Government shies away from two Indian LoC-funded projects

The government has dispensed with two projects involving nearly $400 million from the Indian 2nd Line of Credit (LoC) and decided to go after the two schemes on its own.

As the Indian authorities failed to disburse any fund within a stipulated time, the government has decided to carry them out by local fund.

Of the two projects, one was Creating Facilities for Additional Students Enrollment in Different Polytechnic Institute under Technical and Madrasha Education Division approved on December 26 in 2017 by the ECNEC. The commitment was $ 281 million in loan.

The total cost of the project was estimated at Tk 2,561.92 crore, of which Tk 2186.18 crore would come from the second LoC and the rest of Tk 375.74 crore from the government exchequer. The deadline of the project was June 2020.

As the deadline passed, the cost also shot up to Tk 3,490.53 crore along with the extension of the tenure that went up to June 2026.

Another project under the second LoC involves Establishment of 500-bedded Hospital and Ancillary Buildings in Jassore, Cox’ Bazar, Pabna and Noakhali Medical Colleges under Health Services Division sanctioned on May 22 in 2018.

The Indian government committed to extend $ 180 million in loan to be implemented by June this year.

The cost of the project was figured out to be Tk 2,103 crore. Of the amount, a Tk 1,440 crore was supposed to be provided by the second LoC and Tk 663.32 by the government exchequer.

“The two projects have been de-listed due to fund disbursement procrastination and other reasons,” Joint Secretary to the Economic Relations Division (ERD) Mirana Mahrukh told The Business Post.

“The project funded by the Indian Line of Credit is different from that of other development partners. When a project proposal gets the go ahead of ECNEC, we sign agreement with our development partners, but not in the case of Indian LoC-funded project in which an agreement is signed earlier than the project proposal is prepared,” she described.

“Two projects have been dropped and there are logical reasons behind such a decision. We have talked to Indian officials requesting them to de-list the two.”

“Coronavirus pandemic is one of the reasons for delaying the fund disbursement,” the official reasoned out.

The government would carry out both the projects with the help of its own fund, she added.

Sources at the Planning Commission said some other ministries are pressing them for implementing their respective projects with the government own fund as Indian funding appears elusive.

The 1st Indian LoC is $862 million, 2nd one is $2 billion and the 3rd one is $4.5 billion.

India has so far released only $160 million against 12 projects included in the 1st LoC, $99.73 million against six projects included in the 2nd LoC and $37.91 million against Rooppur Nuclear Power Project included in the 3rd LoC.