Dhaka on Wednesday signed an agreement with New Delhi for $4.5 billion loan with the provision of procuring 65 to 75 per cent goods and services from India for implementation of 17 development projects in Bangladesh.
Besides, the local implementing agencies would have to take prior approvals from the Indian authorities to complete the procurement which they feared would delay execution of projects further.
Due to these conditions, Bangladesh which earlier struck deals with India for one billion dollar credit in 2010 and two billion dollar in 2016 could release only half a billion dollar in last seven years.
Speaking at the loan signing ceremony at the secretariat, finance minister AMA Muhith expressed dissatisfaction with the implementation of projects due to slow disbursement of loan with the first and second Indian Line of Credit.
He expected that loan disbursement process would be improved with the third LoC.
His counterpart Indian finance minister Arun Jaitley, who was also present during the loan signing ceremony, blamed ‘land acquisition,
local management and selection process of the projects’ for the delay in loan disbursement.
He, however, hoped that that the loan disbursement would be ‘expedited’ in coming days.
Claiming that the ‘India-Bangladesh relations are at their best today and stand out as a model for other countries to emulate’, Jaitley said India continued to attach the highest importance to its relations with Bangladesh, which saw steady growth during recent times.
‘A strong, stable and prosperous Bangladesh is in India’s interest and we are committed to working with Bangladesh to deepen our mutual engagement,’ he said.
He said the fresh loan would enable the implementation of 17 projects in infrastructure such as power, railway, roads, shipping and development of ports.
Economic Relations Division secretary Kazi Shofiqul Azam and managing director of the Export-Import Bank of India David Rasquinha signed the deal on behalf of their respective sides.
The interest rate of the loan is one per cent annual and repayment period is 20 years with five years as grace period, but Bangladesh would have to depend solely on the Indian suppliers for the goods and service because the ‘limited tendering method’ tagged by India instead of the open tendering system.
The loan also bears 0.5 per cent commitment fee.
A former caretaker government adviser, Mirza Azizul Islam, said the fresh credit deal with India was similar to that of the suppliers’ credit, a worst form of loan.
The loan recipients have no choice but to procure goods from the loan providing the country with such deals, he noted.
According to a press release of ERD, 12 out of 15 projects taken with the first LoC were implemented.
Only nine projects at the estimated cost of $1.5billion were so far identified with the second LoC.
Major projects to be implemented with the third LoC include infrastructure development of the Rooppur Nuclear Plant, development the Payra Sea Port, construction of a new dual-gauge rail line between Bogra and Sirajganj, establishment of an economic zone at Mirsarai and special economic zone in Payra or Moheshkhali, a cross border electricity transmission line in Bogra, a 450 megawatt power plant in Gazipur, upgrading a highway between Comilla and Brahmanbaria, restoration of the River Buriganga, dredging in the Ashuganj-Zakiganj route and development of an inland container depot at Iswardhi.
In addition to the loan deal both the countries signed ‘The Joint Interpretative Notes on the Agreement between India and Bangladesh for the Promotion and Protection of Investments’ aiming at imparting clarity to the interpretation of the existing agreement between two countries on investments.
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