The World Bank today agreed to revive a USD 1.2 billion loan to Bangladesh for a major road and rail bridge on a condition that the government implements anti-graft measures for smooth functioning of the project.

“The Bank has agreed that, upon satisfactory implementation of the agreed measures by the Government (against corruption), and with the support of the Bank’s governing bodies, the Bank will engage anew in the Padma Multipurpose Bridge,” the World Bank said in a statement.

It, however, added the global lending agency “remains vigilant to any signs of corruption in the Padma Bridge project and our determination to take a strong line against wrongdoing will never waver”.

The World Bank withdrew a USD 1.2 billion line of credit for the 6.2-km bridge over the Padma River, saying it had “credible evidence” of high-level corruption among Bangladeshi government officials.

Since then, Prime Minister Sheikh Hasina’s government pursued a campaign to revive the loan agreement. The government removed a minister from the cabinet and sent a senior adviser to Hasina on leave for their suspected involvement in the “corruption conspiracy”.

The World Bank said, “The Government of Bangladesh has now begun to address the evidence of corruption the Bank identified. The World Bank understands that all government employees and officials alleged to have been involved in corrupt acts in connection with the project have been put on leave from Government service until an investigation is completed and that a full and fair investigation is now underway.”

Sheikh Hasina Challenge World Bank

In a major policy decision, Bangladesh Prime Minister Sheikh Hasina has announced that her country would itself implement the $3-billion Padma bridge project through mobilising domestic resources after the World Bank cancelled the loan deal recently.

Ms. Hasina also announced that her government would start the construction of the ambitious multi-purpose project immediately.

In a hard-hitting speech in Parliament on Sunday, she also came down on the World Bank for the “catastrophic act” of cancelling the loan agreement. Ms. Hasina, whose government was annoyed with the World Bank decision, said a country takes loan from the World Bank and repays it with interest; therefore, it is the country which will decide how to spend the money.

Outlining her plan to mobilise domestic resources for the project, she said the government would go for imposition of surcharge and issue foreign and local bonds for mobilising the fund. She said the people, including the Bangladeshi expatriates, would donate for the bridge which is both politically and economically important for the country. “Even school students are making calls over my mobile phone to tell me that they would provide money for the bridge by saving their tiffin money. And the Bangladeshis living abroad told me that they would provide fund if we start the project.”

She added: “The entire country has become recharged to fulfil the dream of constructing the bridge, mentioning that the country had achieved the liberation showing the same spirit.

Padma Bridge Project

Bangladesh must rely on WB

Says The Economist

Bangladesh must rely on loans of the World Bank to build the proposed Padma bridge as the idea of constructing the South Asia’s biggest infrastructure with domestic resources seems unworkable, The Economist said in a report published yesterday.

“Without the bank, there can be no bridge,” the report says, as Bangladesh relies heavily on Western aid for a vast array of projects that otherwise would not exist.

The report from the British popular magazine came while the ruling Awami League-led grand alliance has desperately been trying to revive talks with the Washington-based lender to fulfill its one of the key electoral promises.

The report quotes Prime Minister Sheikh Hasina as saying that Bangladesh would “not beg” from the WB. A sense of injured national pride has given rise to the unworkable notion that the bridge must now be built with Bangladesh’s “own resources,” it says.

In June this year, the bank cancelled its $1.2 billion loan, citing alleged corruption by Bangladeshi public servants. “The World Bank has identified various officials as being unable to leave the money for the bridge alone,” as the report puts it.

Sacking crooked-seeming officials is, for the WB, a precondition for resuming the lending. The Asian Development Bank, a co-financier of the project, is more ready than the WB to be a cheerleader for the government and is keen on resuscitating the project. Like the Japan International Co-operation Agency, another backer, it has kept the door open, said the report.

The Economist said the Bangladeshi government would probably return to talks with the WB after hectoring its perceived enemies first.

Hasina had accused Muhammad Yunus, a pioneer of micro finance and a Nobel peace laureate, of putting the WB up to walking off, says the report. Yunus had already denied that allegation.

