Report_on_padma_bridge.docx

Introduction: The Padma Bridge is a multipurpose road-rail bridge across the Padma River to be constructed in Bangladesh. When completed it will be the largest bridge in Bangladesh and the first fixed riverCrossing for road traffic. It will connect Louhajong, Munshiganj to Shariatpur and Madaripur, linking the south-west of the country, to northern and eastern regions. The project will include 6.15 km long and 21.10 m wide bridge, 15.1 km of approach roads, toll plazas and service areas. The bridge will contribute significantly towards facilitating the social, economic and industrial development of this relatively underdeveloped region with a population of over 30 million.The area of influence of the direct benefit of the projectis about 44,000 km2 or 29% of the total area of Bangladesh. Therefore, the project is viewed as very important infrastructure towards improving the transportation network and regional economic development of the country. The bridge has provisions for rail, gas, electric line and fiber optic cable for future expansion. .

In this report, the importance of Padma Bridge is discussed in Bangladesh context & also the following questions for conducting my report paper. The central research questions are Why WB’s loan is important in Padma bridge project?  Why good governance fail in Padma bridge project?  What measures should be taken to revive WB’s loan policy?

Figure1: Padma Bridge

Padma Bridge: Location: The Projected area is located in the south-central part (Munshiganj, Shariatpur, and MadaripurDistricts) of Bangladesh. The left bank (north bank) on Mawa side is located in Lauhajangupazila of Munshiganj District whereas the right bank (south bank)on Janjira side located in the JanjiraupazilaofShariatpur District and Shibcharupazila of Madaripur District. Alternatives for Project Location: Feasibility Study has identified following four possible sites for the bridge construction and recommended Site 3: Mawa – Janira as the preferred alignment but their also other alternatives side & these are:  Site 1: Paturia – Goalundo  Site 2: Dohar – Charbhadrasan  Site 4: Chandpur – Bhedarganj

Figure 2: location of Padma Bridge

Funding procedure: The total cost for construction of Padma Bridge has estimated US$ 2.9 billion. The total cost is provided by:  The world bank-$1200 million  Asian development bank(ADB)-615 million  Japan international cooperation agency(JICA)-415 million  Islamic development bank(IDB)-140 million  Bangladesh government-50 million The government also signed another $14.84 million agreement with the IDB for the implementation of the water-supply and sanitation project in cyclone-prone coastal areas, and Abu Dhabi Development Group $30 million.

Figure: Donor's contributions in Padma Bridge (USD)

Construction: One of the manifestations of present government (Awami league) is to construct Padma Bridge. The Bridge will provide a vital missing link in the national road network of Bangladesh, particularly for the southwest part of the country. The bridge is designed to be an approximately 6.15 km long fixed crossing double deck composite steel truss bridge over the Padma river with provisions for four lane highway on the upper deck, and a rail line, gas pipeline, optic fiber cable and power transmission lines on the lower deck. August 20, 2007: An ECNEC meeting headed by Fakhruddin approves the Padma bridge project with a cost estimation of taka 10161 crore but in january11, 2011 ECNEC revised the project & approve take 20507 crore for crore for the project. Awami league government wanted to begin the project in 2011 but it is stopped because of cancellation WB’s of 1.2 billion loan (The WB had cancelled its $1.2 billion credit for the Padma bridge project on June 29). In 25 sept 2012 WB revised its policy & gives conditions to get loan. Government approves these conditions & hopes that Padma Bridge will start on April-may 2013.

Padma Bridge & WB:  WB’s contribution: The World Bank is established to provide loan to developing countries at lower interest rate. WB mainly gives loan to reduce poverty & infrastructural development. From our independence WB is part & parcel of our development process. It gives loan to our infrastructural development it had contributed to construct Jamuna Bridge & also wants to contribute Padma Bridge. In Padma bridge project (February 2011) The WB board approves the $1.2 billion financing out of a total cost of $2.9 billion. It contributes half of the total project at a lower interest rate. The World Bank was supposed to provide $1.2 billion at an interest rate of0.75 percent to be repaid in 40 years with a 10 year grace period. If the normal loan amortization schedule applied, the government would have had to pay $249 million in interest in 40 years. This interest is very low in contrast to other proposal. For this WB’s contribution is very important.

