Tough Indian credit terms make hospital projects uncertain

Non-disbursement and tough terms of the Indian LoC fund for the Sheikh Hasina Medical College and Hospital and Nursing College in Jamalpur has slowed down the project. The project is being implemented with Bangladesh government funds and an Indian Line of Credit, but since the project was kicked off five years back, only the Bangladesh funded part of it has seen any progress. 

Completion of the important health sector project is now uncertain brought on by fund crisis caused by long-drawn complex administrative procedures like securing approval from Indian authorities in finalising tender documents.  

India was supposed to provide $35.89 million under the second Line of Credit (LoC) for the project. 

Now the health ministry has decided not to depend on the Indian LoC loan in implementing the project because of India's tough credit terms in getting the committed fund. 

The ministry has also taken a similar decision regarding the construction of 500-bed hospital buildings in Jashore, Cox's Bazar, Pabna and Noakhali medical colleges. The project work has not even started yet in the last two and half years due to the non-availability of funds from India. India had committed to provide $180 million under the second LoC for the ongoing project.  

Helal Uddin, additional secretary to Health Services Division, told The Business Standard that they face problems in implementing LoC-funded projects because of tough conditions. 

As per the LoC agreement, it is mandatory to procure 75% of raw materials of the project from India. It is also required to get approval repeatedly from the Indian side in finalising tender documents that adds delays to the project works. 

The health ministry has appointed doctors as project directors for implementing these infrastructure development projects.  They find it hard to execute projects complying with strict conditions imposed by lenders, Helal added.

Considering these bottlenecks, the ministry has decided against completing the two projects under the Indian LoC.  They have already informed the Economic Relations Division (ERD) of the decision. 

ERD officials say 15 projects have been finalised under the $2 billion second LoC and 16 projects under the $4.5 billion third LoC. Some ministries could not even formulate project proposals in a three or four-year period, while some others cannot implement projects by conforming to India's credit terms. 

The ERD is identifying such projects and seeking opinions from different ministries on whether the projects will continue under the LoC, they also say.

They will inform the Indian authorities after getting final opinions from all the ministries on LoC funding, they added. 

The country has three LoC deals amounting to $7.36 billion with India, with each LoC having at least 15 projects.  

The first LoC deal involving $860 million was signed on 7 August 2010, the second LoC on 9 March 2016 and the third LoC on 4 October 2017.  

All three LoC agreements contain similar conditions. As per the agreement, 75% of project materials, such as brick, sand and cement, have to be procured from India. On some occasions at the implementation stage, India relaxes the condition a bit – by 10% – only for infrastructure projects. 

Moreover, no contractor other than from India can participate in tenders for LoC projects. Consent from Indian authorities is needed at every stage, from preparing tender documents to appointing contractors.  

When contacted, Professor Muzaherul Huq, a former adviser to the World Health Organisation, said if these projects to build hospitals and a medical college had been completed on time, health services would have been further strengthened during this pandemic. People would have benefited. 

"Now, we have to find out why the projects are not being implemented on time. Those involved with project implementation need to be held more accountable. Projects should be completed quickly by recruiting skilled manpower if necessary," he added.

Dr Mohammad Mushtuq Husain, adviser to the Institute of Epidemiology, Disease Control and Research, said hospitals are needed to ensure healthcare. There are ongoing projects that would have given benefits had they been completed on time. 

Progress in the construction of Sheikh Hasina Medical College 

Work on Sheikh Hasina Medical College and Hospital started in June 2016. The project is being implemented at a total cost of Tk950 crore with both government and Indian funding. 

Various buildings under the project have been constructed with government funding, but work on the hospital building, which was supposed to be built with a LoC loan, has not begun because no fund has been disbursed for it yet. Besides, many pieces of equipment required for the hospital were supposed to be purchased with the Indian loan.

According to a report by the Implementation Monitoring and Evaluation Division (IMED), tenders have been floated by categorising construction and procurement in 51 packages of the project. Among them, construction of the main hospital building and purchase of equipment were to be completed with the Indian loan. Although work on government-funded buildings has made good progress, the Indian-funded ones are yet to see any progress.

The report further said as per the Indian loan agreement, the eligibility for the participation of Indian contractors was determined. The tender documents had to be amended five times at the request of the Indian authorities at various stages before the tender was called.

That is why it was not possible to complete the work even after extending the project for two and a half years, said the IMED.

The project was supposed to be completed in 2019. Later, the project tenure was extended by another two and a half years to December 2021. Some 80% of work on the project still remains pending. In this situation, the health directorate is preparing to extend the project time again.

Construction of 500-bed hospital buildings in four medical colleges  

The project titled "Establishment of 500-bed Hospital and Ancillary Buildings in Jashore, Cox's Bazar, Pabna and Noakhali Medical Colleges" was approved by the Executive Committee of the National Economic Council in May 2018. The project was scheduled to be completed this year.

Even in two and a half years since the project began, it has not been possible to spend any money on the project except for salaries and allowances, said the health directorate.

Project authorities say the project implementation work could not be started due to the complicated process of tender approval. 

The Tk2,103 crore project was taken up to ensure higher medical education and quality healthcare at the district level. The project was to get Tk1,440 crore under the LoC.