Another white elephant
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has to pay about $8.5 million to HSBC for the satellite, which was launched by the Falcon 9 rocket of SpaceX in May 2018.
As of April, the regulator has paid $101.70 million in 12 instalments to HSBC, including the interest. Another eight instalments amounting to about $64 million are due by April 2028.
But given the 40 percent depreciation of taka against the dollar in the last couple of years, the burden of repayment has intensified on the BTRC.
Now, the BTRC has to pay Tk 190 crore to Tk 200 crore every year in two instalments.
“We don’t know why we agreed to pay this huge amount of public money without any financial viability -- it’s like the value of money has been reduced to that of jackfruit leaves and we are feeding it to a goat which will never yield any benefit to us,” said a top official of the BTRC on the condition of anonymity to speak candidly on the issue.
Given the satellite’s predicted life span of 15 years -- that is it will cease to exist beyond 2033 -- time is running out to recoup the project cost.
The government is set to lose more than Tk 1,500 crore as the revenue from the Bangabandhu-1, whose clients are mostly the local TV stations, has been failing to meet its mammoth project cost, according to estimates of the industry people.
After completing the project, the BTRC handed over the satellite to the newly formed BSCL in 2018.
As the loan was signed by the BTRC with HSBC, this asset has to be kept in the books of the BTRC even though no future benefit will flow to the entity, according to the BTRC’s audit report for 2021.
“When you pass the asset of company A to company B, company B will bear all the expanses of company A’s assets as per accounting principle. But here, BTRC has handed over the asset, which is the satellite, to BSCL and is still paying its debt and principal sum,” said another BTRC official.
BSCL incurred losses of Tk 19 crore in 2018 and 2019, according to its audit report. After that, it logged in profits amounting to Tk 187 crore in 2020, 2021 and 2022.
The audit reports for 2023 and 2024 are yet to be released and BSCL has not shared any financial statement for the two years.
Shahjahan Mahmood, the immediate past chairman of BSCL, declined to comment on the figures, while Md Jahirul Islam, the current managing director (additional charge), hasn’t responded to The Daily Star’s request for comment.
The interim government should review the satellite project, said Iftekharuzzaman, the executive director of Transparency International Bangladesh.
It should be reassessed whether the project was initiated after properly evaluating its financial viability and profitability, or if it was undertaken merely as a prestige project.
“Was a cost-benefit analysis conducted to determine whether procuring satellite services from external sources would have been more economical than launching our own satellite? At the time the project was conceived, was its financial feasibility and comparative cost-benefit thoroughly assessed?” Iftekharuzzaman said.
The feasibility study was faulty and that set the foundation for several subsequent issues, including overestimating the market demand, competition and revenue potential, which affected the overall project plan, said an expert wishing anonymity.
The study projected that the capacity of the satellite can be sold to Indonesia, the Philippines, Saarc countries, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.
However, in the seven years since the satellite’s launch, Bangladesh has failed to create a market in these countries.
The frequency coordination with these countries should have been done before the launch of the satellite, according to a document presented by BSCL to the ministry recently.
As a result, Bangladesh is not getting the landing rights in these countries, it said.
There is a significant underutilisation of the capacity of the satellite, which was manufactured by manufactured by France-based Thales Alenia Space.
Only 59 percent of the C-band frequency has so far been sold while 25 percent of the Ku-band could be sold.
The C-band offers better resistance to rain but requires larger antennas, while Ku-band provides higher bandwidth but is more affected by weather conditions.
Bangladesh paid $36 million to Russia for the orbital slot.
The price is significantly more than typical payments for such slots, which are usually $8-10 million, according to industry experts.
“The failure in frequency coordination and planning led to this costly outcome, which could have been avoided with better management,” the expert said.
The satellite was originally scheduled to take off in 2017 but was delayed by a year. This led to the incurrence of unnecessary costs.
As per the audit information, the satellite has now undoubtedly become an item in a potentially long list of white elephants, said Iftekharuzzaman, who has been appointed the head of the committee formed to reform the Anti-Corruption Commission.
“The burden of this project is now being placed on the people, and that burden is accumulating on a regular basis. Since the project was approved during an authoritarian government that lacked accountability, now is the time that the high officials who colluded in the process and facilitated it should be held accountable,” he added.
The past government has awarded the key officials involved in the satellite launching project.
For example, Shyam Sunder Sikder, who was the telecom secretary during the launch of the project, was made the BTRC chairman later on, while Mahmood, who was the BTRC chairman, the implementing authority of the satellite project, was later made the chairman and chief executive officer of BSCL.