Most state-owned commercial banks (SCBs) are likely to face problem with their fund positions due mainly to the financing of long-term infrastructure projects, including the Jatrabari-Gulistan Flyover.
“The mismatch of funds will widen gradually if the government does no take any effective measure immediately,” a senior banker, who is familiar with such financing, told the FE Wednesday.
He also said the government should strengthen bond as well as capital markets to help create a new window for long-term financing of major infrastructure projects in Bangladesh.
“The country’s private commercial banks (PCBs) along with the SCBs may also face identical problem in the near future if the alternative funding sources are not created,” he added.
Belhasa-Accom Associates Limited has already raised fund worth Tk 6.00 billion from three SCBs, a Shari-based Islamic bank and state-run investment corporation of Bangladesh (ICB) through issuing preference shares for implementation of the proposed Jatrabari-Gulistan Flyover which, according to experts, might create more problem than easing the traffic movement due to faulty design.
Three SCBs — Sonali, Janata and Agrani — have purchased the preference shares worth Tk 5.0 billion in early 2010. These shares will be converted into ordinary shares at end of three years from the date of issuing the same.
Preference shares, also called preferred shares, or simply preferred, is a special equity security that has properties of both as equity and debt instrument and is generally considered a hybrid instrument.
“We’ve invested the money hoping a good return,” a senior executive of another leading SCB said, adding that the project is expected to be implemented in time.
He, however, admitted that trade financing by banks that had extended such long-term financing might be affected slightly in the near future.
The nine kilometers long and four-lane flyover is being built on a build-own-operate-transfer (BOOT) basis at an estimated cost of Tk 13.32 billion.
“The total project cost will go up further due to the addition of three more kilometres to the original one,” an official, who is close to the project implementation process told the FE.
He also said management of the implementing agency is providing funds on the basis of progress of the construction works.
This hi-tech capital intensive project is the first scheme, under Public-Private Partnership (PPP) in Bangladesh, designed to provide improved, faster and safer road connectivity with a minimum travel time.
Meanwhile, the construction of the 9.6 kilometre long Jatrabari-Gulistan flyover has been going on at a fast pace despite experts’ warning that on completion it would contribute to further deterioration of the traffic congestion through this important corridor.
Bangladesh University of Engineering and Technology (BUET) and Dhaka Transport Coordination Board (DTCB) separately cautioned the DCC against the possible problems the existing roads would experience after the completion of the flyover containing faulty design.
“But the implementing agency has hardly paid heed to such warning and ignored the need for taking initiatives to ensure coordination with other agencies implementing other infrastructure projects in the city,” said a DTCB official.
Dhaka City Corporation (DCC), the executing agency of the first flyover project under public private partnership (PPP), would achieve 40 per cent progress of the work until June. It has refixed target to complete the project by December 2012, six months before the original target.
Prime Minister Sheikh Hasina on June 22 last year inaugurated the project the implementation of which was kept on hold for more than eight years. “The Prime Minister has now requested us to complete the flyover at the earliest possible time and we are now trying to make it by December 2012,” said a DCC official preferring anonymity.
However, the DTCB officials said at least three letters were sent to the DCC authority seeking the detailed design of the flyover during last one year but they have not responded until now.
They said it is very important to ensure coordination among the agencies building important transport projects, including the metro rail, bus rapid transit and Jatrabari-Gulistan flyover..
‘But we have not received the due cooperation from the DCC. They are not providing us with the design of the flyover,” said the DTCB official alleging that the executing agency has sent the same design every time by which technical solution to all these ongoing projects is not possible.
In a study before the construction began last year, BUET identified a number of bottlenecks in the flyover design and alerted the authorities not to proceed without finding a solution.
The BUET experts said the number of piers and height to be used in the flyover would create severe obstruction to the movement of traffic through the existing road due to its substantial narrowing at some points.
DCC’s official record shows that the flyover will have 113 piers in the main structure but more in the ramps to get down and up from six different points in the city.
Transport expert Professor Shamsul Haque of BUET said due to construction of the project under PPP, the commercial interest has got more importance than its technical aspects.
“Though Jatrabari-Gulistan is the country’s most important economic corridor, the functionality of the corridor cannot be damaged by giving importance on commercial interest of the flyover, ” he said.
He said the present design in details is needed to be shared and consulted with other agencies for better coordination with a view to ensure smooth traffic movement
The Jatrabari-Gulistan corridor which is linked with three important highways – Dhaka-Sylhet, Dhaka-Chittagong and Dhaka-Mawa has also connectivity with 30 districts.
The experts studying the metro rail, BRT and dedicated bus service also identified the corridor as the most important location for setting up an interchange to ensure linkage with neighbourhood towns of Narayanganj and Narsingdi.
When contacted, the DCC officials claimed that they had sent all the designs sought by the DTCB in time and alleged that those were not placed properly by the board.
However the BUET experts said the flyover project office did not send the design concerning the grade road under the flyover which is needed to assess the real space allocation for the movement of trucks, covered vans.
They alleged that flyover design had excessive columns, apparently, to force most transports to use it, when completed.
The DCC signed agreement with Belhasa Accom and Associates Ltd under a joint venture with UAE-based Belhasa Engineering & Construction Company.
UAE-based Belhasa Engineering & Construction Company and Bangladesh-based Accom Engineering and Co Ltd jointly dropped bids, and signed an agreement to construct it after wining the bid.
However there were media reports about the foreign partner snapping its relationship with Belhasa Accom and Associates on allegation of forgery and the former filed a case against the latter before leaving.
Belhasa Accom and Associates Ltd, an affiliated company of the Orion Group, now owns most shares of the flyover project.
A DCC official blamed DTCB for creating an unwanted situation over the project saying that they began construction after revising the design through a fresh study in 2009 and received no objection from DTCB during a stakeholder meeting.
Sources said DCC and DTCB have conflict over the flyover project since it was made a PPP project.
Siddique Islam and Munima Sultana
Source: The Financial Express