Dhaka, Bangladesh (BBN)– Bangladesh’s most state-owned commercial banks (SCBs) are likely to face problem with their fund positions due mainly to the financing of long-term infrastructure projects, including the Jatrabari-Gulistan Flyover.

“The mismatch of funds will widen gradually if the government does no take any effective measure immediately,” a senior banker, who is familiar with such financing, told the Financial Express (FE), a local newspaper, on Wednesday.

He also said the government should strengthen bond as well as capital markets to help create a new window for long-term financing of major infrastructure projects in Bangladesh.

“The country’s private commercial banks (PCBs) along with the SCBs may also face identical problem in the near future if the alternative funding sources are not created,” he added.

Belhasa-Accom Associates Limited has already raised fund worth BDT 6.00 billion from three SCBs, a Shari-based Islamic bank and state-run investment corporation of Bangladesh (ICB) through issuing preference shares for implementation of the proposed Jatrabari-Gulistan Flyover which, according to experts, might create more problem than easing the traffic movement due to faulty design.

Three SCBs — Sonali, Janata and Agrani — have purchased the preference shares worth Tk 5.0 billion in early 2010. These shares will be converted into ordinary shares at end of three years from the date of issuing the same.

“We’ve invested the money hoping a good return,” a senior executive of another leading SCB said, adding that the project is expected to be implemented in time.

He, however, admitted that trade financing by banks that had extended such long-term financing might be affected slightly in the near future.

The nine kilometers long and four-lane flyover is being built on a build-own-operate-transfer (BOOT) basis at an estimated cost of BDT 13.32 billion.

“The total project cost will go up further due to the addition of three more kilometers to the original one,” an official, who is close to the project implementation process told the FE.

He also said management of the implementing agency is providing funds on the basis of progress of the construction works.

This hi-tech capital intensive project is the first scheme, under Public-Private Partnership (PPP) in Bangladesh, designed to provide improved, faster and safer road connectivity with a minimum travel time.

BBN/SSR/AD-21July11-12:32 am (BST)