Beza seeks bidding process reform amid delay in Indian economic zone project

The Bangladesh Economic Zones Authority (Beza) has requested the Indian authorities to let Bangladeshi contractors participate in the tender process for land development for setting up an Indian economic zone in Chattogram's Mirsharai that has remained stalled for years.

In 2019, the Bangladesh government undertook a project to establish the Indian economic zone on 900 acres of land under Bangabandhu Sheikh Mujib Shilpa Nagar in Mirsharai. However, even after over five years, the first phase of the project, which involves land development, remains incomplete.

"We have a Letter of Intent (LOI) with India for funding this project. Exim Bank of India has listed two Indian firms in this LOI. However, when we floated the tender, these firms did not submit any bids. We have informed the Indian authorities about the matter," Shaikh Yusuf Harun, executive chairman of Beza, told TBS.

The Indian LOI mandates the use of Indian contractors for the offside structure of the economic zone, he said.

"We have requested the Indian authorities, through the Economic Relations Division (ERD), to let Bangladeshi bidders take part in the tender process alongside the Indian contractors. If India agrees to this, we will re-issue the tender," said the Beza executive chairman.

He anticipated a delay of at least six months if they were to launch a fresh tender process.

Built under an agreement between the governments of Bangladesh and India in 2015, Adani Ports and Special Economic Zone Limited, an Indian multinational port operator and logistics company based in Ahmedabad, was nominated to develop the economic zone.

The Executive Committee of the National Economic Council of the Bangladesh government approved $115.63 million for the project on 9 April 2019. The Indian government under the third line of credit in principle approved $115 million on 11 June 2020 to develop the project.

Out of the total project cost, Tk5.88 crore has been spent as of March this year, according to Beza documents.

Beza, the project implementation agency, issued the tender document in favour of shortlisted two Indian companies — Adani Sports and Special Economic Zone Limited and International Seaport Dredging Private Limited — to develop land in the Indian economic zone on 27 August 2023. However, the Indian companies did not submit tender papers by 28 February 2024 to the Beza authorities even after buying the tender six months ago.

In a project implementation committee meeting on 3 April this year, Beza decided to develop the land of the Indian special economic zone following the international tender process under the Public Procurement Rules 2008 model.

The meeting also decided to pursue the international tender process instead of the existing tender process under the Exim Bank of India.

IBCCI calls for a fixed deadline in zone setup

Abdul Matlub Ahmad, president of the India-Bangladesh Chamber of Commerce and Industry (IBCCI) and chairman of Nitol Motors Ltd, told TBS, "Bangladesh government needs to set a deadline for setting up the Indian Economic Zone. The project cannot linger for an indefinite time."

He further stated, "It is necessary to allot the plots as per the drawing map of the economic zone, which has been done in the Mirsharai Economic Zone. There, before creating the zone, the investors have been allotted space as per the map."

"If this scenario persists within the Indian Economic Zone, the zone's development will proceed on one front, while investors will retain their land allotments on the other. This is crucial, considering that it typically takes 2-3 years to complete an industrial establishment," he continued.

Matlub highlighted the need for immediate marketing efforts to attract investment to the Indian Economic Zone. 

With numerous Indian companies expressing interest in investment opportunities, he proposed conducting a roadshow to attract investments, including from chambers, if provided with the necessary details.

Meetings between two countries

In 2015, a memorandum of understanding was signed between the governments of Bangladesh and India for the establishment of an Indian economic zone. In continuation of the agreement, the land was identified for the establishment of two economic zones in Mirsharai and Mongla upazila of Bagerhat.

The 6th Meeting of the India-Bangladesh Joint Working Group (JWC) on the Establishment of Indian Economic Zones in Bangladesh was held on 23 April this year in New Delhi, India.  

Md Mokhlesur Rahman, additional secretary and project director for the establishment of Indian SEZ in Mirsharai, who led the Bangladesh delegation at the meeting, told TBS that they requested the Indian authorities to let Bangladeshi contractors take part in the tender process for land development of the Indian economic zone in Mirsharai.

The Indian authorities are yet to respond to their request, he said.

Beza wants to extend the project deadline further

The original implementation period for the Indian Economic Zone project in Mirsharai was from April 2019 to June 2021. The period has already been extended to June 2025. Now, Beza is again considering extending the timeline.

The main components of the project are the appointment of a consulting firm, land development, construction of a 10-kilometre connecting road, construction of an administrative building, construction of a boundary wall, construction of a security shed, installation of a water supply system, installation of a water treatment plant, and installation of a telecommunications system.

In the project implementation committee meeting in April Beza officials said that at the time of preparing the Development Project Proposal for the project, the exchange rate of the taka was 83.82 per dollar. Currently, the exchange rate has risen to over Tk110 per dollar, they said. As a result, the estimated cost of various project-related activities such as consulting services, land development, boundary walls, administrative buildings, connecting roads, and water supply systems is increasing in taka terms, the officials said.

Due to the increase in project implementation time, some expenses such as office rent, salaries, allowances, and honorariums for project personnel are also increasing, they said. Overall, a further extension of the project implementation period is necessary, said the officials.

In search of developers for Mongla Economic Zone for India

Beza has identified 110 acres of land close to Mongla Port in Bagerhat to develop the Mongla Economic Zone for India. Negotiation is now underway with Mumbai-based Hiranandani Group, which has been nominated as the developer of the zone.

The Indian government agreed to finance $88 million for the infrastructure development of the zone.