An Investigating Report on Padma Bridge
|Padma Multipurpose Bridge at a Glance|
|Carries||Motor vehicles, Railway|
|Locale||Louhajong, Munshiganj to Shariatpur and Madaripur, Bangladesh|
|Maintained by||Bangladesh Bridge Authority|
|Total length||6,150 m (20,180 ft)|
|Width||21.10 m (69.2 ft)|
|Construction begin||expected in 2013|
|Construction end||expected in 2016|
|Coordinates||23°25?21?N 90°18?35?ECoordinates: 23°25?21?N 90°18?35?E|
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 river crossing 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 covers three districts — Munshiganj (Mawa Point/North bank), Shariatpur and Madaripur (Janjira/South bank). The total area of land to be acquired and required for its components is 918 hectares. The requisition of land for the construction yard will be for six years on a rental basis. As per the new design, an additional 144.04 ha has been identified for acquisition, bringing the total to 1062.14 hectares. This additional land is required because project site lost significant land due to erosion, for transition structures and due to a change in railway alignment.
Figure: Graphical Presentation of proposed Padma Bridge
The two-level steel truss bridge will carry a four-lane highway on the upper level and a single track railway on a lower level. 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.
Project cost is estimated to be US$3.00 billion. Funding for the project is provided by the Asian Development Bank (US$615 m), the World Bank ($1.5 billion), Japan International Cooperation Agency ($415 m), and Islamic Development Bank ($140 m). 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 m). Of the total amount, the government will provide Tk 50 million while the rest will come in the form of project aid.
The Bangladesh Bridge Authority (BBA) invited the pre-qualification tender for the project in April 2010. Construction of the bridge was expected to commence by early 2011 and be ready for major completion in 2013 (and complete all sections by late 2015). The proposed Padma Multipurpose Bridge Project will provide direct connectivity between the central and southwestern part of the country through a fixed link on the Padma River at Mawa-Janjira points. 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 project is about 44,000 km 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. The project will be co-financed by the government of Bangladesh, the World Bank, the Asian Development Bank, the Japan International Cooperation Agency (JICA) and the Islamic Development Bank. The Bangladesh Bridge Authority is the executing agency of the project.
Communications Minister Obaidul Quader confirmed that the government is going to sign a memorandum of understanding (MoU) with Malaysia on February 21 to construct Padma multi-purpose bridge. Once the MoU is signed, the loan interest and other issues will be finalized through negotiation, the minister said while talking to reporters at Roads and Highways office in the capital. The Malaysian government on January 30 formally offered financing for the construction of Padma bridge project, which has been welcomed by Bangladesh government. Malaysian official news agency Bernama reported on Saturday that a consortium comprising experienced Malaysian construction companies will be set up to undertake the $2.19 billion (RM 6.6 billion) Padma multi-purpose bridge project after the Bangladesh government accepts Malaysia’s technical and financial proposals on the project.
Construction of the 6.15 km bridge became uncertain when the World Bank suspended a $1.2 billion loan last year alleging corruption in the pre-bidding process. On 29 June 2012, World Bank cancelled its $1.2 billion loan.
On 16th July, China Railway Engineering Corporation has proposed Government of Bangladesh with a better offer than World Bank to build the Padma Bridge about no interest and 3 years work time feature.
Padma Bridge: From Beginning to Now
2.1.0 Fund Rising of Padma Bridge
Padma Bridge is very much desired and a dream project to Bangladeshi people. It’s also having a great economical impact on Bangladesh’s economy. When completed it will be the largest bridge in Bangladesh and the first fixed river crossing for road traffic. It will connect Louhajong, Munshiganj to Shariatpur and Madaripur, linking the south-west of the country, to northern and eastern regions. It will unlock the economic potential of the Southwest Region, transforming the lives of millions of Bangladeshis and accelerating national growth toward middle income country status. It will also enable a large scale development in this area which will ensure more business related activities. The ultimate result will be a good amount of expansion of total economy of Bangladesh.
At 04th December 2010 Communications Minister Syed Abul Hossain has said that the funds for the much-desired Padma Bridge have been arranged and its construction will be completed before the end of the tenure of the current government.
The minister mentioned this on 03rd December, 2010 while distributing the compensation among the landowners, whose lands have been acquired for the bridge, at Zazira in Shariatpur.
