500 Crore taka loss in ship procurement

Published : Wednesday, 15 January, 2025 at 5:09 PM Count : 480

Photo: Collected

A serious allegation of corruption has surfaced against former Managing Director of the Bangladesh Shipping Corporation (BSC), Commodore SM Moniruzzaman and former private industry and investment adviser Salman F Rahman. They are accused of colluding to procure only 4 ships instead of budgeted 6 resulting approximate loss of taka 500 crore of BSC.

According to the sources, in 2020 BSC proposed to purchase 6 ships from the Chinese company CMC under a supplier's credit. The bid included 3 Bulk Carriers of 80,000 DWT and 3 Tankers of 114,000 DWT at a 2.2% interest rate.

However, citing an increase in prices, Managing Director Commodore SM Moniruzzaman and adviser Salman F Rahman allegedly in collusion with CMC convinced the government as well as the ministry to approve the purchase only 4 ships within the same 235 million USD in 2022.

Bypassing a tender process, this direct procurement from CMC resulted approximate financial loss of taka 500 crore of the government. The agreement with China National Machinery Export and Import Corporation (CMC) was signed on October 14, 2023 in a holiday.

Investigations have revealed that the ships were procured at prices higher than the prevailing market rates. According to the Economic Relations Division (ERD) and BSC sources, the prices quoted by CMC were significantly higher than the other Chinese shipbuilders offered.

An economist of Policy Research Institute (PRI) has expressed concern about the necessity of procuring new ships, given the significant decline in freight rates. He further suggested that if China is unwilling to negotiate a lower price, the contract should be canceled.

The allegations have raised serious concerns about the transparency and accountability of the procurement process. The appointment of Commodore SM Moniruzzaman as the Chairman of Chittagong Port has also drawn scrutiny, perceived as an attempt to facilitate the implementation of the old agendas of Salman F Rahman and Saber Hossain.

Several shipyards in other countries were offering 80,000-82,000 DWT capacity ships between $3.2 million and $3.4 million in 2023 which is nearly $1 million less than Bangladesh is paying for its newly ordered vessels.

Similarly, for 114,000 DWT crude oil mother tankers (Aframax), other companies quoting prices were between $61 million and $63 million. This means Bangladesh is paying an extra $1 million per ship.

Sources from the Bangladesh Shipping Corporation (BSC) have revealed that ship construction will commence upon the initial payment to the Chinese shipyard CMC. This process has already begun. The total cost of the four ships, to be paid in local currency, is 2,486 crore taka. This amount will be paid in five installments.

Despite multiple attempts to contact senior officials at the BSC, none were willing to comment. An anonymous official, however, told the media that the shipyard's commencement of work is in final stages and the Economic Relations Division (ERD) will soon announce it. However, due to the rising prices of goods in the international market, the ships may not be available at the previous price.

Ahsan H. Mansur, Governor of the Bangladesh Bank and Executive Director of the Policy Research Institute (PRI) told the media that purchasing new ships is unnecessary as freight rates have decreased by 10%. Moreover, 93 seagoing vessels are already operating under the private sector, and adding four more to the government fleet will not make a significant difference. he further suggested that if China is unwilling to sell the ships at this price, the authorities should cancel the contract.

There are allegations that even after Prime Minister Sheikh Hasina left the country on August 5, Awami League-backed government officials remain active in various departments. As a continuation of this, SM Moniruzzaman has been appointed as the Chairman of Chittagong Port to facilitate the implementation of the old agendas of Salman F Rahman and Saber Hossain.

FP/MI