China to handpick contractors only for priority projects

Bangladesh will continue to allow China to select contractors only for priority projects financed with low-cost loans from Beijing, as Dhaka's efforts to enforce limited bidding are yet to produce any positive outcome.

For more than a year, the government has been pushing for putting in place a limited tendering system for all projects funded by concessional credits from China.

But the issue remains pending as China has not given its final decision on the limited tendering despite agreeing on the issue and exchanging several letters and holding talks over a period of more than a year.

This prompted the government last week to take a decision to follow a two-way policy for projects financed with low-cost loans from China.

The cabinet committee on economic affairs decided that in case of special priority projects the related ministry can follow direct procurement as an interim arrangement.

This means that the Chinese government will choose contractors -- without any tendering process or competition for the time being -- for the priority projects it would finance with soft loans.

For all other China-supported projects, however, the future bidders will be selected through limited tendering among Chinese companies.

Last year, the economic affairs committee discussed the issue of unsolicited proposals.

During the discussion, it was said that in some cases the purchase value is not competitive.

In other cases, the price is brought down through negotiation before sending it to the cabinet committee on purchase, only for the cost to be revised upwards later.

The economic affairs committee decided that the government would not entertain any unsolicited proposal except for those taken under the Speedy Supply of Power and Energy Bill 2010 and the public private partnership framework.

Instead, the meeting decided that the government would go for limited tendering for all projects for the sake of transparency.

Finance Minister AMA Muhith discussed the issue with Chinese Commerce Minister Gao Hucheng when the latter visited Bangladesh in August last year. Hucheng also backed the idea of limited tendering.

He agreed that a limited tender be applied and both sides should work out a proper starting time for it, according to the letter sent to Muhith in November last year by Ma Mingqiang, Chinese ambassador to Bangladesh.

In his letter, Mingqiang made his government's position clear that bidders nominated for projects supported by concessional loans from China before August last year would enjoy the existing procedure.

This means there would be no limited tendering process.

Mingqiang also said future bidders would be selected through the limited tendering.

However, the limited tendering method has to be finalised for it to be operational.

The ERD informed the cabinet committee that it was conveyed to the Chinese Embassy what the limited tendering process would be. But China has not given its final decision yet.

The ERD also said as the limited tendering has not been finalised, China has refrained from giving its verdict on financing any new project.

In this context, the government has taken a two-way decision for taking soft loans for any project from China, said an ERD official.

At present, Bangladesh applies the limited tendering method for India, which allows only Indian companies to participate in the tender for projects supported with New Delhi's soft loans of $3 billion.