Abul Hossain said that the bridge will be constructed at a cost of Tk 210 billion – of which Tk 160 billion has been pledged by the foreign donors and Tk 50 billion will be provided by the government.
The latest figure is way above the original estimate for the construction, which stood at Tk 168 billion, or $2.4 billion.
Of the total cost, the World Bank would provide $1.2 billion, Japan $300 million, Asian Development Bank $ 550 billion, Islamic Development bank $120 million, while Abu Dhabi Development Group would give $30 million. The rest of the funds would be collected from different internal source
Prime minister Sheikh Hasina, however, a few days ago said that during her official visit to Japan, the Japanese government pledged to provide an additional US$ 100 million for the construction of the bridge.
On the other side at 19th December, 2010 the World Bank was announced that they are expected to finalize an initial $1.2 billion (Tk 84 billion) financing package for the Padma Multipurpose Bridge Project in January, according to World Bank Country Director Ellen Goldstein. She confirmed this when she met with the Honorable Prime Minister Sheikh Hasina today to provide an update and seek guidance on preparation of this flagship project.
The meeting with the Prime Minister followed a visit by the World Bank Country Director to the bridge site to assess progress in preparation. About 14,000 households will be affected by construction of the bridge, which requires land purchase and resettlement of many families. Robust environmental and social actions plans are already under implementation, and have garnered global awards and recognition for Bangladesh.
‘Work is underway to begin construction of the bridge. Construction of clinics, schools, markets and other community infrastructure, employing local men and women, has begun at the four resettlement sites’ said Ms. Goldstein. ‘Through retroactive financing, the World Bank is already funding land purchases before formal approval of our contribution. Overall, we will be financing $220 million in environmental and social actions to ensure that families in the construction zone have land, homes, livelihoods and community assets for improved welfare.’
In the meeting, Ms. Goldstein congratulated the Honorable Prime Minister for her leadership and close monitoring of the project’s progress, which has maintained momentum in preparation. She also noted the strong partnership among co-financiers, including the Asian Development Bank, Islamic Development Bank and the Japan International Cooperation Agency, which has helped keep project preparation on track. The Honorable Prime Minister encouraged rapid implementation and stressed the importance of transparency and accountability on a project of such prominence and national stature.
The World Bank financing, through a soft credit of the International Development Association (IDA), carries less than one percent interest and a repayment period of 40 years. This type of low-cost financing ensures maximum development benefits for the people of Bangladesh when the bridge is completed.
2.2.0 Question of corruption and Investigation of Padma Bridge:
April, 2011: International authorities have started investigation on a serious allegation of corruption and irregularity related to US$ 2.9 billion Padma Bridge project in Bangladesh. If the alleged case of heavy bribery related to the Padma Bridge project, the communication minister will be the second Bangladeshi national caught for receiving bribe from any international company, after Arafat Rahman Koko [son of the former Prime Minister] was already caught to have received huge amount of bribe from NICO. Syed Abul Hossain is considered to be one of the most influential ministers in Bangladeshi cabinet.
After the first-ever foreign bribery guilty plea by NICO Resources Inc, which admitted to bribing a Bangladeshi junior energy minister, who was paid off with the use of a car and a paid trip to Canada and the US, Canadian authorities raided the offices of SNC-Lavalin Group Inc. outside Toronto on Thursday in connection with a corruption probe into the engineering giant’s work on a World Bank-funded bridge project in Bangladesh. A spokeswoman for the Royal Canadian Mounted Police [RCMP] confirmed the raids. Without mentioning the Padma project, Leslie Quinton, SNC-Lavalin vice president of global communications, said it was “assisting the RCMP in their investigation on a specific case in which they requested our collaboration.”
“We are complying fully with their requests and are not aware of any reason that would warrant such an investigation,” she said. “Because the situation is under investigation, we cannot comment any further.”
The RCMP launched the probe following a referral from World Bank officials about alleged corruption in the bidding process for the Padma Bridge project. RCMP spokeswoman Const. Julie Morel confirmed that the force had executed search warrants at several locations as part of an investigation of SNC-Lavalin employees Thursday.
A World Bank spokesman said RCMP executed search warrants in “several locations” following a referral by the Bank’s anti-graft unit, which is investigating allegations of corruption in the bidding processes for the Padma Bridge Project in Bangladesh. The World Bank signed a 40-year deal in April 2011 to lend US$ 1.2 billion to Bangladesh to build the four-mile bridge over the river Padma. The bridge will link Bangladesh’s underdeveloped south with the capital, Dhaka, and the country’s main port, Chittagong. Once completed, it would be the largest bridge in the country.
