World Bank (WB) has decided to withdraw from two projects in the country. As a result, the government will have to return 31.70 crore taka for one project and will not receive an additional 154 crore taka funding for another project.
WB had released advance fund for a project titled 'Dhaka Public Transport Improvement (DPPIP)' to ease traffic congestion in Dhaka.
The global lender sent a letter to the government asking for a refund of the money released in advance for the preparation of the project. As a result, the government will have to return 31.70 crore taka to WB.
Additionally, WB has cancelled a loan agreement of 154 crore taka under the additional financing agreement of Siddhirganj Power Project. As a result, Bangladesh will not receive the WB loan of around 154 crore taka.
The Economic Relations Division (ERD) has informed the Ministry of Finance about the separate letters sent from the WB Dhaka office.
Sources at the Ministry of Finance and ERD confirmed the matter to the Business Post.
The letter to ERD on the DPPIP project said WB signed an advance agreement on the proposed project on June 27, 2019. However, the project is not progressing at this stage. For this, it was requested to return 31.70 crore taka given in advance by WB.
The matter was reported to the Finance Ministry in a letter signed by ERD Deputy Secretary Roxana Khan.
On the other hand, the letter regarding Siddhirganj Power Project said, out of the total loan agreement for 12.56 lakh SDR (Special Drawing Rights) will not be released.
This means the contract has been cancelled. SDRs are the IMF's own currency. US Dollar is valued at $ 1.41 per SDR. As per this, the amount of cancelled contract in local currency is Tk 150.71 crore.
Mohammad Anis, the WB’s Acting Country Director for Bangladesh, wrote a letter to ERD Secretary Fatema Yasmin on August 5 informing her of the cancellation of the agreement.
Finance ministry has been informed about the matter in a letter signed by Syeda Masuma Khanam, Deputy Secretary, ERD.
Regarding the matter, Sahabuddin Patwari, ERD Additional Secretary and Head of ERD’s World Bank Wing, told The Business Post, “Work on the DPPIP project has been going on for a long time.”
“However, the priority of the project has been demoted due to various reasons including the coronavirus pandemic, therefore, the project is in suspension at the moment. But the World Bank had earlier released some money as an advance, now it has to be refunded,” he said.
“On the other hand, the full amount of the World Bank loan agreement was not spent on the Siddhirganj Power Project. The unspent money will not be returned. However, the remaining amount of the contract will not be released by WB. They referred to it as the cancellation of the contract,” he added.
Mehreen A Mahbub, spokesperson of the World Bank's Dhaka office, told The Business Post, “The contract under the Siddhirganj power project was not be spent. The work of the project has been completed, so WB will not release the unused money. On the other hand, the DPPIP project will not happen this year. So, money released in advance has to be returned.”
She added there is a possibility that WB will give this money for other projects in Bangladesh.
An initiative was taken to introduce Bus Rapid Transit (BRT) from Gazipur to the airport. In order to expand the project, DPPIP was in introduced. The project was estimated to cost Tk 39.24 crore. The WB was supposed to provide assistance.
On the other hand, to meet the growing power demand, the project named Siddhirganj 2x150 MW Peaking Power Plant was approved on September 6, 2009.
The cost was estimated at Tk 2,077 crore. Of this, WB’s funding was Tk 1,502 crore. A loan agreement was signed with the WB on 13 November 2008 for the implementation of this power plant.
Later, its expenditure increased to Tk 4,239 crore. In other words, by increasing the expenditure by Tk 2,162 crore, Tk 1,622 crore is expected as additional assistance in the foreign aid sector. Now the World Bank will not release Tk 150 crore from this extra money.
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