 WB’s conditions: Early June 2012 in a letter to Prime Minister Sheikh Hasina, WB Vice President Isabel Guerrer gives the government “five conditions” to take to get WB funding for the massive project. The conditions are:  A high-powered investigation team has to be formed to probethe corruption allegations in the project.  An independent firm has to be appointed to monitor implementation of the project.  The independent firm will not be under the government or any co-financier of the Bridge project. It will make its recommendations independently, and the authorities concerned will implement those. The persons against whom there are allegations of corruption regarding the bridge project would not be in its implementation.  The co-financiers will have to be actively involved in the procurement process for the bridge.  As a long term step, the government will take initiative to increase the capacity of the ACC.

 WB’s policy about Padma Bridge: Because of corruption WB adopted structural adjustment policy in 1980. Under this policy WB raised strong policy against corruption. Under this policy in February 2011, The WB board approves the $1.2 billion financing out of a total cost of $2.9 billion. But WB cancelled its loan Because of corruption. In September 21, 2011: The WB sends a letter to the finance minister alleging that then the communications minister Syed Abul Hossain and high officials of SAHCO had pressed for the appointment of SAHCO as a “commission agent” regarding the selection of contractors’ pre-qualification for the main bridge’s construction. The lender also suspends financing. WB request RCMP to investigate against SNC – lavalin & by investigation they see

the presence of corruption in this project. After that along time bargaining WB decides to reengage in this project & gives strict policies & tells to the govt to implement these policies. Policies are To place all public officials suspected of involvement in the corruption scheme on leave from government employment until an investigation is complete;  To appoint a special inquiry and prosecution team within the ACC to handle the investigation; and  To grant access to all investigative information to an external panel of internationally recognized experts who will advise the Bank and co-financiers on the credibility of the government’s investigations.

World Bank & Bangladesh government:  WB-Bangladesh Relations: Bangladesh has been maintaining a congenial relationship with the World Bank (WB) for more than 40 years as this institution started financing different development programmes in this region even before the emergence of Bangladesh. Bangladesh became a member of the World Bank in 1972 and till June 2012, it received US$ 16.80 billion as financial assistance from the Bank. Bangladesh received US$ 3.10 billion from the Bank in FY 2011 which was the highest quantum of assistance for any particular year. Currently, the World Bank is financing 41 projects/programs worth US$ 4.23 billion. These projects/programmes are at various stages of implementation. Bangladesh also received commitments for US$ 1.55 billion from the World Bank in FY2012. In fact, the World Bank is the largest financier among the development partners. In this long journey with the World Bank, the government had differences of opinion, but, eventually it found the Bank a progressive and close associate. At times, the World Bank did not approve procurement or expenditure proposals for different projects and also decreased or increased their level of assistance to different projects. The cancellation of the loan may have some long term impact on relations between Bangladesh and the World Bank.

 Why Bangladesh government urge to World Bank? This is important to question that why Bangladesh government urge to WB, as WB is doing more harm than good for the developing countries? Bangladesh, a developing country, is always choice WB for infrastructural development. Bangladesh takes support from WB because the World Bank has been Bangladesh’s development partner sinceour independence. It provides a major part of funds for our annual development programs. Most of our major development projects carried out in last forty years was spearheaded by the bank. The financial assistance that comes from the World Bank is actually funded by the international development agency (IDA), the low-cost financing arm ofthe World Bank group. The financial

assistance, called credit, bears on interest & is repayable over 30-40 years. Each credit has a small commitment fee. IDA credits are available to low-income countries of the world. Bangladesh is among fifty or low-income countries that currently receive this type of assistance. The World Bank assistance for Padma Bridge was also a noninterest credit (.75%) for $1.2 billion. A major fallout of this cancellation is that we have to seek an alternative source, but at a higher cost. If we could get the loans from the donors, the country would have had to pay $505 million. But if we have to get commercial loans, the interest amount would be $ 4.4 billion. This is why Bangladesh government is always urging to WB loans.

