The Padma bridge project will require $2.1 billion in foreign currencies in five fiscal years as the government looks to build the bridge by June 2018.
Of the sum, around $200 million will be needed in this fiscal year, $700 million in the next FY, $600 million in FY16, $500 million in FY17 and $100 million in FY18. The forex reserve of the country is now over $18 billion.
According to the Bridges Division's estimate in 2011, the bridge will cost $2.56 billion, of which $2.1 billion will be paid in foreign currency and the rest in local currency.
The Bangladesh Bank will issue the international consultants and contractors Letters of Comfort so that they do not feel insecure about the payments, the Bridges Division decided in a meeting early this month.
The February 3 meeting discussed the management of the foreign currency required for the project and the payments for the international contractors and consultancy firms.
The bridge authorities would inform the BB in advance the monthly requirement for foreign and local currencies, said an official of the The bridge authorities would inform the BB in advance the monthly requirement of foreign and local currencies, said an official of the Bridges Division.
Talking to The Daily Star on Monday, BB Governor Atiur Rahman said the Padma bridge was a top-priority project and the bank would extend all-out support in meeting the foreign currency requirement.
The government wants to complete the tender process and award contracts for three key components of the project -- construction of the bridge, river training and appointment of supervisory consultant -- by June.
It also intends to make some advance payments to the contractor and the consultant then, which will take most of the $200 million forex required for this FY.
The central bank, however, will not make any direct disbursement from the forex reserve. It would instead provide all supports so that the bank concerned faces no problem in collecting the foreign currency against the budget allocation, said the governor.
The Bridges Division has already opened an account with state-run Agrani Bank to make the payments for the bridge project. The bank will provide the money from its own foreign currency reserve or from inter-bank forex market.
If there is still any shortfall, the BB will sell foreign currency to Agrani Bank, the meeting agreed.
It also decided that the central bank would provide the foreign currency required for paying the contractors at a time to avoid delay, and will issue no-objection certificates with its Letter of Comfort to the contractors.
Atiur said they would remain alert so that there was no volatility in the inter-bank forex market once Agrani Bank starts purchasing foreign currency for the project.
In a letter to the finance ministry on January 28, the Bridges Division gave details of the present status of the project's three key components and asked the ministry to decide on how to pay the contractors in foreign currency.
The Bridges Division is now evaluating the proposals for the bridge construction. It has also asked the bidders to submit proposals for river training by February 20 and those for the job of consultancy by March 18.
The Padma bridge project is among the six projects under the direct supervision of the Fast Track Project Monitoring Committee headed by Prime Minister Sheikh Hasina.
Once built, the 6.15km long bridge will connect the country's southern part with the capital and cut travel-time by at least one hour.
Originally, it was to be funded by the World Bank, Asian Development Bank, Islamic Development Bank and Jica.
But the WB scrapped its $1.2 billion loan deal with the government in 2012 over alleged corruption conspiracy involving former communications minister Syed Abul Hossain in hiring a Canadian consultancy firm, SNC-Lavalin.
Following the WB decision, other donors also pulled out of the project and the government then decided to implement the project with its own fund.
Asked if the $2.1 billion payments in foreign currencies would create any pressure on the forex reserve given it is so vital for imports, a central bank official said the current reserve was in good shape.
“There should be no problem in financing the project with the country's own resources," the official said, requesting anonymity.