First Indian Line of Credit: 8yrs gone, only 51pc utilised
12:00 AM, February 21, 2019 / LAST MODIFIED: 04:08 AM, February 21, 2019

First Indian Line of Credit: 8yrs gone, only 51pc utilised

Projects under the three Indian Lines of Credit worth around $7.5 billion are facing delays mainly due to technical and bureaucratic reasons, and both sides are responsible for this, officials said.

In the last eight years, a little over half of the $862 million of the first LoC has been used despite various steps to expedite the utilisation of the funds.

And while India has so far disbursed $1.2 million of the $2 billion of the second LoC, Bangladesh has yet to use any money from the $4.5 billion third line of credit, officials said.

Finance ministry officials blamed both sides for the delay.

The Bangladesh side is responsible for selecting projects and consultants, preparing the project designs, acquiring land and skilled manpower -- all of which is taking longer than it was expected, said a finance ministry official.

On the other hand, every step of every project must be approved by the Indian Exim Bank, which is a lengthy bureaucratic process, the official added, requesting anonymity.

Officials of both countries are now pushing for quicker implementation of the projects.

As part of the move, a joint monitoring team comprising officials from both sides will sit to “resolve the issues” of every project on February 25. It will be the second such meeting in three months.

Officials from the ministries and agencies concerned, the Economic Relations Division (ERD), the Indian High Commission in Dhaka, EXIM Bank of India and contractors of the projects will join the meeting in Dhaka.

Dhaka and Delhi singed the first LoC in in August 2010 to implement 15 projects. Till December last year, $440.87 million has been used and the work of 12 projects have completed.

Majority of the 12 projects, involving $352 million, was related with procurement of buses, passenger coaches, wagons, locomotives and a dredger from India, which is why these projects faced little delay.

But the lion's share of the money is meant for three railway projects, which are facing delay.

Zahidul Haque, additional secretary of the ERD, said disbursement has been a “little slow” since these projects involve large funds.

Initial delays in appointment of consultants, finalisation of the projects and acquisition of land are to blame for the slow progress, he added.

“In the last one year, all these problems have been solved and works of those projects are now going on in full-swing,” he added.


The three rail projects involve $510.12 million, of which only $87.70 million has been used till December, officials said.

Meanwhile, the cost of one project -- construction of 3rd and 4th dual gauge track between Dhaka-Tongi section and doubling of dual-gauge track between Tongi-Joydevpur -- has gone up by $112 million. The EXIM Bank of India has already approved the additional amount, said an official involved with project.

Project Director Shahidul Islam said the project is behind the schedule by two years as a result of the delay in finalising the design and appointing the consultant and complexity over the tender process.

“Almost all these problems have been resolved and contractors have started work at the Joydevpur site,” he said.

“We hope to complete the work within 2022.”

The project was scheduled to be completed by June this year.

About the rise in project cost, Shahidul said change of design, upgradation of quality of materials and rise in prices with time are to blame.

Construction of Khulna-Mongla Port Rail Line with a bridge over the Rupsa river was scheduled to be completed by June 2020. It may take at least one more year.

The third rail project involving $78 million for rehabilitation of Kulaura-Shahbazpur of dual gauge rail line is also facing delay. Only $7.64 million of the project fund has been used.

The project was due to complete in June this year.


India approved the $2 billion second LoC in March 2016 to implement 16 projects.

About three years after the deal, 12 projects were approved by the Bangladesh government.

Two of the projects involve procurement of trucks and buses for Bangladesh Road Transport Corporation (BRTC) and equipment from India. Some of the vehicles arrived in Dhaka last month, while the rest is expected by April, officials said.

Work of the rest of the projects are yet to begin.

The deal for third LoC was signed in October 2017. A fourth of the $4.5 billion is meant for the Rooppur nuclear power plant.

Sixteen projects have been identified for implementation with this loan, but not a single dollar of the fund has been used in the last one and a half years.

The loan, at 1 percent interest, is payable in 25 years, including a five-year grace period.

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