To meet the WB’s conditions for reviving talks for the loan, Abul Hossain, a former communications minister, has already resigned and a couple of secretaries have been sent on leave.

Prime minister’s chief economic adviser Mashiur Rahman seems to be the last barrier to the talks, although the former bureaucrat said he had done nothing wrong and would only resign if the prime minister told him to.

Regardless of Rahman’s case, Bangladesh has a culture of impunity, the report says, citing that only one senior politician has ever gone to jail under an elected government for corruption, and that was a former dictator.

It adds the project has also got caught in the global and regional complex politics.

“Western governments do not want to see the Padma bridge project snapped up by a state-backed Chinese company (in return, perhaps, for an equity stake and for economic influence, as has happened with ports in Sri Lanka and Pakistan).”

“India, with which Bangladesh has usually had good relations, would do its best to block a high-profile Chinese involvement in its neighbour’s economy.”

The Economist report says Sheikh Hasina’s Awami League is livid enough that it will be unable to keep its electoral promise to build the bridge before the end of 2013. “Yet it would be even more appalled if the Bangladesh Nationalist Party, led by Sheikh Hasina’s arch-rival, Khaleda Zia, took office at the next election, bagging credit for the bridge. (That prospect is real: no elected government has won a second term).

“So, in the end, Sheikh Hasina has no strong incentive, other than the country’s best interests, to mollify the World Bank,” said the report.

The biggest infrastructure project in South Asia to be paid for by foreign donors is a $3 billion bridge in Bangladesh intended to span the Padma river.

The bridge is the stuff of donors’ dreams, aiming to end the isolation of Bangladesh’s poor south-west, home to three crore people who are cut off by these vast waters from the capital, Dhaka, and the rest of the country.

The report says the proposed 6.15-km bridge could be a gateway to India, tying Dhaka to the great metropolis of Kolkata. It is also a crucial piece of an even more ambitious dream of connecting South Asia with South-East Asia, via Bangladesh and Myanmar.

According to official estimates, the bridge could raise Bangladesh’s annual growth rate by 1.2 percentage points.

http://article.wn.com/view/2012/07/09/Sheikh_Hasina_challenges_World_Bank/

Dhaka, Sep 3 (bdnews24.com)—Finance Minister AMA Muhith on Monday said the decision over funding of the Padma Bridge will be taken jointly by the government and the donor agencies including the World Bank.

The minister came up with the announcement at his Secretariat office in the much-awaited press conference which was deferred twice.

“The World Bank, Asian Development Bank and Japan International Cooperation Agency will take the decision together. I also have (a part) in this (decision making),” said Muhith.

“I will go abroad on Sep 9. Then you will be briefed about something,” he added.

Muhith is set to leave for China to attend an international conference for a week. He was supposed to talk about the government’s efforts to get the World Bank back in the project and the latest status of the negotiations.

Last week, while replying to media query, Muhith had said, “I still have time in my hands. I will talk later.”

Last month, the minister had also indicated that obstacles to the project were being removed gradually. On Aug 25, newspapers reported the World Bank would not return unless the project’s Integrity Advisor Mashiur Rahman, who also advises the Prime Minister on economic affairs, was removed in line with its suggestions.

It was among many conditions the global lender had given in September last year for ensuring transparency in the project. The bank pulled out of the project in June this year alleging that the government had failed to take the steps the bank had asked for.

Syed Abul Hossain stepped down as Information and Communication Technology Minister after the World Bank pulled out of the project. He was the Communication Minister when the corruption charges surfaced and then he was moved to the ICT ministry. The Bridges Division Secretary Mosharraf Hossain Bhuiyan was sent on leave.

The World Bank had pledged to provide $ 1.2 billion for constructing the 6-km-long bridge at the cost of $ 2.9 billion. The rest of the amount was supposed to be provided by ADB, JICA and IDB.

The ADB and JICA have extended the deadline for effectuation of the loan contract for the second phase.

Though he did not give any detail about the bridge project, the Finance Minister said he would be giving a statement on the banking sector.