“We have been informed that the Royal Canadian Mounted Police is investigating employees of SNC-Lavalin for violations of Canadian law,” the World Bank spokesman said. “We commend the Royal Canadian Mounted Police for its robust response to the World Bank referral and look forward to the outcome of its investigation.”
In April, 2011 SNC-Lavalin’s interim chief executive, Ian Bourne, said the company had “launched our own internal investigation when this matter was first brought to our attention, and we will continue to cooperate fully with the World Bank on this matter.”
Because the question of corruption has risen, the World Bank suggested the Bangladesh Govt. to take some steps for enabling the smooth investigation. The World Bank suggested that the Govt. adopt four measures.
§ Firstly, the Anti-Corruption Commission (ACC) was asked to form a special joint investigative and prosecutorial team to work together on the investigation and follow up. The ACC agreed with this proposal.
§ Secondly, the Govt. accepted an alternative project implementation arrangement which gave co-financers greater oversight over procurement processes.
§ Thirdly, the ACC was asked to provide information to an external panel under World Bank auspices, allowing the panel to assess the adequacy of the investigative process. Ultimately the ACC would not accept any formal relationship with external panel to share information.
§ Finally, the Govt. was unwilling to exclude public officials from public service for the duration of the investigation although Bangladeshi law permits this. Unable to reach agreement on two of the four measures during a last mission to find a way forward in June; the World has left with no option other than to cancel our support for the Bridge.
2.3.0 Cancellation of the World Bank Credit for the Padma Multipurpose Bridge Project:
Due to failing of Bangladesh Govt. to adopt the suggested measures; the World Bank cancelled $1.2 billion credit for the Padma Bridge. At 29 June, 2012 the World Bank officially announced the cancellation of credit. The Bank’s statement is given below:
2.3.1 World Bank Statement on Padma Bridge
WASHINGTON, June 29, 2012—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.
The World Bank provided evidence from two investigations to the Prime Minister, as well as the Minister of Finance and the Chairman of the Anti -Corruption Commission of Bangladesh (ACC) in September 2011 and April 2012. We urged the authorities of Bangladesh to investigate this matter fully and, where justified, prosecute those responsible for corruption. We did so because we hoped the Government would give the matter the serious attention it warrants.
In Canada, where SNC Lavalin‘s headquarters are located, after executing numerous search warrants and a year-long investigation based on a referral from the World Bank, the Crown Prosecution Services brought corruption charges against two former SNC executives in connection with the Padma Bridge Project. Investigation and prosecution are ongoing but the court filings to date underscore the gravity of this case.
Because we recognize the importance of the bridge for the development of Bangladesh and the Region, we nonetheless proposed to proceed with an alternative, turnkey-style implementation approach to the project provided the Government took serious actions against the high level corruption we had unearthed. It would be irresponsible of the Bank not to press for action on these threats to good governance and development.
To be willing to go forward with the alternative turnkey-style approach, we sought the following actions:
(i) place all public officials suspected of involvement in the corruption scheme on leave from Government employment until the investigation is completed;
(ii) appoint a special inquiry team within the ACC to handle the investigation, and
(iii) Agree to provide full and adequate access to all investigative information to a panel appointed by the World Bank comprised of internationally recognized experts so that the panel can give guidance to the lenders on the progress, adequacy, and fairness of the investigation. We worked extensively with the Government and the ACC to ensure that all actions requested were fully aligned with Bangladeshi laws and procedures.
We proposed that when the first bids would be launched, the Bank and the co-financiers would decide to go ahead with project financing if they had determined, based on the Panel’s assessment, that a full and fair investigation was under way and progressing appropriately.
In an effort to go the extra mile, we sent a high-level team to Dhaka to fully explain the Bank’s position and receive the Government’s response. The response has been unsatisfactory.
The World Bank cannot or should not or will not turn a blind eye to evidence of corruption. We have both an ethical obligation and a fiduciary responsibility to our shareholders and IDA donor countries. It is our responsibility to make sure IDA resources are used for their intended purposes and that we only finance a project when we have adequate assurances that we can do so in a clean and transparent way. In light of the inadequate response by the Government of Bangladesh, the World Bank has decided to cancel its $1.2 billion IDA credit in support of the Padma Multipurpose Bridge project, effective immediately.
