The Karnaphuli River tunnel project saw a major breakthrough after China Exim Bank released the first instalment of its funds, putting an end to longstanding bottleneck surrounding the mega scheme.
China Exim Bank has recently disbursed $137.6 million as the first instalment of the funds it committed for the project designed to ease nagging traffic congestion on Chittagong-Cox’s Bazar route, officials at Economic Relations Division (ERD) said.
The project had been facing financing constraint for a long time as it had not received the funds required for kick-starting the project even after signing the loan deal with the Chinese lending agency.
“The project faced complexity for a long time as the fund could not be released. But now the problem has gone after ERD’s fruitful negotiation with China Exim Bank,” commented ERD Secretary Kazi Shofiqul Azam.
“We hope that the project execution won’t face any problem now and the project work will get a boost,” he added.
The government signed a loan contract with China for the Karnaphuli tunnel project during Chinese President Xi Jinping’s visit to Dhaka in October 2016.
The Chinese President and Prime Minister Sheikh Hasina also announced a formal launch of the project, but the project was caught in a dilemma for the delay in fund release.
Local authorities went on a frantic effort to overcome the complexity.
Bangladesh paid 0.25 percent of the committed loan or $1,402,390 as the management fees to get the fund released, ERD sources said.
ERD officials said China provides two types of loans—concessional and non-concessional. G2G basis loans are usually deemed concessional that bear no profit for the lender, but buyer’s credits are non-concessional and make some profit.
Both types of the loans have some management cost and China Exim bank charges management fees irrespective of the interest rates and the fees are to be paid before the fund release, they informed.
The government first took the initiative of constructing the proposed 3.4km tunnel in 2009 at an estimated cost of Tk 8,446 crore. The project got the nod in November 2015 to be complete by June 2020.
The government appointed two Chinese and Hong Kong-based companies in 2011 to jointly conduct a feasibility study on the project. A design of the project was done at that time as well.
According to the loan agreement, the Chinese government is supposed to provide $705 million or nearly Tk 5,500 crore loans for the scheme on a G2G basis, while the rest will come from the GoB fund.
The tunnel’s one face will meet Chittagong city’s Naval Academy point in Patenga and another face will be near Chittagong Urea Fertiliser (CUFL) in the bank of Karnaphuli River in Anowara.
In the current fiscal’ ADP, Tk 1,573 crore has been earmarked for the tunnel project, including Tk 565.73 crore from GoB’s matching fund and Tk 1,008.42 crore from Chinese loan.