“Perhaps, it will come tomorrow (Tuesday). But (the time) would be communicated to you, (it will not take place) based on your reports,” he said taking a dig at the media speculations.

The largest commercial bank of the country Sonali Bank is currently being investigated over misappropriation of more than Tk 36 billion from its Ruposhi Bangla Hotel Branch. A six-strong team of ACC is conducting the probe that also involves five other institutions including Hallmark Group.

The ACC is also ready to question the Prime Minister’s Health and Family Affairs Advisor Syed Modasser Ali over the scam.

Dhaka Sep 17 (bdnews24.com—Dr Moshiur Rahman went on leave Monday, a highly-placed government source told bdnews24.com, apparently giving in to pressure from ruling party stalwarts that he departed for now to make way for the World Bank to release $ 1.2 billion for the Padma project.
Several sources said Moshiur, who advises the Prime Minister on economic affairs, had left office temporarily but no senior government functionary could say for how many days.
The under-fire advisor, who is also the Integrity Advisor in the Padma bridge project, was absent in Monday’s regular weekly Cabinet meeting that he usually attends.
The Advisor could not be reached.
Another prime ministerial advisor, Dr Gawher Rizvi, left for Washington on Sunday night to negotiate with the World Bank over the Padma funding, a source in the government said.
World Bank Country Director Ellen Goldstein also went to Washington, where the global lending agency is headquartered, on Saturday to discuss the issue, Communications Officer at its Dhaka office Mehrin A Mahbub told bdnews24.com.
All the bdnews24.com sources declined to be named because they were not authorised to speak to the media.
Allegations of corruption in the Padma bridge project were raised against Moshiur, former Communications Minister Syed Abul Hossain and several others. The World Bank demanded that he be removed as well if the money was to be made available.
No government official, however, agreed to speak on record about the Advisor going on leave.
A press photographer who took pictures of the Cabinet meeting and several intelligence officials tasked with the security of the meeting had also confirmed the absence of the advisor there.
They said Moshiur was not seen even five minutes before the meeting started and added that he would usually take his seat before the Prime Minister does.
When asked about Moshiur’s absence, Cabinet Secretary M Mosharraf Hossain Bhuyian told bdnews24.com: “I was busy receiving the Prime Minister and later with the agenda of the meeting. So I can’t say whether he came or not.”

On whether the Advisor resigned, Bhuiyan said he knew nothing about this.
Earlier, former Communications Minister Syed Abul Hossain had resigned and Bridges Division Secretary Mosharraf Hossain Bhuyian was sent on leave.
Facing the demand of his resignation, Moshiur on Sep 12 said he had not yet taken any decision on the issue.
On Aug 26, he had said he would resign if the government and the Prime Minister thought that he had not worked faithfully.
“I’ll not only resign once but 10 times if the $2.9 billion fund row is settled. But if there is any allegations, witnesses and evidences will have to be presented to prove these and I’ll have to be given the chance to defend myself,” he had added.
Last Saturday, at the Awami League Central Executive Committee’s meeting, the party’s General Secretary Syed Ashraful Islam suggested that Moshiur be sent on leave, saying it would help to get the World Bank back on the Padma bridge project.

Following Abul Hossain’s resignation, Finance Minister AMA Muhith had said that the other obstructions to bring back the global lender to the project would be removed, too.

Later, the opposition BNP asked for Moshiur’s resignation. But media reported that the World Bank’s return to the project had been hanging in the balance once again as the advisor did not resign or went on leave.

In September last year, the World Bank gave some conditions after allegations of corruption in the project had surfaced. The conditions include sending relevant government officials to leave. The global lender cancelled the fund in June, saying that the conditions were not met.

