Japan’s hard line complicates release of $1.2b fund

Japan has taken a hard line on signing loan agreements with the government, as JICA said they will not sign loan agreements against five pipe-line projects involving US$ 1.2 billion until their development project proposals are approved.
The hard line from the country’s largest bilateral development partner surprised officials at the economic relations division under the finance ministry that deals with foreign aids for the country.
The ERD officials said the deals involving nearly US$ 1.20 billion under the Japanese 36th ODA (official development assistance) were supposed to be signed in last March or April after Japan International Cooperation Agency had okayed the five projects in January.
‘It is strange, and largely new in Japan’s approach towards the cause of Bangladesh,’ a senior ERD official, requesting not to be named, told New Age on Friday.
The latest stance of Japan came during a recent visit of JICA’s high-level delegation, called ‘Japanese fact finding and appraisal mission’ in Dhaka, a senior finance ministry official said.
‘During appraisal, it was agreed between GoB and JICA that the approval of DPPs (development project proposals) for the projects under 36th YLP (Yuan loan projects) must proceed with the signing of the loan agreements. However, we came to learn that DPPs of the above mentioned projects except western Bangladesh bridge improvement project are still being processed at the ministry-agency level,’ reads a JICA letter, written to finance ministry.
‘We are concerned that the delay of approval of DPP might affect the implementation schedule, PIU establishment, procurement process, etc. We also flagged the issue of DPP approval at the high-level portfolio review meetings at ERD.’
A senior ERD official said they had informed ministries concerned and planning commission to speed up the project approval process, so the loan agreements can be signed soon.
However, a finance ministry official said the ministries concerned would need at least three to five months to complete the formalities on DPP approval.
The projects that await loan signing are – development of economic zones and promotion of foreign direct investment, power grid development and enhancement capacity, construction of more than 50 medium and large bridges across the country, health projects targeting maternal health, improving building safety in urban areas and upazila integrated development project.

Sources close to New Age said the Japanese stance might have been influenced by the government’s recent attitude of tilting heavily towards Chinese fund, a rival of Japan on the counts of international trade and maritime dispute.
The JICA in its letter also expressed its dissatisfaction over the delay in DPP approval for one of the projects that was included in 35th Japanise ODA, signed in early 2014.
‘In addition to the above, it is also our concern that the DPP of the access road component of the Matarbari ultra supercritical coal fired power project under 35th YLP has not been approved yet though the L/A had been signed more than a year ago, which is lying with planning commission for around two months.’
Japan in May, 2014, had pledged to offer a credit line of US$ 5.9 billion for Bangladesh economy over the next five years up to 2018.

- See more at: http://newagebd.net/154840/japans-hard-line-complicates-release-of-1-2b-fund/#sthash.S7jRBmUr.dpuf