Indian EZ: Beza pushes for local land developers amid delays

The Bangladesh Economic Zones Authority (Beza) has proposed to the Chief Adviser's Office (CAO) that Bangladeshi contractors, in addition to Indian ones, be allowed to participate in the land development work at the Indian Economic Zone in Mirsarai, Chattogram.

Beza made the proposal as the land development work for the project has yet to begin, with no Indian contractors submitting their tender papers within the stipulated time.

The situation has become complicated due to the conditions of the Indian line of credit, which require that Indian companies be awarded the land development contracts.

In a letter sent to the CAO, Beza also proposed to allow the allocation of funds from one sector of the project to another to ensure the ongoing implementation of the economic zone.

Beza, which now operates under the Chief Adviser's Office (CAO), sent the letter last month.

The original implementation period for the Indian Economic Zone project in Mirsarai was from April 2019 to June 2021, but it has already been extended to June 2025. Beza is now considering another extension of the timeline.

Beza officials say more than five years later, the first phase of the project, which involves land development, remains incomplete. Consequently, progress on the Indian Economic Zone has stalled.

Complexities over land development

According to Beza sources, the conditions of the Indian line of credit stipulate that Indian companies must be awarded the land development work, and that 65% of the equipment needed for land development must be procured from India.

Beza, the project implementation agency, issued the tender document on 27 August 2023, in favour of two shortlisted Indian companies – Adani Ports and Special Economic Zone Limited and International Seaport Dredging Private Limited, to develop land in the Indian Economic Zone.

However, despite purchasing the tender, the Indian companies did not submit their tender papers to Beza by 28 February 2024.

The sixth meeting of the India-Bangladesh Joint Working Group (JWC) on the establishment of the Indian Economic Zone in Bangladesh took place on 23 April of this year in New Delhi, India.

During the meeting, Indian authorities were requested for consent to allow both Indian and Bangladeshi contractors to participate in the re-tendering for the land development works of the project. However, that consent is still pending.

According to Beza sources, an implementation progress review meeting for the project was held on 23 June. Representatives from various ministries at the meeting said the next steps should involve revising the project after receiving feedback from Indian authorities regarding the re-tendering of the land development work.

Project Director Md Mokhlesur Rahman told TBS, "It's unfortunate that the project is nearing its completion date, yet no Indian contractor is available for land development. There are many companies in Bangladesh capable of handling this work."

"Therefore, we have requested permission from India for Bangladeshi companies to participate as well, but we have not received a response on this matter yet," he added.

The Indian Economic Zone covers 900 acres of land. The Tk965 crore project, which is one of the key economic zones in the country's largest industrial city, Bangabandhu Sheikh Mujib Shilpa Nagar. The industrial city spans 30,000 acres across two upazilas – Mirsarai in Chattogram and Sonagazi in Feni.

Of the total estimated costs, Bangladesh will finance Tk50.26 crore, while the remainder will come from India as a soft loan under India's line of credit facility.

The main objective of the project is to create a conducive environment for Indian developers and investors by developing necessary infrastructure.

As of June 2024, the total expenditure incurred on this project amounts to Tk6.03 crore, with the government contributing Tk3.48 crore and Tk2.55 crore allocated as part of project assistance.

In the current fiscal year, the Revised Annual Development Programme has allocated a total of Tk57 crore to the project, consisting of Tk10 crore in government funding and Tk47 crore in project assistance.