Communications Minister Obaidul Quader on Wednesday said the government has not heard anything from the World Bank’s on its rejoining the Padma bridge project.
“The smoke surrounding the World Bank’s return to finance the Padma bridge has not cleared yet,” he told journalists and added that the finance ministry and the Economic Relation Department were working on the matter.
The proposed Padma bridge project’s key financer, the World Bank, scrapped its pledged $ 1.2-billion loan for the $ 2.9-billion bridge in June last year raising graft allegations. The two other lenders, the Asian Development Bank and the Japan International Cooperation Agency, have extended the deadline of finalising the loan deal for the bridge until Aug 31.
The fate of the project will go in limbo if the World Bank does not return by Aug 31.
Amidst the stalemate, Malaysia had expressed its willingness to finance the bridge. A memorandum of understanding was also signed between the two countries.
Malaysia submitted its final proposal to Bangladesh on construction of the bridge on Monday.
When asked about the proposal, the Communications Minister said, “We are scrutinising their proposal.”

The lead financier of the Padma bridge project, the World Bank is finally back on board ending days of speculations and frantic negotiations after the global lender pulled out of the project about two and half a months back.

Bangladesh Ambassador to the United States Akramul Qader confirmed bdnews24.com on Thursday about the reversal of its previous decision to pull out citing evidence of corruption.

“The World Bank has decided to engage itself in Padma bridge project and informed other lending agencies about the decision,” Qader said over phone.

Earlier in the afternoon, Finance Minister AMA Muhith had said the World Bank will also have to ‘leave’ certain things, along with the government, to reach an agreement.

The Ambassador was expecting a formal announcement from the global lender on Thursday night.

The World Bank decision followed the visit of Prime Minister’s International Affairs Advisor Gawher Rizvi to Washington. He was supposed to meet the World Bank officials once again for further discussions.

The Washington-based lender suspended its pledged $1.2 billion credit last year raising graft allegations against some senior government officials, and set some conditions for its return to the project. It finally cancelled the deal on June 29 saying no measures were taken to meet those conditions.

The government responded by announcing that the bridge would be built with own resources, if need be, but continued pursuing the World Bank for reconciliation.

As part of the process, former Communication Minister Syed Abul Hossain eventually resigned and Bridges Division Secretary Mosharraf Hossain Bhuiyan was sent on leave.

Sources in the government said on Sep 18 that the Prime Minister’s Economic Affairs Advisor Dr Moshiur Rahman, who was the Integrity Advisor of the project, had been sent on leave, but Moshiur denied this.

The news of Moshiur going on leave gave rise to the latest wave of speculation that the final obstacle to World Bank’s return to the project was removed.

Rizvi left for Washington this month for meeting World Bank officials at its headquarters. The team of representatives from the Bangladesh government had met a group of World Bank representatives on Wednesday.

“I talked with Gawher Rizvi this morning too. He is scheduled to meet the World Bank officials today (Thursday),” said Ambassador Qader.

Muhith had also hoped in the afternoon that the lending agency could make an announcement on the issue ‘any moment’. “The government will also make its announcement once they make theirs.”

When asked about the latest situation regarding Moshiur, the Finance Minister said, “Moshiur Rahman will not have links with any economic matters, including the Padma bridge.”

The government had struck the deal with four international lenders – World Bank, Asian Development Bank, Japan International Cooperation Agency and the Islamic Development Bank – for building the bridge which was one of its major electoral pledges.

A design for the 6-km long two-storied bridge establishing rail and road communications with the southern region was finalised. The government also began taking over land for the $ 2.9 billion bridge.

The crisis began to unfold after Canadian engineering firm SNC Lavalin was charged by Canadian police with corruption in the bidding process for getting a supervisor for the project. The World Bank suspended the pledged $ 1.2 billion loan.

The government had been refuting the allegation ever since it surfaced and refused to initiate any move to fulfil the World Bank conditions, leaving the project fate uncertain.

The bank cancelled its contract in June this year alleging that the government had failed to meet its requirements, drawing strong reaction from Prime Minister Sheikh Hasina herself.

The decision to build the bridge with own resources was taken in the Cabinet too, while talks went on with the government of Malaysia for funding.

But, Muhith had always been optimistic about getting the bank back in the project.

“In the beginning, the World Bank alleged corruption had taken place in the Padma bridge project. After our continuous denial and presenting facts before them, they are now talking in terms of a ‘possible graft’,” Muhith said in the afternoon.

