ADB gives $500m for 800MW plant

The Asian Development Bank’s board of directors has approved a $500 million loan to develop a modern 800 megawatt power plant in Khulna along with associated connections to natural gas and power transmission facilities.

“In the face of rising demand for energy in a growing economy, the Rupsha power plant will be the first of its kind in Bangladesh, vastly increasing the availability of efficient and cleaner energy,” said ADB Energy Specialist Aziz Yusupov in a statement yesterday. “By providing additional electricity supply to about 300,000 consumers, the plant will stimulate business expansion and create new jobs.” Bangladesh faces a major challenge in providing modern and affordable energy as it suffers from recurring generating capacity shortages in the power sector.

The ADB-financed project design will ensure that the Rupsha plant uses the latest combined cycle technology, which offers the highest efficiency to convert gas to electricity. It will also use the most advanced water treatment processes to purify and recycle liquid waste at the end of the industrial process, leaving zero discharge.

To supply gas to the Rupsha power plant, the project will construct gas distribution pipelines of 12 kilometres. The project will also finance construction of a 230-kilovolt switchyard at the power plant and 29km of high capacity transmission lines to transfer electricity from Rupsha to the grid.

To ensure adequate institutional capacity, the project will conduct overall institutional strengthening of the executing agency, the North-West Power Generation Company Ltd. The total cost of the project is $1.14 billion, with the Islamic Development Bank contributing $300 million in co-financing and Bangladesh $338.5 million on top of the ADB’s support.

The project is due to be completed by the end of June 2022.

Grant financing of $1.5 million will also be provided from the ADB’s Japan Fund for Poverty Reduction, said the statement.

Govt plans Tk 10,000cr fund for jute sector

The jute ministry is working on a policy to form a Tk 10,000 crore fund to provide low-cost loans for the development of the nearly $1 billion export earning jute sector. A panel headed by Md Mahmudul Hassan, chairman of Bangladesh Jute Mills Corporation (BJMC) has prepared the draft for the Jute Sector Development Fund.

The panel proposed that the government form a 20-year revolving fund based on the budgetary allocation to provide loans to farmers, traders, industrialists, diversified goods producers and exporters. The loans will be disbursed at 5 percent interest and half of the interest payments would come from the state coffer as subsidy, according to the recommendations. Bangladesh Bank would be assigned to manage the fund, to where banks would also enjoy access under refinancing arrangement, the committee suggested. Except for farmers, none without licence for jute and jute goods business will be eligible for getting loans from the fund.

“Loan defaulters will not be eligible for applying for loans from the fund,” according to the draft.

The draft policy targets providing the ailing jute sector opportunities similar to what garment and leather goods industries enjoy, the BJMC chairman said. “Jute industry is lagging behind in terms of technology. We are using traditional technology which needs to be modernised,” he said. The government formed Export Development Fund (EDF) in 1989 to provide low-cost funds to export-oriented sectors—such as garment and leather goods—to buy raw materials from abroad to make exportable goods.

There is no such fund for the jute industry, Hassan said.

“The government’s support is needed for the development of any industry.”

The draft policy will be scrutinised, said Sabina Yeasmin, joint secretary to the textiles and jute ministry. “We are trying to frame a policy.” The initiative for the fund was taken as the jute millers have been demanding formation of a fund similar to the EDF. In Bangladesh, around 2 lakh people work in 176 public and private mills, which process two thirds of the country’s annual jute production of 14 lakh tonnes, according to data by Bangladesh Jute Spinners Association.

Of it, 8.36 lakh tonnes are exported and the rest consumed locally, according to the association.

FTAs far away

The signing of the much needed free trade agreements (FTAs) with the important trading partners is still far away for Bangladesh as many countries are not showing interest to go for such deals, despite the hectic efforts over the years. The government is now looking for ways to sign preferential trade agreements with the trading partners.

The preferential agreements are vital for Bangladesh to remain competitive in the international market, Commerce Minister Tofail Ahmed told The Daily Star. “These (preferential trade agreements) will also help Bangladesh to continue getting the duty benefits after its graduation from the league of least developed countries (LDCs).”

The government is also trying to sign an FTA with Sri Lanka, he said.

“We set September 31 as a deadline to ink an FTA with the Lankan government. But unfortunately, Sri Lanka is moving very slow. Bangladesh’s hope for gaining success in signing the FTA is fading by the day, “but the process is still going on”, Ahmed said. The minister also blamed the delay on the unstable political situation in the island nation. Bilateral FTAs have been becoming instrumental in the global trading system as the prospects of multilateral trading systems under the World Trade Organization are decaying gradually. There are more than 200 such deals worldwide. Even neighbouring India has already signed an FTA with the Association of South East Asian Nations (Asean) and was trying to sign another with the EU.

“We are even interested to sign an FTA with Turkey. But they are also moving very slow because if there is an FTA between Turkey and Bangladesh, it comes in Bangladesh’s favour.” “We have sent a proposal to Thailand also. We are studying and we are trying to have a bilateral trade agreement between the two countries,” the minister said.

