The government is set to provide an additional €170 million or $183 million to the Payra Port Authority from the Bangladesh Infrastructure Development Fund (BIDF).
This will bring the total amount released to the port authority to €247 million or $266.38 million.
The Bangladesh Bank would provide the amount to Sonali Bank to pay the bill of the Belgium-based Jundunul NV, the contractor of the Capital and Maintenance Dredging of the Ramnabad Channel of the Payra Port project, said a central bank official, requesting not to be named.
The BIDF was established in March 2021 to finance development projects in Bangladesh using foreign reserves. So far, the Payra Port project is the only project funded by the BIDF, with €77 million already disbursed in four phases.
Under a tripartite agreement, the Payra Port Authority will receive a loan of €524 million ($564.88 million) from the government through Sonali Bank over the next three years, to be repaid in seven years with a 2% interest rate. Half of the interest will go to the BIDF and the other half to Sonali Bank.
Despite concerns that the release of funds will further decrease the foreign currency reserve, the central bank is expected to release the funds as per agreement.
As of 8 February, the country's foreign exchange reserve was $32,639 million, central bank data shows.
The International Monetary Fund (IMF) has also recently stated in its loan terms to Bangladesh that the country should exclude funds such as the BIDF when calculating its foreign reserve.
The director of the project, Rajiv Tripura, declined to comment on the fund release when contacted.
Sonali Bank officials confirmed that the Payra Port Authority had applied for the funds and that the process of releasing the funds from the central bank is underway.
An official of Bangladesh Bank on condition of anonymity said the fund will be released amid the ongoing foreign reserve crisis in the country because there is an agreement on this. However, he said a decision has been taken not to fund any more projects under the BIDF for the time being.
The Capital and Maintenance Dredging of the Ramnabad Channel project, which has a cost of Tk4,950 crore, will create a 75 km channel with a depth of 10.5 meters, allowing ships with a capacity of 40,000 tonnes to use the Payra Port.