Indian Foreign Secretary Harsh Vardhan Shringla paid a surprise visit to Bangladesh on Tuesday (August 18) to further strengthen the historical ties between the two neighbouring countries. However, no discussion took place during his visit regarding projects under Indian Line of Credits (LoC).
In the meantime, the government has been moving to expedite the progress of projects being implemented under Indian LoC, according to an Economic Relation Division official involved with the projects.
While implementation of most projects under first LoC agreement is satisfactory, progress of projects under the second and third LoC is slow-moving.
In order to speed up these projects, a two-day tripartite meeting was convened on Wednesday.
ERD sources said the progress of the projects will be faster as $1 billion will be released in the current financial year.
Finance Minister AHM Mustafa Kamal said the visit of the Indian Foreign Secretary was important.
However, there was no discussion with him on the issue of speeding up the LoC loan projects.
According to the rules, work is underway to speed up the projects, he said.
In this context, ERD Asia wing Chief and Joint Secretary Shahriar Kader Siddique told The Business Post, “Loan money for second and third LOC projects will be released from the Indian government after all the project proposals are ready.”
Under first LoC almost $60 crore has already been disbursed. This is year, $1 billion or 100 crore taka will be disbursed, he said.
A LoC project review meeting was held in Bangladesh this year, last year it was held in India.
In the meeting, various issues including project implementation and disbursement are discussed.
According to ERD sources, 46 new projects will be taken under the three LoCs. Most of these projects will be under the Ministry of Road Transport and Bridge.
There is also a project waiting for approval in the Prime Minister's Office to set up two economics zones. And, another one to set up a new medical college.
Out of the 15 projects under first LoC, 3 are now in undergoing implementation. $60.70 crore has been disbursed for this purpose.
Under the second LoC, 2 of 16 projects have been completed, the rest are in progress.
DPPs of 10 projects have been approved, while the remaining two are yet to be prepared.
On the other hand, out of 15 projects in the third LoC, implementation has already started. However, DPP has been approved in five projects.
Progress of the first LoC
The first LoC for 15 loan projects were signed in 2010 for the implementation of 15 projects.
In this, for the first time, India started giving loans on a large scale. The first was a $100 crore loan agreement.
Later, India gave a grant of $14 crore for that loan. Out of the $86 crore loan, $60 crore has been disbursed so far.
Progress of the second LoC:
Second LoC Memorandum of Understanding (MoU) was signed for a loan of $ 200 crore during the visit of India Prime Minister Narendra Modi to Dhaka in June 2015.
To make it work, an agreement was signed with Exim Bank in India on March 9, 2016.
Under the second LoC, two projects have been completed out of 16 projects, two of which are ongoing.
DPP has been approved in 10 projects. Now the labour agreement is pending. DPP is not ready in the remaining two projects. $8.40 crore has been disbursed for the projects so far.
Progress of the third LoC
During the visit of Prime Minister Shaikh Hasina to India in 2017, the third LOC was announced at a cost of $450 crore.
As per the agreement signed with Exim Bank on October 4, 2017, 15 projects were initially selected on priority basis. As a result, there has been no disbursement of loan of third LoC.
According to ERD, interest rate and condition on the Indian loans are strict.
The interest rate on the loans are fixed at 1 percent, penalty loan interest at 2 percent and Promise Fee at 0.5 percent.
In addition, the projects are implemented by Indian contractors only.
The process of land acquisition, preparation of tenders, design of projects and finalization of tenders for the projects are coordinated with Exim Bank of India.
The loan will be disbursed within 20 years. However, the grace period is five years.
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