From Challenge to Opportunity
In the wake of the World Bank’s (WB) cancellation of its contract with the Government of Bangladesh for $1.2 billion credit for the Padma Bridge, the government faces an acid-test which like any challenge in life can be converted into opportunity. This can, however, happen only if the government shuns the apparent denial syndrome and generates the courage and commitment to ensure a fully independent, credible investigation into the allegations of corruption and deliver exemplary punishment, if found guilty.
The WB loan is a part of the $2.9 billion Padma Bridge project which has been well recognized as extremely important for Bangladesh for many reasons, not least as a key route to 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 backed by over a dozen specific pledges to build capacity to control this menace. For obvious reasons, like any other aspect of government’s delivery against pledges, and perhaps even more, the Padma Bridge project implementation was expected to be free from corruption.
In this context, the challenge that the government faces today is deeply regrettable, embarrassing and disappointing. But it is in the hands of the government itself to face it with dignity. 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.
In determining the mandate of this investigation, the government must distance itself from the policy of denying that corruption couldn’t have taken place because no funds have yet been released. Corruption is more than exchange bribery or kickback. It consists of abuse of power in influencing policies and decisions, particularly involving conflict of interest. It will be particularly important in this case to assess if such abuse has taken place in this case.
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. The report of the Committee must be published for public information at the same time as it is submitted.
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.
The World Bank’s decision was in some ways expected. It is common knowledge that a significant part of the funds of WB financed projects in the developing countries have been lost to corruption and misuse over the years, for which the main burden lies in the hands of the governments of those countries.
However, it is also well known that part of the onus also lies on the Bank itself. A 2009 report by the Bank’s own Independent Evaluation Group (IEG) that was released only after a protracted battle with the Bank’s management which fought hard to avoid disclosure concluded that the Bank doesn’t protect its funds adequately. Lack of safeguards in the Bank was found to be in the category of “material weakness.” the most serious of financial accounting failings. (http://fpif.org/reports/world_bank_corruption) The report also commented that after over a decade of high-level speeches and rhetoric against corruption the Bank has progressed very little to protect its projects and financial management from risk of fraud.
Against this backdrop, as a newcomer to the world of openness and accountability, faced with the challenge of addressing the allegations of corruption in the Padma Bridge project, the Bank seems to have adopted the easiest approach of chopping off the head because of a headache.
Instead of depriving the people of the benefits of funds that the Bank draws from global public sources, it could have been, and should now be, more strategic and continue to engage with the government. While investigations on alleged corruption continues in Bangladesh and Canada, to which WB should provide full support, it should review the decision and find ways to 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.
Neither the WB, nor the government can deprive the people of the country of the development opportunity for alleged corruption of a handful of people.
The government’s initiative to secure funds for the Padma Bridge from alternative sources may be perceived as a way to divert attention from the allegation of corruption rather than actually moving ahead with the project, but even if it so succeeds, it would not help the credibility crisis that the government faces.
There is no alternative for the government other than taking the challenge head-on. By taking the Padma Bridge project as a test case the government must demonstrate that it has the capacity and courage to send a strong signal that corruption is indeed a punishable offence in Bangladesh without fear or favour to anybody. This will not only persuade the people of the country a year and a half before the next general elections, but also help overcome the reputation crisis of the government in the eyes of the international community.
What next for the Padma Bridge project
the World Bank’s cancellation of a $1.2 billion loan to build Bangladesh’s longest bridge was intended to prompt some kind of anti-corruption action by Dhaka, it appears to have backfired. Prime Minister Sheikh Hasina’s government has gone on the offensive in recent days, calling the global lender’s action “disgraceful” and vowing to fund the bridge on the river Padma through alternative means.
Government ministers have sought to contain the damage from highly embarrassing accusations of corruption by the World Bank, portraying the row with the lender as a matter of ‘national honor’ and calling on the World Bank not to punish the people of the country.
In a major policy speech in parliament on July 8, Sheikh Hasina appealed to nationalist sentiment by invoking memories of the country’s 1971 war of liberation. “They want us to beg. They want us to continue as guinea pigs …” she said. “We will go ahead with this project using our own resources.”
