FE Report

The government has finally opted for starting the construction of the Padma Bridge project without participation of the World Bank as a major co-financier.

Economic Relations Division (ERD) of the Ministry of Finance (MoF) through a statement issued to the press on Friday said the government has decided to begin the construction of the bridge over the Padma immediately to fulfill one of its election pledges.

In a separate statement to the press on the day, the World Bank (WB) said, the government of Bangladesh (GoB) on Thursday informed the WB that "it is withdrawing its request of World Bank financing for the Padma Bridge".

Earlier on Wednesday last, the president of the World Bank Group Jim Yong Kim, in his address to a gathering at the Center for Strategic and International Studies (CSIS) in Washington, ruled out the possibility of the Bank's financing the Padma Bridger project until 'certain conditions' were met.

Those conditions related to the follow-up actions by the Anti-Corruption Commission (ACC), the anti-graft watchdog body in Bangladesh, on alleged corruption involving the bidding process for the selection of the consultant for supervision of the construction works of the Padma Bridge project.

The President of the World Bank Group told the audience in Washington that the Bank would need "to be assured of credible investigation into the alleged corruption by the Bangladesh authorities" prior to its re-engagement as a co-lender and lead financier of the Padma Bridge project.

Following this development, the government announced on Friday the withdrawal of its earlier request for the WB funds which were cancelled beforehand on grounds of alleged corruption for construction of the Bridge project.

Besides the WB, the government has also informed other development partners about its latest decision about withdrawal of its request to the WB for funding the project, it said.

The statement, issued by ERD on Friday and signed by its Additional Secretary Arastoo Khan, said the government has sought continuous support from other development partners for this project.

"A decision has been taken to invite all the development partners to Dhaka very soon to discuss with them the project implementation schedule and other steps," the ERD's statement said on Friday.

If needed, the government will construct only Road Bridge to reduce project cost, it added.

"It was realised that the proposed project implementation schedule prepared by the World Bank is not consistent with the government timing. According to the World Bank schedule, the project implementation has become uncertain," the statement said.

The government is making its position clear since last few days when it expected a decision from the World Bank by January 2013 and the government was determined to take an alternative decision by January 31.

According to the government estimation, the World Bank earlier decision to return to Padma Bridge Project was a positive decision for Bangladesh and was validitation of government's claim.

Since the very beginning of the bank's corruption allegation the government claimed that it took the matter seriously. But until June 2012, government had no adequate evidence for filing first information report (FIR), the statement said.

It also said, after providing some additional documents, the Anti-Corruption Commission (ACC) filed an FIR against some persons in respect of the Padma Bridge graft conspiracy. The ACC also had continued investigation against some other persons who were not included in the FIR.

"The government considered that those steps were correct and the Bank should have returned to the project on the basis of those steps," it said.

Meanwhile, the WB, in its statement issued to the press on Friday, said that the letter by the government of Bangladesh that the Bank received on Thursday "confirms the authorities' intent to continue the investigation of alleged corruption related to the project."

"The World Bank has taken note of the Government's decision of not seeking renewed World Bank financing for the Padma Bridge, and it encourages the Anti-corruption Commission to complete a full and fair investigation of the corruption allegation," the WB statement added.

A senior official of the MoF told the FE that Finance Minister AMA Muhith had sent the letter to the World Bank headquarters in late hours of Thursday requesting for withdrawal of the Bank's funding for the Padma Bridge project.

The statement issued by the government Friday confirmed the withdrawal of its earlier request to the World Bank for reconsidering the resumption of its US$ 1.20 billion credit support for the bridge project.

The latest government move came, following a seven-month-long stalemate with the WB over the financing of the Padma Bridge project.

The senior MoF official said the finance minister had also requested the three other co-financiers -- Asian Development Bank, Japan and the Islamic Development Bank -- to continue their funding support for the Padma Bridge project.

In a joint financing deal in October 2010, the ADB confirmed $615 million, the Japan International Cooperation Agency (JICA) nearly $400 million and the Islamic Development Bank (IDB) $140 million in loans apart from the WB's $1.20 billion credit.

With the government's latest request to the WB, the committed loans by the three other co-financers for the project are likely to stand scrapped automatically, the official said quoting conditions in the co-financing loan agreement.

The immediate past head of the WB Robert Zoellick scrapped the Bank's committed $1.20 billion loan for the bridge on June 29 last on the ground of alleged corruption in the bidding process.

Later, the Washington-based lender in September last year agreed to reconsider the loan on some conditions including, among others, a credible probe into alleged corruption in the bidding process.

The WB constituted a three-member independent, external panel of anti-corruption experts to deal with the matter. This panel has been overseeing the investigation by Bangladesh's ACC into the allegations.

Meanwhile, Anti-Corruption Commission (ACC) Chairman Ghulam Rahman termed the government's latest position absolutely a matter between the government and the WB, saying it would not affect the ACC's on-going investigation into the graft allegation.

"The commission will continue its legal action in line with the country's existing laws," he told the FE adding that it will remain engaged in its works for a fair, complete and neutral probe.

Those who will be found guilty of any corruption conspiracy relating to the project at the investigation level will be implicated in the charge sheet as the accused, Mr Rahman added.

He said: "There is no question of backtracking from our ongoing action against the alleged bribery plot in the face of the government's recent decision."

The government late last month stated it would not wait for the credit support of the WB after January 31.

Prime Minister Sheikh Hasina said that the government would go for alternative financing for the project in the event of any lack of positive decision by the WB by January this year.

Finance Minister AMA Muhith said last Tuesday that he had sought an appointment with the WB Group President to know about the latest position of the WB on the financing of the Padma Bridge project.

However, the Communication Minister later in the same week stated that the chapter on any possible WB re-engagement with the Padma Bridge project was closed.

Prime Minister Sheikh Hasina told the parliament on Wednesday that the construction work on the Padma Bridge would begin during the current tenure of the government.

bdnews24.com adds: Finance Minister M. A. Muhith told the online news agency that the government had informed the other lenders, too, about its decision not to seek the World Bank (WB) credit for the project.

"I had told the World Bank earlier, 'let me know your decision [by January]'. But I didn't get any response. So [we] wrote letters to the World Bank, ADB and JICA yesterday (Jan 31)."

"We have told the World Bank that we are withdrawing the request to review your decision. We do not need you any more to finance this project," Muhith told the on-line news agency Friday morning.

"At the same time, we have requested the ADB, IDB and JICA to stay with us. I am confident they will continue to support us for this project."

Asked what would be the fate of the project now, the minister said: "The Prime Minister has already said that we will implement the project with our own resource if necessary. We'll now quickly start working towards that end."

"It will be easier for us if ADB, IDB and JICA continue support to us as they have been all along," Mr. Muhith said.

"We will now move quickly. We had pledged in our election manifesto that we would bridge the mighty Padma. We will act accordingly."

Mr. Muhith also expressed hope that the government's decision to retract on its request for WB fund for construction of the Padma Bridge project would not have any negative impact on the Bank's funding for other projects in the country.

AFP adds: Officials said the government had decided to look forward to the WB fund because of its low rate of interest, by keeping its other options for commercial borrowings on hold.

Construction of the Padma bridge in the southwest of the country was supposed to begin in the second half of 2010. Traffic is currently transported across the Padma river -- the local name for the Ganges -- by slow ferries.

A World Bank study said the bridge would boost growth because it will improve transport links to the capital Dhaka in the poverty-hit southwestern region.