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Our mega-projects become a burden due to rampant corruption 

Published : Wednesday, 1 January, 2025 at 12:00 AM  Count : 587
Motaher Hossain
In Bangladesh, large-scale projects and the excessive foreign loans taken in the name of these projects have now become a significant burden. At the same time, these projects have created a massive debt trap. After the implementation of these debt-heavy projects, it is clear that the benefits derived from them are negligible compared to the financial obligations. Moreover, some projects like the Karnaphuli Tunnel have turned into a real liability. 

The reason is that these projects began facing pressure to repay loans and interest right after their completion. However, their benefits to the economy are almost non-existent. A study reveals that for 20 major projects in the country which cost 70 billion USD, nearly 43 billion USD has been borrowed from foreign sources. After the fall of the Awami League government, the burden of repaying this debt now rests on the shoulders of the people and the government.  

In this regard, according to the white paper on financial irregularities of the Awami League government, prepared by the interim government, the amount of money spent on foreign loan interest will triple by 2028. The white paper states that for various projects and budgetary aids, the government will have to repay 2.73 billion USD in the 2025-26 fiscal year, and 3.2 billion USD in the 2026-27 fiscal year. There are concerns that limitations in revenue collection and remittance income might increase this pressure. Dr. Debapriya Bhattacharya, head of the white paper preparation committee, has expressed concern, stating that foreign loans taken for major projects have created significant risks and pressure on the state and the economy.  

 In a study titled "Bangladesh's 20 Largest Mega Projects: Trends and Situations" by Dr. Debapriya Bhattacharya, it has been found that the largest share of the 43 billion USD foreign loans for 20 mega projects undertaken during the Awami League government's tenure will need to be repaid to Russia (36.6%), Japan (35%)  and China (21%).

In a study titled "Bangladesh's 20 Largest Mega Projects: Trends and Situations" by Dr. Debapriya Bhattacharya, it has been found that the largest share of the 43 billion USD foreign loans for 20 mega projects undertaken during the Awami League government's tenure will need to be repaid to Russia (36.6%), Japan (35%), and China (21%). In addition, loans from development partners like the World Bank, ADB, JICA, and others are also part of the total debt. 

According to the Ministry of Economic Relations, as of June 2023, Bangladesh owed 62.4 billion USD to creditor agencies. In the 2022-23 fiscal year, Bangladesh repaid 1.74 billion USD, and 2.47 billion USD in the 2023-24 fiscal year. In the current fiscal year, 2024-25, the interim government will need to repay another 2.6 billion USD in foreign loans. 

Dr. Zahid Hossain, a former lead economist at the World Bank, commented that loans were taken for some projects without proper scrutiny, questioning how much of these funds have been used effectively and how much might have been siphoned off. He added that if these loans were utilized properly, they would have brought economic benefits. However, some projects, after being completed, are found to be of no use.  

One example is the 800 MW combined-cycle power plant set up in Khulna's Khalishpur. This project, funded with a 500 million USD loan from the Asian Development Bank (ADB), is near completion but is unable to go into commercial production due to a gas shortage. This raises doubts about the benefits of the foreign loan for this project, which has now become a major burden for the government. In this regard, Dr. Zahid Hossain stated that both the borrowers and the lenders have responsibilities. If the lenders had conducted proper due diligence, the burden of repaying foreign loans would not have been so heavy. Now, the burden must be borne by the people using their tax money, part of which might have been embezzled.  

Research reveals that foreign loans taken for mega projects, primarily from Russia, Japan, and China, have contributed to the rising debt pressure. For instance, Bangladesh signed a loan agreement with China in 2018 for the Padma Bridge Rail Link Project, which amounts to 2.66 billion USD. The five-year grace period for this loan ended in April of the previous year, and now the government is under pressure to begin repaying the loan. This repayment will continue for the next 15 years. 

Similarly, in 2019, the government took a 1.4 billion USD loan from China for the DPDC project aimed at expanding and strengthening the power system network. The grace period for this loan also ended in June, and repayments began in July. Additionally, the repayment for the loan taken for the Karnaphuli Tunnel project started even before the project was inaugurated. This 11,000 crore BDT project was co-financed by China and Bangladesh, with China providing 6,000 crore BDT at an interest rate of 2%. Since the grace period ended, the government has been repaying this loan from the 2022-23 fiscal year. Besides these, the burden of repaying loans for other major projects like the Rooppur Nuclear Power Plant, Metro Rail Lines 1, 5, and 6, Dhaka Mass Rapid Transit Development Project, and several bridges and expressways across the country will continue to grow each year.  

Given this situation, the relevant government departments might need to consider reducing unnecessary expenses in these projects and negotiate with the lending institutions for extensions in the repayment period and reductions in interest rates. This approach could potentially benefit the country, the people, and the government in the long run.  

The writer is a journalist and General Secretary,  Bangladesh Climate Journalist Forum



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