WB hints at removing impasse over its Padma Bridge funding
“We need further discussion… discussion is on… I hope there’ll be something positive within January,” Goldstein told reporters after a meeting with Finance Minister AMA Muhith at the latter’s secretariat office.
She, however, denied making further comment on the issue.
When approached, the finance minister also declined to make any comment on the outcomes of the meeting.
Muhith, however, said he would talk to journalists after the Purchase Committee meeting at 6pm today.
Goldstein met the finance minister at about 1:30pm and had talks on the WB’s promised funds for the 6.15-km long bridge.
The World Bank had promised to provide US$ 1.2 billion to Bangladesh for constructing the mega Padma Bridge.
The Asian Development Bank is also committed to providing US$ 615 million, while Japan International Cooperation Agency (JICA) US$ 400 million and the Islamic Development Bank (IDB) $ 140 million for the Padma Bridge project.
In October, the World Bank suspended its funding for the project following allegations of corruption in river dredging, appointment of consultants and selection of pre-qualified contractors on the project. Jica and ADB have also extended their loan activation dates.
The bridge, expected to be completed by 2014, will connect 19 southwestern districts of the country with the capital city.
WB suspends $1.2b pledged funding for Padma Bridge
The World Bank (WB) has suspended its pledged funding worth US$ 1.2 billion for Padma Bridge amid allegation of corruption in the bidding process of the country’s longest multipurpose bridge, Finance Minister AMA Muhith said Monday.
The government will also investigate the corruption allegations, he added.
“The WB has temporarily suspended funding for Padma Bridge,” Muhith told reporters at his secretariat office.
He said the WB has officially lodged complaints with both the governments of Bangladesh and Canada about irregularities in the bidding process of the Padma Bridge.
“We are yet to finalise the modality and terms of reference (TOR) for the proposed investigation,” Muhith told the reporters, adding that a statement in this connection will soon be issued from the Ministry of Finance (MoF).
“I will soon convene a press briefing on this particular issue,” the finance minister said.
Muhith refused to make any comment when asked about the involvement of a business house owned by an influential minister of the incumbent government in the alleged irregularities and corruption.
Meanwhile, Ellen Goldstein, Country Director, World Bank Bangladesh responding to an e-mail query from this correspondent said Monday that WB will not proceed on disbursing pledged fund for Padma Bridge until the Bank is fully satisfied on the fraud and corruption front.
‘The World Bank is committed to good governance and anti-corruption issues. As we have said from the outset, we will not proceed until we are fully satisfied on the fraud and corruption front,’ reads the e-mail of Ellen Goldstein.
‘This is in the interests of the people of Bangladesh. We can confirm that our Vice President for South Asia has recently visited Bangladesh where she met with the Prime Minister and raised concerns about investigations relating to the Padma Bridge project. Their dialogue is ongoing,’ the mail of WB says further.
The Finance Minister Sunday said that the WB wants the government to probe alleged irregularities in the appointment of a consultant for the Padma Bridge project.
A senior official in the MoF said the WB in a letter to Muhith has recently requested him to take necessary actions relating to corruption allegations in the project’s tendering process to get the pledged fund from the Bank.
The estimated cost of the Padma Bridge project is US$ 2.9 billion. The WB Board approved $ 1.2 billion and committed to providing an extra $ 300 million later. Asian Development Bank, Islamic Development Bank and Japan are the other financiers of the Padma Bridge project.
Earlier this year, the government sent a list of five pre-qualified bidders for the consultancy job to the WB for its approval. Of the five, the lowest bidder was a Canadian company, SNC-Lavalin Group Inc. The Canadian authorities are investigating corruption charges against SNC-Lavalin Group Inc following a WB request.
WB budgetary support loan becomes uncertain
Sun, 09/10/2011 – 10:54am
The World Bank high officials in Washington made their views known to a Bangladesh delegation on the sideline of the World Bank-International Monetary Fund (IMF) annual meeting last month, a top official said.
Bangladesh delegation, led by the Finance Minister AMA Muhith, sought support from a World Bank (WB) Vice President and a Director to facilitate its promised $1.0 billion worth of budgetary support.
Since the government has come under fiscal pressure
due to soaring subsidies on power and energy sector, the team sought the $1.0 billion budgetary support from the Bank, the official who was also a Bangladesh delegation member, told the FE.
Since WB and IMF are unlikely to make available the budgetary support loan and the extended credit facility (ECF) respectively soon, it is most likely that both fiscal management and the balance of payment (BoP) would come under stress and strain, according to analysts.
WB high officials said the donor is not in a position at this moment to extend the assistance to Bangladesh until the allegation of corruption in the multi-billion-dollar Padma Bridge project is resolved, he said requesting anonymity.
The Washington-based lender last year assured Bangladesh of providing one billion dollar assistance to support its national budget which is now under pressure for bulging subsidies to power and oil sector.
The WB integrity department has started investigation into allegation about a Canadian bidder, which is among the short-listed firms for doing consultancy job for the Bangladesh’s $2.9 billion Padma Bridge construction work.
The WB, one of the key lenders for 6.15-kilometre Padma Bridge project with confirmation of its $1.2 billion credit, has already started the investigation into the alleged graft.
Bangladesh’s national budget in the current fiscal 2011-12 has come under pressure due to the absence of expected foreign aid flow and soaring amount of subsidies. The resource constraints has forced the government to borrow heavily from the country’s banking system.
The government until first week of last month has borrowed Tk69.32 billion from the country’s banking system, against the annual bank borrowing target of Tk189.57 billion set in the budget.
The Bank earlier committed to provide $1.3 billion assistance on an average per year to Bangladesh. It is very hard at this moment to consider such a huge sum of money after a single largest commitment of $1.2 billion for Padma Bridge project, he added.
Meanwhile, the IMF’s $1.0 billion support under its Extended Credit Facility has also become uncertain as the lender is not happy over the low pace of reforms including revision of tax laws, lack of further energy price adjustments and cuts in subsidies, which were tagged as conditions.
The Bangladesh team also met the IMF high officials in Washington during the WB-IMF annual meeting, where the lender gave such an indication.
A finance ministry official said the government targets $300 million loan from the WB and another $300 million from the IMF this fiscal to support the budget and reduce the fiscal pressure.