Chinese loans sought for rail projects

Bangladesh has finalised four railway projects for seeking Chinese soft loans, top finance ministry sources said.

These include the Dhaka-Mawa-Bhanga rail link of the Padma bridge that will require $2.18 billion and the Bhanga-Jessore rail link of the Padma bridge costing $1.14 billion.

The two other project for which Chinese soft loans will be sought are the double lining of Joydevpur-Ishwardi tracks that would require $897 million; and double track lining of the Joydevpur-Mymensingh route that would cost $331 million.

The railways ministry has already signed memorandums of understanding with China Railway Group Ltd for the two Padma bridge rail link projects.

China is prepared to offer between $ 15 to 20 billion for key railway projects.

A 3-member committee headed by an additional secretary of the railway ministry is said to have already identified eight such projects , for which Chinese soft loans to the tune of $ 10.79 billion can be sought.

The list has been send to the Finance ministry which has now finalised the four projects including the two involving the Padma Bridge for seeking Chinese soft loans. 

But Bangladesh is trying hard to soften the terms of the loans offered and negotiations are continuing. 

On April 12, Finance Minister AMA Muhith met Chinese Ambassador Ma Mingqiang in this connection.

China charges 2 percent interest on soft loans with a repayment period of 15 years, including a 5 year grace period. The loan also carries 0.2 percent commitment fees and 0.2 percent management fees.

In case of such loans, the Chinese government selects the contractor, and stipulates that all materials for the projects have to be purchased from China.