 Bangladesh government policy about Padma Bridge project: The present government’s electoral pledge embodied in a vision of Bangladesh is to achieve the status of middle income country. One of the five strategic components of the government’s election manifesto was a very uncompromising stance against corruption. Present government’sone most committeemen is to begin the Padma bridge project. The government want start its construction in 2011 but it is stopped because of cancellation WB’s loan. WB cancels its loan because of corruption. The World Bank has credible evidence corroborated by a variety of sources which points to a high-level corruption conspiracy among Bangladeshi government officials, SNC Lavalin executives, and private individuals in connection with the Padma Multipurpose Bridge Project. As present government’s most important manifestation is to stand against corruption, so government must have clear cut policy about Padma bridge project & the policies are Uncompromising stance against corruption backed by over a dozen specific pledges to build capacity to control this menace.  As WB told about corruption so the government should formtrusty board to investigate corruption.  To conduct of a full and fair investigation into evidence of corruption.  As the bridge has the potential to accelerate growth and transform lives in Southwest Bangladesh and across the nation. So government must not give interest of many to protect the interest of few.  The WB for its part allowed itself to take a controversial decision and miss the opportunity to continue to engage with the government to assist the investigation process, and keep the credit open parallel with the investigation process.  Implement all conditions given by WB & work together with WB.  Assures to give all types of facilities to ACC commission independently to investigate corruption.  Provide all kinds of facilities to WB team. Bangladesh government should revive its policies as soon as possible because WB revives its loan policy but they do not assure to grant loan. Grant of loan mainly depends on the positive report of the WB investigation team. WB investigation work with the Anti-Corruption

Commission (ACC) so it is needed to give independence of ACC to work freely together with WB team & government should provide all facilities for positive report.

Padma Bridge &Bangladesh government:  Padma Bridge & domestic politics: Politics of Bangladesh takes place in a framework of a parliamentary representative democratic republic system whereby different type’s political parties. But the scenario of domestic politics in Bangladesh is not so good. There is lack of trust among the different parties. Since our independence to present time there is no example where the ruling party & opposite party works together in any crisis situation. This is one of the most barriers of all types of development. In present time the issues like Tipaimukh dam, Tista water sharing, Padma Bridge etc the ruling party & opposite party stand against each other. This is the real (negative) scenario 10 of domestic’s politics in Bangladesh. For this attitude (negative attitude) the country has to pay unimaginable prices. In present domestic politics the most talkative issue is the cancellation of WB’s $1.2billion Padma bridge loan. Politics with the planned Padma Bridgeis now live in Bangladesh. Equations in politics that the planned bridge has generated are complex, multidimensional, and bear deeper implications in more than one level. This dispute has transcended from a socio economic investment to political issue. In this issue the leaders of both political parties start to talk is such a way that they think the citizens’ are too naïve & can easily be led believing anything they say. The ruling party politician are now blaring the slogans that the World Bank did not insult not only the government but also the 160 million people of Bangladesh. Without understanding the real scenario, the ruling party leaders started saying that the government constructs this bridge with their own finance (ADP budget). The government has announced that the Padma bridge will cost Tk 23,000 crore over 4 years. This year's budget forecasts show that the total Annual Development Program (ADP) budget for the next 4 years is expected to be more than Tk 300,000 crore. In other words, the Padma Bridge will cost about 8% of the ADP budget. ADP financing of the bridge will make it relatively expensive because our ADP budgets are mostly financed through direct government borrowing from the banking sector at interest rates of up to 11-12%. It will definitely be more expensive than the 0.75%concessional interest rate that the WB was offering on its loan. They are saying this to recover their image to the citizen. They do not think that the corruption is possible in this project. The opposition party, BNP, has tactical advantage in this issue. They can pressurize the government to find out the corrupted person but without considering the welfare of the country

they use this issue for their party benefits. They directly are saying that this government is totally corrupted. We were better than that of the present government. On Saturday, BNP Chairperson Khaleda Zia alleged that Prime Minister Sheikh Hasina was involved in corruption of the muchtalked-about Padma Bridge project. “The Padma Bridge couldn’tbe built due to corruption of the Prime Minister and her government.” She branded the present tenure of the government as an ‘internationally-r-cognised corrupt regime’. One of the opposite leader said that “The Prime Minister knew who were involved in corruption in the Padma bridge project. She had not taken 11 any action in this regard. But, now she is giving her cell phone numbers and e-mail address to the citizens. Corruption cannot be buried with such silly tactics”. This is not right the opposite leaders should analyses the real situation& gives the constructive advice to the government.

