Indian funds sit idle for slow project implementation
Bangladesh has utilised just 6 per cent of three Indian lines of credit (LoCs), collectively worth more than $7 billion, in the past decade because of slow project implementation.
The government has spent $410.76 million to complete 14 projects since 2010. Of the projects, 12 were funded by the first LoC signed in August 2010, while two others were under the second LoC inked in March 2016.
Priyanshu Tiwari, resident representative of the Exim Bank of India, the lender, shared the information during a recent view-exchange programme with reporters at the High Commission of India in Dhaka.
An LoC is a flexible loan from a financial institution that consists of a defined amount of money that one can access as needed and repay either immediately or over time.
In his presentation, Tiwari suggested following the Indian government's project preparatory facility to reduce the time it takes to formulate project details and improve the overall quality of planning.
He further suggested that Bangladesh should facilitate entry or re-entry of Indian project personnel and experts, who are currently awaiting clearance, without any objection.
He also expects quicker services and support to be extended by the Bangladesh High Commission in India.
A senior official of the Economic Relations Division (ERD) said they had already adopted the recommendations to expedite the implementation of the projects funded by India.
Project implementation has been stunted due to the prolonged cross-border travel restrictions aimed at curbing the spread of Covid-19.
Under the LoC portfolio, $1.72 billion has been assigned for various projects, which is 25 per cent of the total fund.
Project contracts worth $780 million have been signed since 2019 despite the pandemic, according to the ERD official.
A total of $852 million, or 11 per cent of the funds, has been disbursed so far. Of the sum, $661 million came from the $862-million first LoC, $115 million from the $2-billion second LoC, and $76 million from the third LoC, involving $4.5 billion.
To resolve any issues related to project spending, the ERD holds regular meetings with line ministries, Indian contractors and other officials, the official said.
The agency even holds individual meetings with project personnel to identify problems and find solutions. Still, though, the pace of implementation has been slow, he added.
So far, around 43 projects have been included under the three LoCs. The 14 projects that had been completed were related to the procurement of buses, trucks, and other vehicles. The remaining 29 projects are suffering from slow implementation.
Project implementation in Bangladesh typically faces delays at the execution level.
Besides, in each stage of a project, the Bangladesh side needs to take approval from Indian authorities.
According to the Indian procurement conditions, at least 75 per cent of the goods and services required for a project should be bought from the neighbouring nation. At most, this may be relaxed down to 65 per cent.
Officials of the implementing agencies say such a condition is one of the major obstacles delaying project implementation.
None of the 16 projects under the third credit line has been completed.
ERD officials earlier said India would disburse $40 million per year, but the process slowed in 2020 due to the coronavirus outbreak.
However, they hope to raise the amount to $150 million this fiscal year.