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The Financial Express

Indian LoCs: Project deadlines see pushback

A couple of schemes under first LoC still incomplete


Mir Mostafizur Rahaman | Published: January 18, 2020 10:10:47 | Updated: January 20, 2020 11:25:30


Indian LoCs: Project deadlines see pushback

Dozens of projects for which the Indian government extended three credit lines over the past decade shows a dismal picture in project management, according to the latest review.

According to the documents obtained by the FE, out of the 15 projects included in the second Line of Credit, or LoC, only two have been completed. The second LoC was offered in 2016.

On the other hand, out of the 16 projects under the third LoC, which was signed in 2017, none has been completed.

Even three projects of the first LoC, which was approved nine years ago, have remained incomplete.

The government signed an agreement with Indian EXIM Bank for the $2.0 billion LoC-II in March 2016 and $862 million worth of LoC-I in August 2010.

The minutes of the 16th review meeting of the LoCs reveal that most of the projects of the LoC-II and LoC-III are at the DPP (development project proposal) stage.

The meeting also reviewed the $500 million defence LoC.

Officials of the both sides, who attended the New Delhi meeting, expressed their frustration over the slow implementation of the project scenario, a senior official of the finance ministry said.

One of the key projects of the first LoC, signed in 2010, is Khulna-Monghla railway line project worth $388.92 million.

The last completion date was September 2019, but so far only 55 per cent physical works for the project has been completed. The revised deadline is now December, 2020.

The meeting was told that delayed delivery of bridge spans, delay in approval of the 'design variations' were the major reasons for slow progress.

The Dhaka-Tongi-Joydevpur Railway line project worth $235.10 million and $78.10m Kulaura-Shahbajpur Railway line project of this nine-year-old credit line are still pending.

Of the LoC-II projects, the two completed projects are: the procurement of 500 trucks and 600 buses for the BRTC.

The LoC-III has 16 projects and three projects are at the tendering stage and the rest are at DPP stage, the meeting was told.

Until October 2019, out of the total $4.5 billion, $1.26 b was disbursed under the third LoC.

However, the review meeting took a host of decisions to expedite the implementation of the projects.

The meeting decided to pay the contractors in time and streamline the payment process.

Both sides agreed instead of the present long procedure of processing of bills, a faster process in accordance with the delegation of financial power of the Bangladesh government may be examined by line ministries and agencies for all LoC projects, according to the meeting minutes.

Currently, the bills are processed from project director office to the project implementing agency to line division/ministry to the Economic Relations Division to the Indian High Commission and finally to the EXIM Bank of India,

Another method suggested for expediting payments was to follow the model used by Bangladesh in projects funded by other development partners, which is to route the payment bills directly from PD to such funding agencies.

In this case, Exim Bank of India is the funder.

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