Indian credit projects crawl
Fifteen projects were taken under the first LOC and 12 of them could be completed, many of them delayed by three to five years.
The India-funded projects under three lines of credit (LOCs) have progressed at a snail’s pace, many of them yet to see any disbursement in the past three years, according to documents prepared by the Economic Relations Division (ERD).
Under the circumstances, the ERD on Tuesday is scheduled to participate in a meeting between Bangladesh Foreign Minister AK Abdul Momen and visiting Indian Minister of External Affairs S Jaishankar, to find a solution for expediting projects under the LOCs.
“The projects under the Indian LOCs initially stagnated due to a multitude of complications. However, the disbursement of funds has increased in recent times,” ERD acting secretary Farida Nasreen told The Business Standard.
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“On Tuesday’s meeting Bangladesh government will request Delhi to reduce existing complications regarding LOC fund disbursement,” she added.
In July this year, replying to a query about the reason for delay in the Indian LOC projects’ implementation, Mofazzel Hossain, secretary to the Ministry of Railways, said the Indian loan was tagged with a condition that a big portion of purchase for the projects should be made from India, resulting in the delay in project implementation.
Besides, a good number of previous projects have been cancelled and some new ones have been taken, he added.
Delhi decided to give Dhaka the loans for infrastructure development following Prime Minister Sheikh Hasina’s visit to India in January 2010.
The first loan agreement for $862 million was signed during her visit, but nine years down the line only about half the amount could be used with red tape and tough conditions set by India posing the stumbling blocks.
Fifteen projects were taken under the first LOC and 12 of them could be completed, many of them delayed by three to five years. As a result, project costs also increased substantially.
Of the remaining three ongoing projects, implementation time for two of them has been extended because of slow progress.
While the projects under the first LOC still linger, the government signed the second LOC with India in 2016 for $2 billion. In the last three years, only 1 percent of the amount has so far been disbursed.
And a third LOC was signed in October 2018 for $4.5 billion. Not a single penny has been spent from the third phase.
The ERD report prepared on the progress of Indian credit states that disbursement under the first LOC in the fiscal year 2018-19 was not adequate, although it slightly increased compared to the fiscal year 2017-18. Till June last, $116 million was released, while it was $44 million in 2017-18.
As a result, the three biggest projects in the infrastructure sector being currently implemented did not receive enough funds in 2017-18 fiscal year.
As per the loan agreement for the first LOC, India in total will loan over Tk3,800 crore out of a total cost of Tk5,500 crore for the Khulna-Mongla Port rail line, Dhaka-Tongi and Tongi-Joydevpur section dual gauge rail lines and Kulaura-Shahbajpur dual gauge rail lines projects.
Among these three projects, the Kulaura-Shabajpur project was approved by the Executive Committee of the National Economic Council (Ecnec) on May 26, 2015. But as the project could not be implemented within schedule, its tenure was extended further and as a result its costs increased.
Under the second LOC, an agreement was signed with Indian Exim Bank on March 8, 2016. So far, 13 projects have been approved by Ecnec, while the Project Evaluation Committee has held meetings for only two projects so far.
Also under the second LOC, an ongoing project has been dropped and the project for infrastructure building at Bangabandhu Industrial City is awaiting approval of the project evaluation committee.
Under the third LOC, only two of the 16 projects have received approval from Ecnec, while several meetings of the evaluation committee were held on six projects.
According to a source in the meeting between the two foreign ministers, Bangladesh has been urged to expedite the payment of Indian contractors working in the projects under the LOCs.
The Bangladesh side has assured that the process of payment has been made faster these days.
In this regard, ERD Secretary Farida Nasreen told The Business Standard that payments of the projects under the LOC were usually made within a three-month period.
The Indian counterpart has been assured that the duration now has been reduced to one month, she said.
As both the parties have the updated information of the projects, there was no discussion on individual project, she said.
Meanwhile, preparations for the remaining eight development project proposals are yet to be completed by the ministries and divisions concerned. All the 16 projects, however, are waiting for consent from India, revealed the ERD report.
