent of commercial contracts and would not provide loan for the three components, reads the project document.

So, China is providing Tk 9692.08 crore as loan instead of Tk 10,949.91 crore. The government therefore has to spend around Tk 1,909.54 crore more from its own fund, warranting revision of the project.

Besides, the rise in the US dollar exchange rate to Bangladeshi taka is mentioned as another reason behind the project's revision. Changes in price contingency and increase in salary and other expenditure for the project staffers and related issues are the other reasons.

 

[Tom-tom]

Bangladesh has made the first payment for a mostly foreign loan-funded project in the taka, ushering in another mode of better preserving foreign currency reserves.

The project is on constructing a 24-kilometre elevated expressway connecting Dhaka to Ashulia at a cost of Tk 17,653 crore, or around $1.2 billion.

China is providing 85 per cent of the cost as a loan at 2 per cent interest, payable in 20 years, including a grace period of five years. The remaining 15 per cent is being borne by the Bangladesh government.

The Export-Import Bank of China is paying the loan part in US dollars to the Chinese contractor, China National Machinery Import & Export Corporation, which is implementing the project. The Bangladesh government will reimburse the bank.

As for the 15 per cent of the Bangladesh government, Shahabuddin Khan, the project director, said, "We convinced them (the contractor) to accept the bill in the taka as they will have some spending to do in Bangladesh."

"They accepted our proposal taking into consideration the present context," he told The Daily Star last week.

According to him, over 250 Chinese citizens, including engineers and staff, and 1,000 Bangladeshis are now working on the project.

To address a demand-supply gap in the foreign exchange market, the Bangladesh Bank has sold foreign currencies and allowed the depreciation of the taka.

Owing to higher import bills compared to combined receipts from export and remittance, the foreign exchange reserves plunged to $29.92 billion on May 31 from $42.20 billion on the same day last year, data from the central bank showed.

Prime Minister Sheikh Hasina inaugurated the construction in November last year and the first payment of Tk 1,339 crore, or $130 million, was made in October. Of the sum, the Bangladesh government's portion amounted to Tk 34 crore.

The next payment of Tk 600 crore, or $58.25 million, will be made in June and of it, the Bangladesh government will pay Tk 90 crore.

"This will continue until the situation pertaining to the foreign currency reserves improves," said Khan.

Once completed, the expressway will connect Hazrat Shahjalal International Airport with Abdullahpur, Ashulia, Baipail and Dhaka Export Processing Zone on the Nabinagar-Chandra highway and ensure quick entry and exit from and to the capital.

It will connect up to Kutubkhali under Jatrabari Police Station in Dhaka.

Over four crore people from 30 districts, including the northern districts, will benefit from the expressway as it will make the movement of people and goods easier and quicker.
Read more

Dhaka-Ashulia elevated expressway: Time, cost gallop even before work starts​

The expressway project document forecasts a 0.217 per cent boost to the country's gross domestic product.

More than 5 per cent of the project has been implemented and it would reach 8 per cent by the end of June.

"We have a target to complete 30 per cent of the overall project by next fiscal year," Khan said.

If it happens, it would be the first bill payment in the local currency for a mostly foreign loan-funded project, confirmed Md Masudul Haque, joint secretary to the Foreign Aid Budget and Accounts wing of the Economic Relations Division.

Read more

"If the same could be done for all such projects, it will turn out positive for the country and help save some foreign currencies."

This has been made possible through fruitful negotiations with the contractor, believes Prof Selim Raihan, executive director of the South Asian Network on Economic Modeling.

"It is a positive initiative and it will help reduce pressure on the forex reserve."

"This initiative will also help money circulation and the local suppliers will benefit entirely. If this arrangement can be introduced to the projects funded by foreign loans, it will bring a positive impact on the economy in the long run."

Fantastic common sense yet out the box thinking.

 

[SoulSpokesman]

Creative effort by SHW and GoBD.

Regards

 

[Bilal9]

Dhaka Ashulia Elevated Expressway Project Updates​