Dhaka eyeing $250m Turkish suppliers’ credit
Author / Source : JAGARAN CHAKMA
DHAKA, June 2: Although most public-private partnership (PPP) projects still remain confined to drawing boards, the government is going to borrow US$ 250 million suppliers’ credit, as line of credit (LoC) from Turkey, to implement some of those planned projects. Sources in the Economic Relations Division (ERD) said that preliminary formalities, for the borrowing, have almost been completed. Türk Eximbank wants to give the USD 250 million LoC for implementing PPP projects, especially those in the infrastructure development sector, ERD sources said.
The Turkish government has already placed the proposal, raised by Türk Eximbank, at its cabinet meeting.
Earlier, on February 29, a meeting was held at the ERD, to discuss the framework of the agreement. Sources added that a two-member delegation of Türk Eximbank will visit Dhaka, on June 11, to negotiate the issue. Türk Eximbank has already sent the draft framework agreement to ERD. The two eximbank officials who will visit Dhaka, to negotiate the deal, are assistant general manager (buyers’ credits), Alaaddin Metin, and assistant manager (in charge of Bangladesh), Suzan Usta.
Earlier on April 24, the Türk Eximbank wrote to the councellor of Bangladesh embassy in Turkey, Shah Asif Rahman, saying, “The loan facility will be provided in accordance with the preference of government of Bangladesh. The selection of the projects, as well as, experts or construction firms, will be managed by the Bangladesh side.”
The bank also wrote, “As Türk Eximbank borrows on floating rates, all of our loans are also offered at floating rates. The rate offered to Bangladesh, and for any other party, are determined in such a way that they do not go below the cost of borrowing of Türk Eximbank.”
According to the draft framework agreement prepared by the finance ministry of Bangladesh, the credit facility would be made available by Türk Eximbank to the borrower, in order to finance 85 per cent of the goods and services that would be exported from Turkey to Bangladesh, under the LoC, to be issued by a bank nominated by the borrower, to Turkish commercial bank, in favour of the Turkish exporters.
It also said, “The goods, to be exported, should have a minimum Turkish component of 50 per cent.” According to a message faxed to the Bangladesh mission in Turkey, on April 29, the rate of interest and repayment period are: Libor plus 3.5%, with up to 10 years maturity, including grace period for construction projects undertaken by Turkish contractors; and Libor plus 3%, with up to 5 years maturity, for capital goods exported from Turkey to Bangladesh.
Meanwhile, the Federation of Bangladesh Chamber of Commerce and Industries (FBCCI) and Dhaka Chamber of Commerce and Industries (DCCI) has asked the government to use the Turkish LoC towards establishing economic zones, ETP plants under BSCIC or ministry of industries, an industrial zone in Savar, coal-based power plants, composite garments or tannery projects whose finished products can be sold back to Turkey, and water supply and sanitation units.
The Annual Development Programme (ADP) for the upcoming 2012-13 fiscal year has included 10 public-private partnership (PPP) projects, in sectors ranging from communications to energy.
Seven of the 10 projects are under the communications sector. Four are under the roads division—the Dhaka Elevated Expressway, a second Padma bridge between Paturia and Goalundo, Dhaka-Ashulia Elevated Expressway, and a tunnel under the Karnaphuli river.
Three are related to the railway—a double-line dual-gauge track on the second Bangabandhu Bridge, a rail line from Dohazari to Cox’s Bazar, and a rail bridge from Fulchhari to Bahadurabad ghat.
The remaining three projects are under the energy sector—renovation and modernisation of the Eastern Refinery Limited, setting up an LPG cylinder, and accessories manufacturing plant at Elenga, and a 0.10 million tonne capacity LPG bottling plant, which includes import facilities, storage tanks, pipelines and jetty.