The Finance Minister said the government had to initiate some ‘tough measures’ over the issue.

He also observed that the bank’s change of heart has upheld the nation’s goodwill, which was stained over the graft allegations.

The World Bank pullout saw other lenders like the Asian Development Bank, Japan International Cooperation Agency and the Islamic Development Bank suspend their part of the loan. However, the ADB and the JICA extended their disbursement deadline twice at the government’s request.

Padma bridge financing revived

Now it should move ahead at full speed

We express satisfaction at the news that the World Bank (WB) has given verbal commitment to revive the stalled $1.2bn loan for Padma Bridge. Congratulations are due for both the government and the WB in being able to overcome months of impasse to reach an agreement due to be announced sometime on Friday. We would like to put in an added word of appreciation for the Minister of Finance, who in the face of tremendous pressure kept his faith in the project specially at a time when the highest public officials of the government had engaged themselves in a tirade of abuse against the WB. The flurry of behind-the-scenes diplomatic efforts by government officials this month in ironing out differences with the lead agency of the consortium has borne fruitful dividends and this is reflected by WB’s willingness to return to the negotiation table a move we greatly appreciate.

There are lessons to be learnt here. Needless to say, there have been shortcomings on both sides. Precious time has been wasted on unnecessary foot dragging on whether or not the information furnished by WB on alleged corruption on a number of public officials was proof enough for action. The anti-corruption commission’s (ACC) half-hearted attempts at investigating the evidence provided all colluded in creating an unnecessary impasse. One would have thought given the experience surrounding Abul Hossain’s resignation, the futility of the exercise would not be repeated with Mashiur Rahman, but that is precisely what happened. Personal ego and a false sense of honour were once again taking precedence over national interest. We are thankful that good sense has prevailed and the final hurdle holding up a renegotiation has been removed.

It is now imperative that we move forward with resuscitating the stalled project expeditiously. The WB has set a number of measures that include appointing a special inquiry and prosecution team within the ACC to handle the investigation and providing access to all investigative material to an external panel of internationally recognised experts that will provide the government, WB and its co-financiers with necessary oversight on project procurement procedures. What ought to be remembered that such stringent measures are not specific to Bangladesh. Rather they are internationally accepted practices that ensure good governance and are a safeguard against potential graft. Given that the project has suffered months of setbacks, we look forward to both parties taking concrete steps to ensure minimum delays in getting the construction project off the ground.

Govt, WB likely to settle Padma Bridge issue

Fri, 24/02/2012 – 1:30am

The government and the World Bank (WB) are likely to settle the issue centering the put-on-hold situation about disbursement of aid funds for construction of the proposed Padma Bridge project as the chief of the WB office in Bangladesh has already met a top bureaucrat of the relevant ministry in Dhaka, officials said.

File Photo

The WB country director, Ellen Goldstein, met the Economic Relations Division (ERD) senior secretary Iqbal Mahmood Thursday at the latter’s office and discussed the stasis on the Padma Bridge project, a senior ERD official said.

The official said after more than a month, the government and the Washington-based capital donor have started talks on matters relating to the likely course of things about disbursement of earlier committed funds for construction of the Padma Bridge project that will involve an aggregate cost of US$2.29 billion.

“Both sides have now come forward with an open mind to settle issues on the donor’s fund, the disbursement of which has been put on hold. If every thing goes well, the stalemate on release of the committed aid funds for the project by the WB and three other donors can be resolved,” the official told the FE.

Another official said Finance Minister AMA Muhith instructed the ERD secretary Wednesday to take appropriate steps for resolving the fund disbursement problem with the WB.

Consequent upon this instruction, the ERD is trying to resolve the issue with the multilateral capital donor, requesting the WB formally to give a time-limit for its (WB’s) final decision on the financing of the Padma Bridge project.

When asked, Ms. Goldstein Thursday declined to talk to the media on the Padma Bridge issue.

She, however, said they have discussed the ongoing projects in Bangladesh in a bid to help expedite their implementation.

The proposed Padma Bridge is one of the 34 on-going projects of the WB in Bangladesh.

