Review meet on Indian lines of credit

Dhaka to seek relaxation of procurement conditions

FHM Humayan Kabir | Published: December 07, 2017 10:05:36 | Updated: December 07, 2017 14:45:53

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Bangladesh will seek relaxation of the conditions attached to procurement of goods and services under the US$ 4.5 billion Indian line of credit-III (LoC-III) at a review meeting to be held later this month in New Delhi.

It would be difficult for the country to procure at least 75 per cent of goods, services or works of a project from India as per the credit condition, said officials at the Ministry of Finance (MoF) Wednesday.

So, Bangladesh will seek waiver of that particular condition at the meeting scheduled for December 19-22, they added.

A Bangladesh team, headed by an additional secretary of the Economic Relations Division (ERD), will take part in the meeting that would review the progress of the latest LoC-III as well as the first and second ones worth $862 million and $2.0 billion respectively.

The meeting would also evaluate the implementation progress of the remaining projects under the LoC-1 and all 14 projects under the LoC-II and suggest measures for removing the obstacles to their implementation.

An official at the MoF pointed out some relaxation of conditions in relation to procurement (case-to-case basis) of goods and services for projects under the ongoing LoC-I and LoC-II. He, however, said the exemptions were not applicable for the LoC-III.

"Our project implementing agencies informed us that they have already faced massive hurdles as they tried to procure 75 per cent of goods or services or works from the Indian market," he said.

"In case of some projects, Bangladesh needs to procure bricks, sand, steel, rod and cement. But those purchase from the Indian market will not be viable for the civil works," he told the FE, requesting anonymity.

Another official at the MoF said the issues concerning the progress of projects under the LoC-II and the newly signed LoC-III are likely to dominate the review meeting as some of the projects were facing hurdles in the approval stage from the Indian side.

Some of the projects were also facing difficulties in meeting the procurement conditions, eventually affecting their execution, he said.

Bangladesh has taken up 14 projects under the LoC-II and 17 others under the LoC-III, officials said.

The government signed an agreement with Indian EXIM Bank for the $2.0 billion LoC-II in March 2016 and the $4.5 billion LoC-III in October this year.

Earlier, Bangladesh had taken 15 projects under the LoC-I after confirming it in August 2010.

The MoF official said they would request New Delhi to expedite the project approval and loan disbursement process for all the projects under the LoC-II and LoC-III.

"We hope the review meeting will remove all the complexities to facilitate execution of the projects," he said.

The Indian credit bears an interest rate of 1.0 per cent with 0.5 per cent commitment fee. It will have to be repaid in 20 years with five years of grace period.

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