China agrees to limited bidding for projects

China has at last agreed to allow limited bidding for the selection of contractors for projects under its soft loan after a year's persuasion by Bangladesh, a finance ministry official said.

At present, for projects financed with Chinese soft loans, Beijing puts forward a contractor and Dhaka has to implement the project by that company.

In such cases, the purchase value is not competitive. Often, the price was lowered through negotiation only for it to be revised upwards later.

At present, Bangladesh applies the limited bidding method for India, which allows only Indian companies to participate in the tender for projects supported with New Delhi's soft loans of $3 billion.

But from now onwards, Beijing will forward a short-list of Chinese companies and Dhaka will run the limited tendering among the candidates as per the rules of Bangladesh.

“The Chinese government respects Bangladeshi government's decisions on whether to adopt negotiated tendering or limited tendering when carrying out G-to-G projects,” said a letter sent last month by the Chinese Embassy to the finance ministry.

On the basis of consent from the Chinese side, the government will bring changes to the policy for selecting Chinese contractors, the finance ministry official said.

Finance Minister AMA Muhith discussed the issue with Chinese Commerce Minister Gao Hucheng when the latter visited Bangladesh in August last year. Hucheng also backed the idea of limited tendering.

He agreed that a limited tender be applied and both sides should work out a proper starting time for it, according to the letter sent to Muhith in November last year by Ma Mingqiang, Chinese ambassador to Bangladesh.

Though China gave verbal consent to limited tendering it was not official, so the implementation of China-funded projects became slow, the finance ministry official said.

China has refrained from giving its verdict on financing any new project until the issue of limited tendering was finalised.

In this context, the cabinet committee on economic affairs in August took a two-way decision for taking soft loans for any project from China.

Bangladesh will continue to allow China to select contractors only for priority projects financed with low-cost loans from Beijing. Otherwise, the Chinese contractor will have to be selected through limited tendering.

Now, the Economic Relations Division will send a new proposal regarding selection of Chinese contractors to replace the two-way policy, the official said.

The new proposal says contractors for all projects implemented with Chinese funds will be selected through the limited bidding process.

During President Xi Jinping's Dhaka visit last month, Beijing gave primary consent to 28 projects for which it will provide soft financing.

The amount of Chinese financing will be about $25 billion, according to a primary estimate by the finance ministry.