12:00 AM, February 02, 2013 / LAST MODIFIED: 12:00 AM, February 02, 2013

Padma Bridge Project

No to WB funds

Govt finally withdraws loan request, asks co-financiers to retain fund; graft conspiracy probe to continue; govt to convene meeting of dev partners soon

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Rejaul Karim Byron and Sharier Khan

The government has withdrawn its request to the World Bank for the Padma bridge loan, bringing to a close a saga over finance for the country's largest ever infrastructure project.
Dhaka communicated the decision to the global lender on Thursday, a day after the WB president in Washington said the financing for the project would not go ahead unless certain conditions were met.
In a statement issued yesterday evening, the government said it had kept maintaining for the last few days that it expected the WB financing within last month and that it was determined to take an alternative decision regarding the matter by that time.
“As per the decision, the government yesterday [Thursday] informed the World Bank that it wanted to begin the work of Padma bridge project right now and without the World Bank finance,” read the statement.
Earlier in the day, the WB released a press statement saying, “The World Bank has taken note of the government 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 allegations.”
The government said it believed the WB's reconsideration was positive for Bangladesh and it attested what the government had been saying from the outset.
“The government has all along been saying that it is seriously considering the World Bank's allegation of corruption. But due to lack of evidence, it was not possible to file an FIR until June 2012.”
Later in November, the statement continued, when the bank provided additional evidence, the Anti-Corruption Commission filed an FIR against some persons. In the FIR, the ACC also said it had taken measures to investigate several other accused.
The government believes this step is appropriate and, on the basis of that, the World Bank should have started implementation of the project.
“Besides, it was found that the government's project implementation schedule does not fit with that of the World Bank. As per the World Bank schedule, the project implementation is uncertain,” the statement added.
“To fulfil its election pledge, the government decides it will start the project without the World Bank assistance. If necessary, there will only be a road bridge to reduce the project cost.”
This decision was conveyed also to other development partners. Calling for their continued support, the government also decided to invite them to discuss on the project implementation schedule and steps.
The move came hours before WB President Jim Yong meets the external panel, formed to assess the ACC probe into the graft allegations.
Apparently, the government wanted to make sure that the WB did not have the chance to cancel the loan for the second time.
On January 9, the external panel, headed by Lewis Ocampo, expressed its displeasure at the case filed by the ACC in December for the graft conspiracy.
The panel was particularly unhappy over exclusion of Syed Abul Hossain, ex-minister for communications, from the list of accused.
It said Abul Hossain was personally involved in the corruption conspiracy to award the construction supervisor's job to Canadian company SNC Lavalin.
The fate of the project depended on the panel's report.
The three-member external panel has meanwhile reached Washington, DC, to hold a meeting with the WB president last night (Bangladesh time).
Ellen Goldstein, immediate past WB Bangladesh country director, was expected to be there.
Sources said the panel would present at the meeting its opinion about the case. Now that the government has rescinded its request, the WB has no action to take.
The finance minister on January 17 urged the World Bank to take a decision within the month. On January 23, Prime Minister Sheikh Hasina reiterated the same.
On Wednesday, Jim Yong Kim during a discussion on anti-graft issues in Washington said the lender would not finance the project unless certain conditions were met and Bangladesh gave an assurance that a complete and fair probe was under way.
Muhith the same day told journalists that he was seeking Jim Yong's appointment in February. The WB chief's remark was still unknown in Dhaka.
The next day, as the WB president's comments were reported in the media, the government scrapped its request for funding.
In yesterday's statement, the government said, “The finance minister would speak on this matter in parliament on Sunday [tomorrow] or Monday.”
Earlier in the day, the finance minister told the BSS that a fresh plan on the project funding would be unveiled in the parliament tomorrow.
Ministry sources say Muhith wrote a two-page letter to the WB boss.
The Economic Relations Division sent similar letters to other co-financiers -- the Asian Development Bank (ADB) and Japan International Cooperation Agency (Jica) -- with separate cover letters explaining why the government sought to withdraw from the request.
In the letter to the WB, the government praised the four-decade development partnership with the Washington-based lender. It expressed gratitude for the latter's consent to fund the project.
“But the government wants to speed up the Padma bridge project implementation,” a source said, citing from the letter.
“The government wanted the WB to delink investigation from procurement process. Since it was not done, the government has requested withdrawal of the WB financing.”
In the letters to the co-financiers, the government sought continuation of their financial commitment for the bridge project, said a finance ministry official.
Out of the $2.9 billion required to build this 6.15 kilometre bridge along with rail, the WB had committed $1.2b and the ADB and Jica nearly one billion dollars.
While the government expects the ADB and Jica to keep the commitment for this one billion, a finance ministry official said now that the loan from the lead financer WB was cancelled, the agreement with the co-financiers would automatically become ineffective.
Therefore, if the government wanted to retain these co-financiers, it would have to sign a new agreement, which would take at least a year.
Already, ADB has pulled out of the project.
In reviving the cancelled World Bank loan last year, Finance Minister Muhith, PM's Adviser Gowher Rizvi and LGRD Minister Syed Ashraf played strong role while many opposed the revival.
Contacted, ACC Chairman Ghulam Rahman yesterday said the ACC investigation into the graft would continue in spite of the latest development.
"We have lodged the FIR [first information report] after completing an enquiry into the allegation," he said. "We will continue investigation in the case in a transparent manner."
The ACC will follow its rules and regulation, he said over the phone, adding that they would complete the case investigation and take subsequent legal steps.
After a year-long enquiry into the allegation over Padma bridge project, the Anti-Corruption Commission on December 17 last year filed the case against seven people for conspiring to commit bribery.
The accused include former secretary of the Bridges Division Mosharraf Hossain Bhuiyan, but the anti-graft body did not include in the case former communications minister Syed Abul Hossain and former state minister for foreign affairs Abul Hasan Chowdhury.

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