 WB’s views about Bangladesh domestic politics: The world bank which giving loan to developing countries doing more harm than good. They have intentions to control domestic politics of loan receiving countries. If domestic politics in a country is strong then WB can’t control this country’s policies. So when they approves loan of a project, they also gives terms & conditions of using this loan. WB’s view about Bangladesh domestic politics is negative. They think that there have lack accountability, transparency & trust among the political parties. WB use this chance to show himself as an actor maintain what polices the government should be taken. Corruption is remaining in the entire project which is donated by World Bank. In all the time the ruling government can’t any initiatives t minimize the corruption. Under structural adjustment policy WB adopted strong voice against corruption in late 80s.before 80s Bangladesh governments receive a lot of loan they can’t used these properly because of corruption. But now WB is strong against corruption for this they cancel $1.2 billion loans because of corruption. From the beginning, the World Bank classified its investment in Bangladesh has “high risk” and expressed concern over a “weak governance environment.” As such, the project entailed numerous measures to prevent corruption in its Governance and Accountability Action Plan. WB’s perception about Bangladesh domestic politics of that it is fully corrupted country & there is no strong mechanism to raised voice against corruption. Accountability conception is limited, high officials, political leaders, are not accountable for their activities.

Padma Bridge & good governance:  Peoples’ hope: The Padma Bridge will be built to provide road and rail links between the relatively less developed Southwest region (SWR) of the country and the more-developed eastern half that includes the capital of Dhaka and the port city of Chittagong. Furthermore, because of its location in the South West region of Bangladesh, Padma Bridge is expected to have larger impacts on this regions compared to the other parts of Bangladesh. By facilitating transportation across the river, the bridge is expected to lead to a greater integration of regional markets within the Bangladeshi national economy. Given the interdependence of economic activities/sectors, the direct impacts of the Padma Bridge on individual sectors and factor markets are likely to induce a chain of changes in the rest of the sectors of the economy. It is expected that the Padma Bridge will have the most significant economic and poverty impacts in Khulna and Barisal Divisions. At least 30 million people, almost one-fifth of the country’s total population, will directly benefit from the bridge, according to a study by the World Bank. At the same time, it is expected to raise Bangladesh’s GDP by 1.2%, pushing it over 7% and thus, enabling it to become a middle-income country by World Bank standards, with over $1,000 per capita income by 2020. But the construction of Padma Bridge is canceled because of high level officials’ corruption. Peoples’ always hope that the present government will start this project. To begin this project government must be punished corrupted person & ensure the donor agencies that present government is against corruption. WB cancels its approved loan ($1.2billion) by saying that corruption is remaining in this project. Without WB’s loan it is difficult (not impossible) to construct Padma bridge. If finally WB cancels this loan project then the other donor agencies will not provide loan in this project. So people’s perception is that the government should communicate the high officials of WB to reconsider this project & also fulfill the conditions of WB. Peoples think that if we consider receiving loan others than we have to pay commercial interest of the loan which will affect our national economy (more like national GDP)& WB’s loan is more like noninterest (0.75%) duration to pay is long. So peoples’ perception is that at any cost government should agree WB to reengage in this project.

Figure: Dreamy Bridge for the people of Bangladesh  Why good governance fails: In the 1992 report entitled “Governance and Development”, the World Bank set out its definition of good governance. This term is defined as “the manner in which power is exercised in the management of a country’s economic and social resources for development”. The World Bank identified three distinct aspects of governance:  The form of the political regime;  The process by which authority is exercised in the management of a country’s economic and social resources for development;  The capacity of governments to design, formulate and implement policies and discharge functions. But governance in Bangladesh is very weak. There is no effective mechanism to ensure good governance from top to bottom. The basic characteristics of good governance (accountability, transparency, rule of law etc) are limited in our administrative system. Because of limited good governance corruption is possible. Entire nation has to suffer for the actions of just a few. The cancellation of the $1.2 billion credit for the Padma Bridge project will have an adverse effect on the Bangladesh economy for years to come. But the ruling government consistently are saying that there no corruption in Padma bridge project without inquiring the real situation. Bangladesh has been at, or near, the bottom of a number of accountability, transparency and corruption indices over the last decade. Corruption is one of the leading obstacles to political, economic and 14 social development. On top of endemic corruption, the rule of law is weak, and there is limited bureaucratic transparency. It has undermined the rule of law and has weakened the institutional basis for good governance. Good governance fails because the ruling government is not willing to strong the mechanism of the characteristics of good governance but good governance is preconditions for all kinds of development. If the ruling government took measures at initial stage of WB’s claim then there

is to solve this uncertain situation. Good governance fails mainly the unwillingness of the government to raise voice against corruptions.

