Padma Rail Link Project: Chinese firm raises fund crunch alarm | The Daily Star
12:00 AM, February 25, 2021 / LAST MODIFIED: 03:16 AM, February 25, 2021

Padma Rail Link Project: Chinese firm raises fund crunch alarm

In a rare press release, it alleges it hasn’t been paid for 7 months’ work; project director casts doubt on the release

The Chinese contractor for the Padma Bridge Rail Link Project yesterday alleged that it has not been paid for work done in the last seven months and this was slowing down work.

The slowdown threatens cost escalation and meeting the deadline has become challenging, the contractor said.

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China Railway Group Ltd, the contractor for the biggest project of Bangladesh Railway (BR), said the government owes it $400 million and the payment delay rendered it unable to buy sufficient construction materials and pay subcontractors and suppliers timely.

"Project execution is naturally slowing down, and project costs are increasing day by day," China Railway, also known as CREC, said in a press release circulated through its PR agency.

"The government of Bangladesh has set a target of opening both rail and road on the Padma Bridge on the same day. However, the fund crisis seems to have emerged as an impediment to completing the construction process," read the release.

It claimed that it was having to borrow hefty sums to keep the fast-track project moving.

Project Director (PD) Golam Fakhruddin Ahmed Chowdhury said he would not comment about the allegations. He said he had contacted the CREC which told him that they had not issued any such press release.

However, the PR agency appointed by the CREC told The Daily Star that they received the press release from their client and circulated it to different news outlets.

This paper could not contact the CREC directly.

PROJECT AND CONTRACTOR

A contractor issuing such a press release is rare but the CREC had issued another press release via the same PR agency on June 9 last year.

It had alleged that Roads and Highways Department (RHD) had closed a passage between the Dhaka-Mawa-Bhanga Expressway and a service road, causing problems for the construction work.

The RHD had refuted the allegations and said the CREC and its sub-contractors were damaging the expressway and service roads with their heavily loaded trucks.

The rail project was approved in March 2016 to connect the capital with Jashore by 2022 with a 169km rail line over the under-construction Padma bridge at a cost of Tk 34,989 crore.

The cost rose to Tk 39,246 crore and the deadline was extended to 2024 after the first revision of the project.

Chinese Exim Bank was supposed to provide Tk 21036.69 crore in loans for the project.

Even though construction work started in July 2018, the project is still facing several challenges that could adversely impact its cost and duration, according to BR documents.

BR plans to open the Bhanga-Mawa section of the route when the Padma bridge opens, expected in June, 2022.

THE PRESS RELEASE

The CREC said it received mobilisation payment at the end of June 2018 but Bangladesh Railway did not pay them anything between that time and September 2020.

During this long period, the CREC had to borrow huge amounts to continue with the project execution, it added.

According to the CREC, the time consumed by BR for processing each interim payment was a lot longer than expected.

For example, the CREC submitted a bill (interim payment-7) for project expenses between June and September of 2020 on October 27, 2020. But it was not until February 9, 2021, that BR sent the bill to China Exim Bank asking it to release the part of the loan, the CREC said in the release.

The local portion of the payment is still pending.

"Since China Exim Bank shall not release the foreign portion before the local portion is paid, the CREC has not received any payment for IP7 [interim payment-7] up to now, 115 days after the submission of IP7," it added.

The CREC claimed that they have only received the payment for the work completed before June 2020, while the payment for the work completed between July 2020 and January, 2021 is still being processed by BR.

According to the CREC, it has repeatedly asked BR to give the go ahead for building 100 rail carriages that would be used on the lines. It had told BR that the carriages would take two years to build.

Even though the carriages were supposed to be supplied by July 2020, BR has not given it any instructions.

Project authorities told a railway meeting on February 9 that they were facing fund problems.

They told the meeting that the contractor submitted Interim Payment Certificate (IPC) for Tk 2,046.54 crore and that they have to send the IPC to the Chinese embassy within 56 days (by February 16), otherwise pay a fine.

But the project authority did not get Tk 1,801.14 crore it had sought from the annual development programme on November 25, reads BR documents.

The PD, however, told The Daily Star after the meeting that they were able to manage the money and would be able to avoid the fine.

DRAMA OVER PRESS RELEASE

The Daily Star received the press release via email.

This correspondent talked with at least four reporters of different newspapers who also said they received the same.

The Daily Star then confirmed the authenticity of the press release with the PR agency.

This paper asked the agency if the CREC had talked to the government authorities concerned about the problems before issuing the press release. The agency said the CREC has been talking to the BR authorities "every day" since interim payment-7 was submitted.

The agency said the CREC wants people to know the reasons for possible delays.

When this correspondent called PD Fakhruddin yesterday evening, he said he was unaware of any press release. He said he would not comment on the release without going through it.

Then this correspondent informed him about the contents.

The Daily Star correspondent called him again 15 minutes later. The PD then said, "I have talked to the CREC [officials] but they [CREC] said no such press release was issued by them. So I would not make any comments over the allegations."

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