Little to cheer about
Nearly two years after signing the $1 billion Indian credit line, Bangladesh has received only $1.28 million for one project thanks to bureaucratic bottlenecks of India as well as inefficiency of various Bangladeshi ministries.
However, 15 projects -- mostly in the railway sector -- worth $750 million are in different phases of implementation, a finance ministry official says.
About 80 percent projects are aimed at smoothening transit-transhipment with India, Nepal and Bhutan.
As many as 21 projects were taken under the credit line, but in early April, the government dropped six projects worth $250 million. Till now, the government has not decided about any replacement projects.
During Prime Minister Sheikh Hasina's visit to India in January 2010, in a joint communiqué signed by the two premiers India committed $1 billion soft-loan to Bangladesh.
Finance Minister AMA Muhith and his Indian counterpart Pranab Mukherjee in August 2010 on the basis of the joint communiqué signed the $1 billion credit deal.
At that time 14 projects were identified under the credit line. Later seven more projects were earmarked for implementation under it.
During the scheduled Bangladesh visit of Indian Finance Minister Pranab Mukherjee on May 5-6, Muhith is most likely to project the latest situation of implementation of the $1 billion credit line to his Indian counterpart, a finance ministry high official says.
Of the 21 projects, $1.28 million was released in April for only one project -- procurement of double-decker, single-decker AC and articulated buses for BRTC.
The total cost in the project is $43.96 million, of which $36.85 million will be provided from Indian credit.
Thirty-three double-decker buses have already reached Bangladesh and 257 are expected to arrive by October this year. Besides, a proposal to import 100 AC buses and 50 articulated buses is awaiting approval of the cabinet committee. Commercial contract for this is likely to be signed in May this year.
The finance ministry official adds, of the six projects that were dropped in April, four did not match with the transit system. The projects are development of Barayahat-Heanko-Ramgarh-Sabrum Land Port connecting road; improvement of Sarail-Brahmanbaria-Sultanpur-Chinair-Akgaura-Senarbadi Land Port road as national highway; improvement of Lalmonirhat Burimari Road; and construction of overpass on Jurain rail crossing in Dhaka city.
The two remaining dropped projects are procurement of 264 MG passenger carriages and two BG inspection cars, and procurement of 150 MG passenger carriages. The finance ministry official says Bangladesh dropped the two projects as the Indian authorities said they do not manufacture quality carriages and cars anymore.
The official adds 30 to 80 percent preparatory work of the remaining projects has been completed.
The official says implementation of the projects was delayed due to inefficiency of line ministries of Bangladesh. He adds in some projects, Indian conditions went against the interest of Bangladesh which also delayed implementation.
Most of the projects belong to the railway. The estimate of procurement on which the railway officials called tender was much backdated. As a result, the tender had to be called several times resulting in the delay.
However, a high official of the Economic Relations Division (ERD) says the delay is less compared to those implemented with such credit arrangements with China or Korea.
The Daily Star has collected the implementation status of the projects from different ministries. The Indian High Commission in Dhaka also informed yesterday the latest implementation status of 14 projects. On the basis of these, the project-wise status is described below:
IMPLEMENTATION STATUS OF 15 PROJECTS
Procurement of 180 broad gauge (BG) wagons and six bogie brake vans: Total cost in the project is $25.55 million, of which India will provide $17.38 million. Commercial contract of the project has been amended once and signed. The Exim Bank of India approved the commercial contract in February this year. Agreement has also been signed with Texmaco Rail & Engineering Ltd. The Letter of Credit (L/C) was opened on April 16.
Procurement of 50 metre gauge (MG) flat wagons and five MG brake vans with air brake for carrying containers: Of the $4.5 million project cost, India will give $2.9 million. Tender was invited once in May last year. But as the market price was higher than the estimated price, the tender was cancelled. In October last year a second tender was called. It has now been undergoing technical evaluation and the process will end in this month. After that the commercial contract will be signed.
Procurement of 30 BG diesel electric locomotives: The cabinet committee on purchase has approved procurement for the $87.16 million project, of which India will provide $60.95 million. The commercial contract will be signed in this month.
Procurement of 100 MG bogie tank wagon and 5 MG brake van with air brake equipment for carrying aviation fuel: Of the total project cost of $11.05 million, India will give $7.43 million. The bidding process has already been completed. The comparative bidding documents have been sent to the Indian mission in March for approval of the Exim Bank. When the approval is received Bangladesh will open the L/C.
Procurement of 170 MG flat wagons and 11 MG bogie brake vans with air brake system for carrying containers: Of the $13.985 million project cost, India will provide $9.49 million. Tender has been opened and technical evaluation process is continuing. The scheduled date for contract signing is May this year.
Procurement of 10 diesel electric multiple units for Bangladesh Railway: The project cost is $51.08 million, of which India will provide $35.86 million. The proposal is undergoing scrutiny at different stages for finalisation at the Planning Commission. Its tendering process will start after approval in the Ecnec.
Procurement of six dredgers and ancillary crafts & accessories for Ministry of Water Resources and Ministry of Shipping: The project cost is $91.28 million and India will provide $67.43 million. Under the project several modes of procurement are going on. Some of those have seen first tender, while technical evaluation is going on. In some other kinds of procurement, first tender has been cancelled and second tender has been opened.
Construction of Khulna-Mongla Port rail line including feasibility study: Of the $250 million project cost, India will provide $175 million. After completing its tendering process, technical evaluation ended in January and is now awaiting approval of the cabinet committee on purchase.
Construction of the second Bhairab and second Titas bridges with approach rail lines: Of the total project cost of $139.32 million, India will give $120 million. The commercial contract of the project was signed in November last year. All processes have been completed. After getting approval of the Exim Bank, the project work will start.
The Indian High Commission claims Indian content in this contract has been relaxed to 61.57 percent though for consultancy contracts Indian content is supposed to be 100 percent. The High Commission also said the Indian government has decided to relax Indian content to 65 percent for all construction projects and any requirement for further reduction will be considered case by case basis.
Construction of dual-gauge track between Dhaka-Tongi section and doubling of dual-gauge track between Tongi-Joydevpur section including signalling works on Bangladesh Railway: India will provide $88.38 million of the total cost of $108.96 million. The Exim Bank in February approved its inclusion in the line of credit. The project is now awaiting Ecnec nod.
Besides, three projects involving around $76 million have been sent to the Indian government for their inclusion in the line of credit.
The projects are procurement of 125 BG passenger carriages, establishment of Inland container river port at Ashuganj, and modernisation and strengthening of Bangladesh Standards and Testing Institution (BSTI).
The finance ministry official says in lieu of the six projects involving $250 million, dropped other projects will be taken. The Bangladesh Government has been continuing talks with India in this regard.
The $1 billion line of credit is the largest ever amount given by India to any countries.
The main terms and conditions of the credit line agreement include 1.75 percent interest (fixed) per annum, 0.5 percent commitment fee per annum on unutilised credit after 12 months from the date of commercial contract approval, and 20 years' repayment period including a grace period of five years.
As per the conditions of the credit line, 85 percent of the equipment or work will be provided by the Indians.
However, the ERD official says the difference between the credit from China and India is that in case of China, it determines as to which company will get the work. But in case of India, an intra-country competition bidding process will take place.