ERD secretary Mr Mahmood also declined to say anything about the Padma Bridge project.

He said that they have discussed the overall situation about project implementation of the WB-aided projects in Bangladesh.

Ms Goldstein said: “The Local Consultative Group (LCG) co-chair, the ERD secretary and myself will hold a plenary meeting soon for expediting the process of project execution.”

Earlier, the government said that it could cancel the loan agreement with the WB in order to confirm an alternative financing arrangement for it from a Malaysian state-owned company to help construct Bangladesh’s latest 6.15-kilometre bridge project over the Padma.

The WB early last year signed the $1.2 billion loan deal with the government as part of its funding for constructing the $2.9 billion Padma Bridge, which will connect Bangladesh’s south-western region with the central zone including Dhaka.

Besides, the Asian Development Bank (ADB) has confirmed $615 million, Japan, $420 million and the Islamic Development Bank (IDB), $140 million for the Padma Bridge project.

The World Bank in September last put on hold the disbursement of fund for the project on alleged grounds of corruption and stated it would give its next decision upon completion of related investigations by the government of Canada.

Finance minister AMA Muhith early this month said the government was looking for alternative sources of funds for constructing the Padma Bridge project.

He, however, said the Malaysian offer to build the bridge on build-own-operate and transfer or public-private partnership basis would be costlier than the loans offered by the WB and other donors.

Communications minister Obaidul Quader stated then that the government would start construction work of the project within the last two years’ time, before the next general election under the periodic electoral cycle

By facilitating transportation across the river, the Padma Bridge is expected lead to the greater integration of regional markets within the Bangladeshi national economy. On the basis of their suitability of capture primary and secondary economic impacts of construction project, three different types of economy wide models are employed in addition to traditional traffic model to capture the total and economy wide impacts of Padma Bridge. Although outcomes of all types of models are positive, the results show variations due to especially to size of shocks. The results are summarized below. In the Traffic model, road users benefits are estimated based on the saving on vehicle operation costs (VOC) and savings in travel time cost (TTC). Total road user benefit is estimated to be about million 1,295,840 taka over the 31 year period. Out of the total cost of the project ($2.9 billion), it was estimated that about $2.1 billion would be injected into the economy and the rest consists of imports, IDC etc. Injection of $2.1 billion into the economy using national SAM model envisaged value added increase of 453,670 million taka. This increase implies that annualized equivalent rate for national GDP would be 0.33 percent compared to the national base GDP (i.e. 4,468,549 million taka). Annual equivalent rates of growth were calculated keeping in view the 31 years as the time taken to fully realize the impact of the bridge. If we took a shorter time horizon for fully realizing the benefit of growth, then the annual equivalent rates could be larger. On the other hand, injection of $2.1 billion into the regional economy using the regional SAM model envisaged that annualized equivalent rate for regional GDP would be 2.3 percent compared to the regional base GDP. However, if it assumed that only 70 percent of the shock would be operative in the region (against full 100 percent or $2.1 billion), the annualized equivalent rate for regional GDP would be roughly 1.66 percent of the regional base GDP. Given that the SAM model assume excess capacity (which may be a reasonable assumption in a country like Bangladesh with under-utilized resources), the size of impacts vary with the size of injection or shock. Using the Traffic mode, road users benefit is found to be million 1,295,840 taka. We consider value added increase of million 453,670 taka derived from the national SAM model (i.e. simulation 1A) as economy wide benefits of the project. Thus, total project benefit is estimated to be 1,749,510 million taka (i.e. Total (1,749,510) = Road User Benefit (=1,295,840) + WEB (=453,670). This implies that total project benefit is 39 percent relative to the base national income (i.e. 4,468,549). Assuming the 31 year full realization timeframe, total project benefits per year is then 1.26 percent relative to the base national income. The base GDP figure would change over 31 years. Assuming 5 percent GDP growth over the 31 period an alternative estimate of base year is arrived. The total project benefit (i.e. 1,749,510) is only 0.56 percent relative to the alternative base national income (average GDP during that period).