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Chinese PM's visit hangs on two projects' fate

Sharier Khan
China is putting pressure on Bangladesh to take positive decisions on at least two stalled projects within this month, hinting that otherwise the scheduled visit of Chinese Premier Wen Jiabao early next month may be cancelled, diplomatic sources said.
Although the ruling BNP has treated China as a close ally in tlic past, the relationship between
Bangladesh and China in the recent years has been choking on suspension of several projects initialised during the Awami League government and Dhaka's move to intensify link withTaiwan lastyear.
The visit of the Chinese premier on April 7 and 8 is expected to warm up the ties, end the misunderstandings and intensify economic activities between the two nations, the sources said. Prime Minister Khaleda Zia has called for an inter-
ministerial meeting tomorrow on Jiabao's visit.
But the visit may be cancelled unless Bangladesh goes ahead with some of the Chinese projects that have been shelved for years, diplomatic sources said.
China is unhappy that these projects did not move ahead even by an inch although the two countries had signed a memorandum of understanding (MoU) during Khaleda Zia's visit to China in early 2003.
"Chinese diplomats have met some government high officials and told them there had been no economic gains from the past visits [of the premiers to each other's countries]," said a diplomatic source. "They told the officials, if Bangladesh shows no positive signal, China will have to think again about the premier's visit."
The sources said China expects Bangladesh to give two projects -one in telecoms and the other of a power plant installation -- final go-aheads within this month.
Of the two, the Executive Committee on National Economic Council (Ecnec) on February 27 approved the digital telecoms project under which five lakh phones will be installed at district headquarters with $400 million supplier's credit. China will charge a very low interest rate, 2.5 percent, against the loan.
The project is now awaiting the prime minister's approval.
The telecoms project was initially awarded to a Chinese company at a cost of $500 million during the fag end of the Awami League government. After the BNP-led coalition had come to power, it suspended the project and brought allegations of corruption against it in its much-publicised White Paper on Awami League government's corruption. But the project has been revived again when former Chinese prime minister Zhu Rongji visited Bangladesh in January 2002.
The other is the 210-megawatt Khulna thermal power plant initialised in 2000. Following an international tender, in which 19 companies participated, only one Chinese company named CMEC submitted a turnkey proposal under supplier's credit.
When the BNP took over the office it stalled this project too, after asking China if it would agree to change the loan into 'soft' from supplier's credit, to which China said no.
In early 2003, during Khaleda Zia's China visit, the government
revived this project through signing a MoU. After that, the power ministry asked China to submit a brand new proposal. Although China was reluctant to rework the proposal, it submitted one in February 2004. Ever since, the government has not responded to China on the revised proposal.
According to the proposal, the power plant will be set up within 36 months of agreement at a cost of $129 million. Sources said the Power Development Board (PDB) has reviewed the proposal and found it much cheaper than other projects of similar sizes. "If it was awarded in due time, it would have had gone into operation by now," quipped a source.
If the government okays both the power and the telecoms projects, China will agree to a Bangladeshi proposal to provide a low-interest state credit to set up a water treatment plant and another for a sewerage system in Dhaka, sources said.
Both these projects -- the North Dhaka (East) Sewerage Treatment Plant and the Pagla Water Treatment Plant had been okayed by the AL government under supplier's credit and suspended by the BNP government. But the coalition government signed MoUs for them again in 2003.
The sewerage plant outlines a high cost of $95 million and the Pagla plant outlines an exorbitant cost of $230 million. Bangladesh has told China that these projects are 'non-profitable' and therefore China should consider low-interest state credit.
"China is a good friend of Bangladesh," said Foreign Ministry Additional Secretary MD Khairuzzaman. "Our problems with China have been resolved. No project is suspended."
On Khulna power project, he said, "It takes time to work on a power project. We are making progress there."
He also said that the foreign ministry is now working on the agendas for the Chinese premier's visit.