Hasina’s government has laid out ambitious plans to mobilize resources, including levying surcharges and issuing sovereign bonds worth at least $750 million. The Bangladesh Prime Minister said she had already directed different ministries to slash some of their development projects and divert the money to fund the $2.9 billion Padma Multipurpose Bridge – a key election pledge.
Analysts say the strategy is a risky one for Bangladesh. Diverting development funds to the bridge project could affect sectors such as health and education, undermining social achievements and retarding growth.
“A significant part of our development budget is donor-funded,” said Dr Ahsan Mansur, executive director of the Policy Research Institute, a Dhaka-based think tank. “The government can’t really divert money without imposing severe austerity. We must not build a bridge to disaster.”
The South Asian nation of 160 million – with a per capita income of $850 – relies on foreign donor aid to fund nearly half of its development spending. Last year a drop in aid flows, in part because of donor concerns over corruption in the Padma bridge project, led to a widening of the country’s budget deficit. The ballooning deficit pushed the government to borrow heavily from the central bank and commercial banks, sparking double digit inflation and crowding out private investment.
Meanwhile, slowing readymade garments exports and rising fuel imports have widened the trade deficit. In April, the government was forced to borrow $1 billion from the IMF after reserves dwindled and the nation’s currency, the Taka, lost more than a tenth of its value against the US dollar.
“Although the Padma Bridge is a hot button political issue, this must be put in the context of good governance and sound economic management,” cautioned Ahsan Mansur. “Remember, three-fourths of the cost of the bridge will have to be paid in foreign currency. The central bank currently has foreign currency reserves that will last us just under three months. Last year the Bangladesh Bank was struggling to pay for imports. It is out of the question to use reserves to fund an infrastructure project.”
Mansur believes individual countries may be interested in funding the bridge project, but those funds are unlikely to be at concessionary lending rates – the World Bank charges just 0.75 percent annually.
The bond market is also uncharted territory. “Bangladesh has never floated sovereign bonds before,” Mansur pointed out. “At our current credit ratings, the interest rates on bonds are likely to be just under 7 percent. Again, this is a lot more than what we would have to pay the World Bank. Bangladesh must be careful to avoid a Greece or Spain situation where the burden is passed on to the poor and the middle class.”
The proposed four-mile bridge over the Padma River, the local name for the Ganges, was intended to link the country’s underdeveloped southwestern districts with Dhaka, the capital, benefiting 30 million people and boosting Bangladesh’s GDP by 1.2 percent, according to a forecast by the Asian Development Bank.
In canceling the loan on June 29, the World Bank said it had “credible evidence” of a “high-level corruption conspiracy” among Bangladeshi officials to misuse money earmarked for the bridge.
“The World Bank cannot or should not or will not turn a blind eye to evidence of corruption,” the World Bank statement said.
The bank said it had provided “credible evidence” of wrongdoing directly to Sheikh Hasina and other top officials but hadn’t seen satisfactory action to remedy the problem. The Asian Development Bank, a co-financier of the project, has joined the World Bank in pulling out while the other members of the consortium backing the bridge, the Japan International Cooperation Agency (Jica) and the Islamic Development Bank (IDB) have said they are waiting to see how Bangladesh deals with the graft allegations.
The Bangladesh government has denied any corruption, although the Canadian authorities are prosecuting two employees of construction giant SNC Lavalin based on the World Bank reference. “Their credible evidence will be credible under our law when witnesses can be found,” finance minister Abul Maal Abdul Muhith said in parliament on July 2.
On Sunday, Ellen Goldstein, the World Bank’s Bangladesh representative, said the Bank stood by its allegations. “The World Bank presented evidence of corruption under the Padma Bridge Project to the Government of Bangladesh in September 2011 and April 2012,” Goldstein said in an email. “The World Bank has an obligation … to maintain these referral reports confidential. However, the Government of Bangladesh may disclose these reports and related correspondence if it so chooses… in the interest of public transparency.”
The Bangladesh chapter of Transparency International has urged the government to get to the bottom of the allegations. “We call upon the government to set up a special judicial committee with full power, independence and technical support, to investigate the matter and recommend action in accord with the relevant laws within a specific deadline,” Iftekharuzzaman, executive director of TI Bangladesh said.
Although the government in Dhaka says it is yet to see any solid evidence of wrongdoing, one senior World Bank official asked: “If the World Bank evidence is so innocuous, what’s stopping the Bangladesh government from releasing it?”