India gives Bangladesh only $ 115.3m of promised LoC

India has given only $ 115.31 million to Bangladesh from its promised $ 800 million line of credit (LoC) till November three years after the loan commitment, officials said Saturday.

Dhaka signed a $1.0 billion credit deal with New Delhi in August 2010 for utilising the money to upgrade the country’s infrastructure especially to facilitate cross-border transport movement between the two countries, reports the Financial Express (FE).

“The project implementation delay due to hard terms imposed by the Indian government has affected fund disbursement,” said a senior Ministry of Finance (MoF) official.

bd-indiaThe Indian supplier has submitted bid with unusually high prices against the tender. This has delayed the procurement process and affected the fund inflow to Bangladesh, he told the FE requesting anonymity.

According to the terms for the LoC, Bangladesh has to procure all the goods, services and works from India. Dhaka will be allowed to source only 15 per cent of the total procurement from another country if India fails to supply.

The MoF officials said the Indian government has disbursed only $115.31 million credit during the period from August 2010 to November 2013, from its $800 million LoC.

The neighbouring country has also disbursed $150 million from its committed $200 million grants.

In May 2012, India made commitment to shift its committed $200 million out of the billion dollar LoC as grant.

Meanwhile, Bangladesh and India on December 2 sat for a review meeting where the project implementation status under the $800 million LoC supported projects were discussed.

According to the Economic Relations Division (ERD), Bangladesh has undertaken 14 development projects, mostly for the railway sector development.

“If India suppliers fail to fulfill criteria of Bangladesh, we have no option to go for another market. In most of the cases, we have to accommodate the Indian suppliers’ capacity ignoring Bangladesh’s requirements. It has mainly created delays,” said a Ministry of Railway (MoR) official.

“For example, we had undertaken some projects for procuring meter gauge (MG) railway equipment like tank wagon, locomotive and passenger carriage. But the Indian supplier had failed and then we are forced to change it to broad gauge (BG) equipment.”

“So, we recast the entire project proposal accommodating India’s supply capacity. Later when we invited bids, the Indian supplier submitted bids with unusually high prices than our estimate. So we need to recast the DPP (development project proposal) again.”

A”ll these factors have mainly affected project execution under the Indian government-supported $800 million LoC and we had get lower funds,” the MoR official added.

A senior ERD official said since project implementation has been affected, fund disbursement by the Indian government has also been delayed.

Asif-uz-Zaman, Joint Secretary at the ERD, said four projects out of total 14 under the Indian LoC have so far been completed and another four are in the process of completion soon.

Among the six remaining projects, implementation of some has already started and some are at the stage of beginning, he added.

According to the ERD, the government has already completed four projects: procurement of buses with $36.85 million, 165 BG tank wagons and 6 BG brake vans with $17.38 million, 10 BG locomotives with $33.05 million and 81 tank wagons and three brake vans with $7.43 million.

Four other projects nearing completion are procurement of 16 BG locomotives with $60 million, 170 MG flat wagons and 10 brake vans with $10.73 million, 50 MG flat wagons and five brake vans with $3.28 million and one dredger with $8.52 million.