Expert’s views: From beginning to present experts’ express very important analysis about Padma bridge issues. When WB cancel their approved loan because the corruption then the experts gives advice to government what the government should do in this crisis situation. Executive director of transparency international Iftekharuzzaman said that, “the present government's electoral pledge embodied in a vision of Bangladesh to achieve the status of a middle-income country. One of the five top strategic components of the government's election manifesto was a very uncompromising stance against corruption. The government should proceed fast to set up a fully independent special judicial committee of highest possible credibility to investigate into the allegations of corruption. The proposed committee should be bestowed with full powers, independence and technical support to investigate into the matter and recommend action in accord with the relevant laws within a specific deadline. While an investigation on alleged corruption continues in Bangladesh and Canada, to which WB should provide full support, it should review the decision and find waysto provide the credit by sharing the responsibility as a key fiduciary agent of the project to ensure integrity, transparency and accountability in the implementation process.” Chairman of Palli Karma-Sahayak Foundation (PKSF) Dr Qazi Kholiquzzaman Ahmed, said, "I hail the Prime Minister for deciding to build the Padma Bridge with our own fund, if needed." "The cancellation of the WB contract has opened up an opportunity for us. Now we can assess our strength as a nation and stretch our ability," Ziauddin choudhury said that, “The World Bank may have canceled the IDA Credit because it thinks this is the best way to respond to our seeming unresponsiveness. But the door need not be closed forever, if we realize that for the greater good of the country and our people we have to take some bold and corrective steps. A nation's interest is much more precious and our people's future is much more important than preserving the interests of an individual or a few people. I do believe that the government will take steps to reopen the dialogue with the World Bank. The Bank remains and should remain our development partner.” Civil servant A Ahmed said that, “we have to reopen our dialogue with the World Bank & this time with members who enjoy confidence of the people & have a reputation of integrity ,impartiality, & negotiating expertise. The Padma Bridge is a national issue for Bangladesh &must be above politics. The leader of opposition should stand by the prime minister on this issue.”

Recommendations: In present, the most important infrastructural development in our country is to construct Padma Bridge. The ruling government has taken initiatives but it is stopped because of uncertainty between government & the World Bank (donor agency). The World Bank cancels its loan (1.2 billion) because of corruption. As it is the manifesto of ruling government to build Padma Bridge so the government should communicate WB to revive its loan policy. To reengage WB’s loan policy should take the following measures (this is mainly my own conception) The government should resolve all disputes with the donor agencies and manage aid coordination in an atmosphere of mutual trust and respect.  The government to set up a fully independent special judicial committee to investigate the allegations of corruption and ensure exemplary punishment to those found guilty.  The government should raise its voice against corruption.  The government should take corruption into consideration &formed a trusted committee to investigate corruption.  The government needed to strengthen its procurement system.  The government should be taken initiatives measures to strengthen the characteristics of good governance.  Government should be punished those person who is engaged in corruption.  Government should be granted the conditions of the World Bank & take effective measures to fulfill these conditions.  Government should strengthen anti corruption commission (ACC) to investigate independently.  The government should provide all support to the WB team.  Both ruling party & opposite party should not use this issue for their party interest rather they should consider it as national issue & work togetherto solve this problem.  The overall recommendation for government is that at any cost the government should start Padma bridge project.

Conclusion: Construction of Padma Bridge is expected to generate welfare to the people of Bangladeshi general and the people of South West in particular. The benefits are expected to arise from the greater integration of regional markets within the Bangladeshi national economy. If it is constructed it will be the largest (6.15) bridge in our country. It will directly impact the national 17 GDP (1.2%) of our country. In such project the government should not compromise against corruption. The government should cooperate with WB to find out corruption & to revive its loan policy. My concern is that this issue should be above from dirty domestic politics. Here in this issue the ruling & opposites should work together

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