China’s Exim Bank to fund Padma rail link

Bangladesh has finally managed to arrange funds for the much-hyped Padma Rail Link project from the Exim Bank of China and an agreement will be signed soon, Kazi Shafiqul Islam, secretary of the Economic Relations Division (ERD), has said. He also said that the deal has been finalised and the agreement would be signed within two to three months, ending uncertainties regarding the execution of the project. He, however, did not make it clear whether the funding would be in the form of a concessional or non-concessional loan. Earlier, the Prime Minister’s Office (PMO) and the finance minister had written separate letters to Chinese president Xi Jinping and the Chinese commerce minister, requesting  speedy funding for the project.  The PMO's letter to Xi Jinping had said: “As desired by

the Hon’ble Prime Minister of Bangladesh, train services will be opened through the Padma Multipurpose Bridge on the same day that the bridge is completed and opened. To achieve such a target, the project has been listed as a fast-track project of the Government of Bangladesh and is, therefore, under the direct supervision of the Prime Minister of Bangladesh.”

On November 25, 2016, Prime Minister Sheikh Hasina approved certain steps to expedite the signing of the credit deal for the project. The Economic Relations Department (ERD) sent a loan proposal of USD 3,138.75 million to the Chinese embassy in Dhaka on September 15, 2016.

Once constructed, this railway will directly link capital Dhaka with the country’s south-western region for the first time in Bangladesh, the letter said.

The ERD secretary also said that Bangladesh and China are going to sign deals on six other projects this year, involving USD 6.8 billion.

The deals have been finalised after months of negotiations following the Chinese president’s visit to Dhaka last October. China will provide both soft and commercial loans to finance the projects.

These are part of the 27 agreements and memorandums of understanding (MoUs) signed during official talks between Xi Jinping and Sheikh Hasina.

China agreed to six out of the eight projects Bangladesh had pushed for Chinese financing in 2017, Shafiqul Islam said.

The projects are: Padma Bridge Rail Link (USD 3.14 billion), expansion and strengthening of the power system under the Dhaka Power Distribution Company area (USD 1.65 billion) power grid network strengthening under the Power Grid Company of Bangladesh (USD 1.32 billion) and installation of a single-point mooring with double pipelines (USD 550 million).

The finance ministry tried to have all the projects financed with soft loans, but Beijing preferred diversified modes such as self-financing, investment and commercial loans.

ERD sources said 15 per cent of the cost of the Padma Bridge Rail Link will be borne by Bangladesh, while the remaining 85 per cent will be borne by China’s preferential buyers’ credit in US dollars.

In both cases (buyers’ credit and soft loan), the interest rate will be 2 per cent with repayment periods of 20 years, including a five-year grace period.

Bangladesh will bear 15 per cent of the cost, while China will provide 70 per cent of the commercial and 15 per cent of the soft loans in financing two power sector projects with a total outlay of USD 3 billion. ERD secretary indicated that the interest of the commercial loan will be around 2.5 per cent.

Sources said China is willing to start financing three out of 28 mutually agreed development projects from this calendar year. However, Bangladesh has pursued the financing of more projects, especially the 172-km Padma Bridge Rail Link project.

The PMO’s letter said the Prime Minister desired the commencement of train services over the Padma the same day the bridge is opened. After the communication, China agreed to sign the deal this year.

The project would be implemented by 2022, but the laying of a portion of the railway tracks would be completed by 2018 so that people can use the Padma Bridge by both road and rail networks.

The government plans to open the bridge to the public in December 2018. The project is divided into four segments: Dhaka-Gendaria, Gendaria-Mawa, Mawa-Bhanga and Bhanga-Jessore rail tracks.

The tracks will run through seven districts of the Dhaka division—Dhaka, Narayanganj, Munshiganj, Shariatpur, Madaripur, Faridpur and Gopalganj— and two districts of the Khulna division, namely Narail and Jessore.

Chinas Exim Bank to fund Padma rail link

Bangladesh has finally managed to arrange funds for the much-hyped Padma Rail Link project from the Exim Bank of China and an agreement will be signed soon, Kazi Shafiqul Islam, secretary of the Economic Relations Division (ERD), has said. He also said that the deal has been finalised and the agreement would be signed within two to three months, ending uncertainties regarding the execution of the project. He, however, did not make it clear whether the funding would be in the form of a concessional or non-concessional loan. Earlier, the Prime Ministers Office (PMO) and the finance minister had written separate letters to Chinese president Xi Jinping and the Chinese commerce minister, requesting speedy funding for the project. The PMOs letter to Xi Jinping had said: As desired by the Honble Prime Minister of Bangladesh, train services will be opened through the Padma Multipurpose Bridge on the same day that the bridge is completed and opened. To achieve such a target, the project has been listed as a fast-track project of the Government of Bangladesh and is, therefore, under the direct supervision of the Prime Minister of Bangladesh. On November 25, 2016, Prime Minister Sheikh Hasina approved certain steps to expedite the signing of the credit deal for the project. The Economic Relations Department (ERD) sent a loan proposal of USD 3,138.75 million to the Chinese embassy in Dhaka on September 15, 2016. Once constructed, this railway will directly link capital Dhaka with the countrys south-western region for the first time in Bangladesh, the letter said. The ERD secretary also said that Bangladesh and China are going to sign deals on six other projects this year, involving USD 6.8 billion. The deals have been finalised after months of negotiations following the Chinese presidents visit to Dhaka last October. China will provide both soft and commercial loans to finance the projects. These are part of the 27 agreements and memorandums of understanding (MoUs) signed during official talks between Xi Jinping and Sheikh Hasina. China agreed to six out of the eight projects Bangladesh had pushed for Chinese financing in 2017, Shafiqul Islam said. The projects are: Padma Bridge Rail Link (USD 3.14 billion), expansion and strengthening of the power system under the Dhaka Power Distribution Company area (USD 1.65 billion) power grid network strengthening under the Power Grid Company of Bangladesh (USD 1.32 billion) and installation of a single-point mooring with double pipelines (USD 550 million). The finance ministry tried to have all the projects financed with soft loans, but Beijing preferred diversified modes such as self-financing, investment and commercial loans. ERD sources said 15 per cent of the cost of the Padma Bridge Rail Link will be borne by Bangladesh, while the remaining 85 per cent will be borne by Chinas preferential buyers credit in US dollars. In both cases (buyers credit and soft loan), the interest rate will be 2 per cent with repayment periods of 20 years, including a five-year grace period. Bangladesh will bear 15 per cent of the cost, while China will provide 70 per cent of the commercial and 15 per cent of the soft loans in financing two power sector projects with a total outlay of USD 3 billion. ERD secretary indicated that the interest of the commercial loan will be around 2.5 per cent. Sources said China is willing to start financing three out of 28 mutually agreed development projects from this calendar year. However, Bangladesh has pursued the financing of more projects, especially the 172-km Padma Bridge Rail Link project. The PMOs letter said the Prime Minister desired the commencement of train services over the Padma the same day the bridge is opened. After the communication, China agreed to sign the deal this year. The project would be implemented by 2022, but the laying of a portion of the railway tracks would be completed by 2018 so that people can use the Padma Bridge by both road and rail networks. The government plans to open the bridge to the public in December 2018. The project is divided into four segments: Dhaka-Gendaria, Gendaria-Mawa, Mawa-Bhanga and Bhanga-Jessore rail tracks. The tracks will run through seven districts of the Dhaka divisionDhaka, Narayanganj, Munshiganj, Shariatpur, Madaripur, Faridpur and Gopalganj and two districts of the Khulna division, namely Narail and Jessore.