Home ›› Economy

BBA ‘unable to pay’ Padma Bridge first instalment

Staff Correspondent
28 Feb 2023 21:12:33 | Update: 28 Feb 2023 21:16:44
BBA ‘unable to pay’ Padma Bridge first instalment
General view of Padma Bridge — TBP File Photo

The Bangladesh Bridge Authority (BBA) has expressed its inability to pay Tk 620.77 crore first instalment of Tk 30,193 crore loans taken for Padma Bridge construction. The BBA earned over Tk 395 crore in toll since the bridge’s inauguration on June 25 last year.

Regarding this loan instalment, BBA had sought deferral on repayment till the next fiscal year. However, in a letter issued on February 14, the Finance Division turned down this request and directed the authority to pay the first instalment by June 30, 2023.

The Business Post has obtained a copy of the letter, which has directed the BBA to pay Tk 620.77 crore by the above-mentioned deadline, of which around Tk 313 crore is the principal and Tk 307 crore is the interest.

A BBA official said on condition of anonymity, “The Padma Bridge project is still ongoing, and is expected to reach completion this June, which is why we asked for more time to pay the loan instalment.

“Both parties, the BBA and the Finance Division, will have to meet soon to resolve this issue.”

Meanwhile, a finance ministry senior official, preferring not to be named, said, “After the Padma Bridge was opened, BBA cited financial problems, and said they are unable to pay the first instalment of the loan.”

Due to the ongoing economic crisis, the finance ministry has been emphasising more on debt recovery from various ministries and departments in the current fiscal year.

Consequently, the finance ministry has taken the initiative to collect instalments from the bridge authority, said Finance Division sources.

There are three loan agreements between the Finance Division and BBA for Padma bridge construction, under which the bridge authority has taken this particular loan.

Constructed with the country's own funding, Tk 30,193 crore was spent on the Padma Bridge. Almost the entire amount was provided as a loan to the BBA by the Finance Division.

Under the agreement, the BBA is supposed to repay the loaned amount along with one per cent interest in the next 35 years. Therefore, the bridge authority has to keep paying instalments till 2057.

According to the loan repayment schedule, a minimum of Tk 826 crore would have to be paid every fiscal year. Four instalments have to be paid each FY, and 140 instalments in 35 years. The interest is calculated on the outstanding loan amount after each instalment has been paid.

If the bridge authorities want, they can also pay an instalment in advance with interest. However, in case the BBA fails to pay an instalment in time, it has to be paid with the next instalment, along with arrears.

As per the loan agreements, the Finance Division will assist in fixing the toll rate as per the proposal of the bridge authority, to enable them to repay the debt.

The prescribed toll rate will increase by 10 per cent every 15 years. Apart from this, the BBA will pay VAT and income tax at the prescribed rate on toll earnings.