Bangladesh govt seeks $8.9b NDB loans for 5 key connectivity projects

The government has sought loans from the China and Russia-led New Development Bank (NDB), formerly BRICS Development Bank, to finance the construction of five bridges at an estimated cost of around $8.87 billion, according to the Bridges Division.

These projects include a bridge to connect Barishal and Bhola with a projected cost of Tk17,500 crore ($1.615 billion), as per the final report of a feasibility study, and the second Padma Bridge in Paturia-Goalanda with an estimated cost of around Tk31,200 crore ($2.8 billion).

The proposed bridge over the Kalabodor and Tetulia rivers aims to establish direct road connectivity between mainland Barishal and Bhola.

The other three Bridges Division projects for which loan proposals have been sent to the NDB are a bridge on the Bakerganj-Bauphal road over the Karkhana River, one on the Bhola-Lakshmipur road over the Meghna River, and either a tunnel or a bridge over the Maheshkhali channel in Cox's Bazar.

Moreover, various ministries and government divisions have submitted proposals to obtain loans from the NDB for numerous projects, as reported by the Economic Relations Division (ERD). Initial estimates by officials indicate that the potential cost of these projects could reach as high as $23 billion.

An NDB delegation, led by its Vice President and Chief Operating Officer Vladimir Kazbekov, visited Bangladesh on 21-23 January. During this period, discussions were held with the Bridges Division regarding the financing of various development projects.

"The government has plans to build several bridges. The master plan in this regard is also in the final stage. Some of these projects have received final feasibility study reports, and the review work is underway. The issue has been highlighted in the meeting with the NDB," Md Monjur Hossain, secretary of the Bridges Division, told The Business Standard.

He said the Bridges Division did not prioritise funding for any particular project during the meeting with the NDB. The NDB is expected to invest in the bridges it is interested in based on its review.

Five more major bridges

Officials of the Bridges Division and Bangladesh Bridge Authority say the feasibility study for the construction of the bridge on the Barishal-Bhola road project has been completed.

The Indian consulting firm, STUP Consultants, has submitted the final report. The bridge department is currently reviewing the report, and simultaneously, the preparation of the preliminary development project proposal is in progress.

Bridges Division officials said the Tetulia River separates the 3,400 square-kilometre Bhola district from the mainland, where more than 20 lakh people reside. Currently, the only access to this island is through a river route. The proposed bridge, with a length of 4.7km along with a 4.8km approach road, aims to enhance connectivity with the district.

Additionally, it will enable the construction of a pipeline to transport the gas produced in Bhola to the mainland. Bhola's Shahbazpur gas field is reported to have 721 billion cubic feet of gas reserves.

Meanwhile, officials of the Bangladesh Bridge Authority say the construction of the bridge on the Bakerganj-Bauphal road over the Karkhana River project will cost Tk3,048 crore ($363 million). The feasibility study for this project has already been completed.

The proposed bridge will establish direct road connectivity between Barishal and Patuakhali through the Bakerganj and Bauphal upazilas.

An NDB loan has also been sought for the construction of a 9.20km bridge over the Meghna on the Bhola-Lakshmipur route. A pre-feasibility study is currently underway for the construction of this bridge. The estimated cost of the project is around Tk37,000 crore ($3.36 billion), according to preliminary estimates by the Bridges Division.

Officials of the division said there is a plan to construct a 6km long bridge over the Padma on the Paturia-Goalanda road. According to preliminary estimates, the construction of the bridge will cost around Tk31,200 crore ($2.8 billion).

Besides, the government is seeking NDB financing for the construction of a tunnel or a bridge from Maheshkhali to Cox's Bazar. The Bridges Division estimates that the construction of the 2km tunnel or bridge may cost an estimated Tk8,100 crore or $736 million.

More loan proposals to the NDB

Officials at the Economic Relations Department (ERD) say apart from the Bridges Department, the NDB delegation held separate meetings with the Ministry of Civil Aviation and Tourism, Ministry of Railways, Local Government Division, Road Transport and Highways Division, Ministry of Local Government, Rural Development and Co-operatives, Local Government Division, and Energy and Mineral Resources Division.

During these meetings, the ministries and divisions submitted project lists for financing to the NDB. Preliminary estimates by officials suggest that the estimated cost of the projects is $23 billion. However, the final approval from the NDB will be obtained after sending the PDPP of the projects.

Before this, the government will determine in which projects NDB loans will be taken, and the PDPP will be sent to the NDB through the ERD.

Meanwhile, proposals have been sent to the NDB for financing 17 projects from the Power Division, ERD sources said.

Among these, there are five projects in electricity generation from renewable energy and five projects in the distribution system and transmission.

The total cost of implementing these projects has been estimated at Tk41,373 crore ($3.727 billion). Of this, Tk32,315 crore ($2.911 billion) has been proposed to be financed from foreign loans.

Md Habibur Rahman, senior secretary of the Power Division, said, "The list has been given to the NDB based on the type of projects that NDB is interested in financing. For example, they have funds in renewable energy. That is why we have included some projects in this sector."

Meanwhile, loans have been sought from the NDB for 10 projects of the Road Transport and Highways Division. However, the cost of the projects was not mentioned.

Besides, the Ministry of Civil Aviation and Tourism has sought loans for two projects, the Ministry of Railways has sought loans for eight projects, Dhaka Wasa wants loans for five projects, and the Energy and Mineral Resources Division wants loans for three projects.

Bangladesh's relation with the NDB

Although Bangladesh obtained NDB membership in September 2021, the country is yet to receive a loan from this organisation due to the lengthy process of submitting loan proposals. However, loan processing for two projects is at the final stage.

After gaining membership, the NDB wrote to various organisations in Bangladesh through the ERD, seeking loan proposals. As the Secured Overnight Financing Rate (SOFR) rises amid the current geopolitical situation caused by the Russia-Ukraine war, Bangladesh is taking fewer market-based loans. Due to this, the government is moving slowly to take loans from the NDB, said ERD officials.

According to the ERD, the NDB wants to facilitate $4.5 billion for Bangladesh during the next five years for infrastructure development. However, there is an opportunity to further increase the loan amount depending on the readiness of Bangladesh.

ERD officials say a loan agreement worth $763 million for two projects could be reached with the NDB this year. This includes Dhaka Wasa's water supply project, for which the NDB will lend $320 million with a grace period of seven years. The project has already received the approval of the Executive Committee of the National Economic Council (Ecnec), and the loan agreement is expected to be finalised by next June.

Additionally, the NDB will provide $443 million to replace decades-old leaky gas pipelines. Titas Gas Transmission and Distribution Company Limited is anticipated to finalise a loan agreement with the NDB for this project within this year, according to ERD officials.

The NDB extends loans to member countries in six sectors – clean energy and energy efficiency, transport, infrastructure, water and sanitation, environmental protection, social infrastructure, and digital infrastructure.