India set to give Tk 360b as loan

Staff Correspondent | Update:

In a span of seven years, India is set to give Bangladesh a large volume of loan, Line of Credit (LoC).

India will provide Tk360billion as loan which will be used to implement 17 projects.

The projects include the construction of infrastructure for Rooppur Nuclear Power Plant, multipurpose container terminal of Paira Port, and establishing economic zones.

Bangladesh will sign Tk 360 billion third Line of Credit (LoC) agreement with India on Wednesday in presence of finance minister AMA Muhith and Indian finance and corporate affairs minister Arun Jaitley.

Economic Relations Division (ERD) and Indian EXIM Bank will ink the agreement on behalf of their respective sides at the finance ministry in the capital.

Earlier, Bangladesh signed a deal of Tk920 billion with Russia to construct Rooppur Nuclear Power Plant.

In 2010, Bangladesh started to receive loan under LoC. The first loan of $100 crore dollars was signed. In 2015, the agreement of $200 crore dollars was inked.

After two years of second LoC, the government is going to sign a loan of $450 crore dollars.

During the visit of prime minister Sheikh Hasina to India in last April, a memorandum of understanding (MoU) of 3rd LoC was signed.

Last June, only Tk 350 million was released from the first LoC. Of 15 projects, 8 projects were completed. No money from the 2nd LoC has been released yet.

ERD sources said it takes time to finalise projects after the loan agreement. It also takes a long time for approval of the projects.

On the part of Bangladesh, much time is wasted in various procedures including tenders, evaluation and issuing work order. As a result, the projects are not implemented timely and the project costs go up.

On condition of anonymity, a diplomat at the Indian High Commission in Dhaka said there was no past experience of loan agreement between India and Bangladesh. "So we are going ahead well by using the the past experiences of various hurdles."

According to ERD, the conditions of 3rd LoC are similar to earlier two ones.

Executive director of Policy Research Institute (PRI) Ahsan H Mansur said it is a good loan agreement considering the interest rate and payment time. With this loan, big infrastructure projects will have to be implemented, he suggested.

Mansur said Bangladesh has to raise its capacity to implement the project. India has to release fund quickly, he added. 

Bangladesh has already undertaken 17 development projects for the third LoC to be implemented with the upcoming USD 4.5 billion loan.

But, no project will be mentioned in the agreement, said an official at the Economic Relations Division (ERD).

The projects include developing infrastructure for power supply from Rooppur nuclear power plant, setting up multi-purpose terminal at Payra deep-sea port, Buriganga river and its banks restoration, constructing dual gauge railway line from Bogra to Sirajganj, modernising Saidpur Airport, converting Benapole-Jessore-Bhatiapara-Bhanga roads to four lanes, building a container terminal in Chittagong, constructing a container depot in Ishwardi, setting up a line to supply power Katihar-Parbatipur-Barnagar, upgrading Mongla port, building a dry dock in Chittagong, setting up a 100-MW solar power project unit in Mollarhat, converting Mirsarai's Baroirhat-Ramgar road to four lanes, laying a special economic zone in Mirsarai, converting Comilla-Brahmanbaria-Sarail road to four lanes, supplying waste disposal equipment to Dhaka South City Corporation, supplying 1,00,00 LED bulbs to Dhaka, Chittagong, and Rajshahi.

About the agreement, ERD additional secretary Zahidul Haque told Prothom Alo, "It's the largest loan agreement ever. We have been implementing previous LoCs successfully. The projects to be implemented in the third LoC are comparatively better and helpful for bringing an economic change."

Some eight projects out of 15 under the first LoC of USD 862 million faced delay in implementation while the physical works of the 14 projects under the second LoC of USD 2 billion are yet to start.

India and Bangladesh signed the first LoC on 7 August 2010 while the second one was inked in March, 2016.

 

*The report, originally published in Prothom Alo print edition, has been rewritten in English by Rabiul Islam and Imam Hossain.

   
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