Indian credit projects crawl

The India-funded projects under three lines of credit (LOCs) have progressed at snail’s pace, many of them yet to see any disbursement in the last three years, according to documents prepared by the Economic Relations Division (ERD).

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-tapism and tough conditions of 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 have 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 one 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 revealed that the release of the first LOC did not prove enough in the fiscal 2018-19, although it slightly increased compared to the amount in the fiscal 2017-18. Till June last, $116 million was released while it was $44 million in fiscal 2017-18.

As a result, the three biggest projects in the infrastructure sector being currently implemented did not receive much funds last fiscal.

As per the loan agreement, India in total would fund over Tk3,800 crore for the Khulna to Mongla port rail line, Dhaka-Tongi and Tongi-Joydevpur section dual gauge rail lines and Kulaura-Shahbazpur dual gauge rail line projects – all worth over Tk5,500 crore.

Among these three projects, the Kulaura-Shabazpur 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 the 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 the ECNEC, while the Project Evaluation Committee (PEC) has held meetings for only two projects so far.

An ongoing project has been dropped and the project for infrastructure building at Bangabandhu Industrial City has been waiting approval at the PEC meeting.

Under the third LOC, only two of the 16 projects have received approval in ECNEC, while several meetings by the PEC were held on six projects.

Meanwhile, the processing of the remaining eight Development Project Proposals (DPPs) is yet to complete in ministries and divisions concerned. All the 16 projects, however, are waiting for consent of India, revealed the ERD report.

When asked about the reason of delay in project 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.

Zahidul Haque, additional secretary to the Economic Relations Division (ERD), Asia Wing, mentioned about a faulty loan agreement system, contrasting the traditional system.

Usually, an agreement for loans is signed after a project receives approval in the ECNEC. But for India-funded projects, agreement was done before the project selection process, he said.

“Besides, India’s approval was taken at different stages of DPP preparation. Sometimes, some projects were cancelled at a moment when they were ready for going to implementation stage,” he added.

However, he said a two-day tripartite LOC review meeting was going to start from Wednesday to find out a solution to these problems.