The Water and Sewage Authority (Wasa) spotted that one of the conditions in the policy was that the government won't be giving any guarantees and it will be Wasa's responsibility. But this is apparently not acceptable to any prospective foreign bidder.

However, the memorandum of understanding (MOU) had already been signed between China and Bangladesh regarding the construction of this plant.

"Foreign countries need the government's guarantee on principle and therefore this particular clause has created problems within the ERD regulation of supplier's credit," said several sources.

"We have requested the ERD of planning commission to verify the supplier's credit conditions and clauses so that it justifies all interest," said Md. Abdullah, the deputy chief of Local Government Engineering Department's planning commission.

There are also problems with the conditions for supplier's credit imposed by the foreign companies.

"Suppliers credit comes as hard loan which includes machinery and material as per the supplier's wish. Therefore we can't choose anything for ourselves. The interest rate is also much higher than the normal credits," said a reliable source in the Wasa.

There are other apprehensions too about supplier's credit. Many think that projects under this type of credit take more time to be implemented.

The cost of Pagla water treatment plant has been estimated at about Tk. 1700 crore. Water from Padma River pumped at Maoa point will be supplied to the Pagla plant, which would then treat it for use of Dhaka's residents.

The plant is extremely important for the city as the quality of water from the Rivers Sitalakhya and Buriganga, which has been used for the Sayedabad water treatment plant and Chadni Ghat plant, has deteriorated due to indiscriminate dumping of wastes. Therefore, a new source of clean water supply has become a necessity.

Once completed, the Pagla water treatment plant will provide 450 million litres of water a day. The demand of water in the city is 2000 million litres. Current supply from tubewells and treatment plants is 1500 million litres. The Sayedabad plant provides 225 million litres of water and Chandni Ghat about 40 million litres. The main source of water, approximately 875 million litres a day, comes from beneath the surface through tubewells.

The surface water of Pagla water treatment plant will reduce the pressure on predominant underground water sources in the city.