Signing of the FTAs with some countries is being delayed because every country looks after its own interests, Ahmed said. For instance, Malaysia is interested to sign an FTA with Bangladesh, but “we are not interested”. If Malaysia gets duty-free market access through the process of FTA, it will go in its favour because the trade is already tilted towards the country governed by the Mahathir-led coalition, the minister said. Bangladesh exports $300 million-worth goods to Malaysia while the import figure has hit $2 billion. “That is the reason for us to go slow.”

“After holding meetings for years spending millions of US dollars Bangladesh backtracked from signing an FTA with Malaysia at the final moment a few years ago,” a commerce ministry official said requesting anonymity. Bangladesh will have to be ready and continue lobbying with the major trading partners for the FTAs as the erosion of preference will affect the trade significantly after the graduation, said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, a private think-tank. “The country should not only try to sign FTAs, but also lobby with major countries and trade blocs for signing the Comprehensive Economic Partnership Agreement which include trade, tourism and investment,” Rahman said citing the example of India and Asean FTA.

Regarding the delay of FTA signing with Sri Lanka, Rahman said a powerful anti-FTA lobby has been opposing the signing of such trade deal by Sri Lanka.

“But, Bangladesh should continue lobbying Sri Lanka for signing the agreement,” he said. Bangladesh needs strong research on trade and FTA issues, he said. Meanwhile, Bangladesh’s exports will face an additional 6.7 percent tariff, which could result in an estimated export loss of about $2.7 billion in a year, Mia Seppo, United Nations resident coordinator in Bangladesh, said in a recent meeting in Dhaka.

The amount of loss is equivalent to 8 percent of Bangladesh’s export receipts in 2015, Seppo said.

The United Nations Conference on Trade and Development estimated that exports may fall by 5.5 percent to 7.5 percent after the graduation. In 2016, the value of exports from Bangladesh to preference granting countries was $24.7 billion, which accounted for 72 percent of the total exports.

Regional trade agreements and bilateral initiatives cover about 90 percent of the exports, she said.

For example, Bangladesh is the highest user of the EU’s generalised system of preferences (GSP) under the Everything but Arms scheme among the 48 LDCs. Bangladesh alone used 67 percent of the trade preference, according to EU. Currently, Bangladesh enjoys zero-duty benefit on export to 38 countries, including 28 EU nations.

Apart from the GSP facility, the country has also been enjoying concessional duty preference in different countries under Rules of Origin criteria, or under different regional agreements like SAFTA (South Asian Free Trade Agreement), APTA (Asia Pacific Trade Agreement) and WTO’s arrangement of 97 tariff line in the developing countries.

Shrimp gradually losing global market share

Bangladesh’s shrimp is gradually losing global market share because of declining production of local species and failure to introduce farming of small-sized vannamei, experts said. Exports of locally-produced shrimp have declined to $446 million in fiscal year (FY) 2016-17 from $550 million in FY 2013-14, they pointed out. The observations were made at a seminar organised by the Bangladesh Frozen Foods Exporters Association (BFFEA) in a city hotel on Tuesday.

To boost export earnings and be competitive in the global market, the country needs to introduce vannamei cultivation and increase bagda and black tiger production, the experts suggested. Fisheries and livestock minister Narayon Chandra Chanda attended the seminar as the chief guest. “Shrimp exports have declined both in terms of value and volume in the last two fiscal years after remaining stable over few previous years,” said BFFEA president Md Amin Ullah.

Prices of locally produced shrimp have come down by more than 27 per cent in the last three months of 2018, compared to the same period of 2017, he said. Nittya Ranjan Biswas, former principal scientific officer at the Department of Fisheries (DoF), presented a keynote paper at the seminar. He said the production of black tiger and galda has dwindled because of shrinking of farming area, seed crisis and price fall. He recommended changing farming system through use of advanced technology, dredging of canals and rivers, diagnosis of diseases and capacity building for surveillance and control.

Sharing experiences at some international fairs, BFFEA president Amin Ullah said buyers showed much interest in vannamei and offering a low price for local bagda-which is 20 to 30 per cent less than the production cost. “The global market is flooded with vannamei as it is available at a low rate and the production rate is high,” said Profulla Kumar Sarker, former executive director at the Department of Fisheries (DoF), Khulna office. Additional secretary at the ministry of commerce Munshi Shafiul Haque suggested introducing vannamei cultivation on pilot basis.

Export Promotion Bureau (EPB) vice chairman Bijoy Bhattacharjee recommended examining both the advantages and disadvantages for introducing vannamei farming in the country. He also called for ensuring quality of shrimp, saying that the country faces difficulties in export only for a few unscrupulous traders who inject different substances into shrimp.

Minister Narayon Chandra Chanda criticised the DoF for its failure to take a plan for introducing vannamei farming timely. He instructed the DoF to take a action plan immediately in this regard. Khulna City Corporation Mayor Talukder Abdul Khaleque and Shipping ministry secretary Md Abdus Samad also spoke at the seminar.