Body planned to reduce gap between BBA, ICB
Saturday, 01 March 2008

JAMUNA BRIDGE

Staff Correspondent

The government has decided to form a committee to resolve some differences between the Bangladesh Bridge Authority and the Investment Corporation of Bangladesh on planned securitisation of the Jamuna Bridge.

The committee to be headed by a senior official of the communications ministry will put forward recommendations within a month.

The decision came from a meeting held at the finance ministry on Thursday with the finance adviser Mirza Azizul Islam in the chair.

The communications adviser Ghulam Quader and senior officials of the communications ministry, BBA, ICB, Securities and Exchange Commission and Bangladesh Bank were also present at the meeting. ‘We have decided to form the committee to bridge the gap between BBA and ICB,’ Mirza Azizul Islam told reporters after the meeting.

He said the committee would make its recommendations within a month. Earlier, the ICB which is responsible for offloading shares of state-owned entities, made a proposal to securitise the Jamuna Bridge, the largest bridge in the country, by issuing Tk 500 crore bonds to be traded on the stock market. Securitisation is a structured finance process in which assets, receivables or financial instruments are acquired, classified into pools and offered as collateral for third-party investment. It involves the selling of financial instruments which are backed by the cash flow or value of the underlying assets.

According to the ICB proposal, of the total amount, Tk 450 crore will be raised through issuance of bond securitisation in private and institutional placement while Tk 50 crore from public. Of the money to be raised, Tk 200 crore will be invested as equity for construction of the Padma Bridge while the rests of the amount will be invested in other areas such as building infrastructure and developing tourism.

Earlier, the report of a World Bank transport team also recommended securitisation of the Jamuna Bridge for financing the construction of the Padma Bridge.

As per the proposal, the JMBA will raise Tk 300 crore against the security of its future tolls receivable in the next 10 years while Tk 200 crore will be raised against the security of JMBA’s fixed deposit receipt worth Tk 200 crore. The 4.8-km Jamuna Bridge, built at a cost of Tk 4,000 crore, was opened for traffic in June, 1998.

After opening, the bridge has earned around Tk 600 crore, of which 70 per cent from toll collection. The meeting, however, ruled out bringing the state-owned Bangladesh Road Transport Corporation to the capital market as it was incurring huge loss every year.

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