Dollar one billion loan from India to Bangladesh runs into 'complexities'

DHAKA: Bangladesh has sought a quick clarification from India on procurement complexities concerning 20 projects to be financed under a landmark USD 1 billion loan sanctioned by New Delhi last year, as the issue has remained stagnant for weeks, a report said here today.

"Our implementing agencies are waiting for the lender's clarification about the complexities that have arisen on the procurement issue," the Financial Express newspaper reported, quoting a senior economic relations division official.

The official, who was not named in the report, said more than a month ago, Dhaka sent details of the 20 projects to be implemented using the loan, seeking New Delhi's clarification on the complexities "that have emerged" in implementing the schemes. However, no response has been received yet.

According to officials, the complexities have arisen in relation to the provisions of the loan agreement stipulating cent per cent procurement of goods, works and services from India under the USD 1 billion credit line.

"Eight months have already passed, but the project works have not started due to the procurement snags," a top planning ministry official said told the newspaper.

None of the concerned officials were available immediately for comment today, as Bangladesh observes a public holiday to celebrate the Buddhist festival "Buddha Poornima", marking the birth of Lord Buddha centuries ago.

Under the loan contract, Bangladesh will have to procure all goods, works and services from India for the projects, mostly in infrastructure sectors, though 15 per cent of the total contracts can be procured from Bangladesh if they can not be sourced from India.

Bangladesh penned the USD 1 billion credit agreement with New Delhi when Indian Finance Minister Pranab Mukherjee visited Dhaka in August last year to initially finance 14 infrastructure projects.

Under the deal, India would lend the amount -- the biggest it has offered to any foreign country -- at a 1.75 per cent interest rate, with a repayment period of 20 years, including a grace period of five years. Bangladesh officials said the loan amount was the highest they have received under a single deal.

The line of credit will be used by Bangladesh for developing its railway and communication infrastructure, power grid connectivity between Bangladesh and India and developing the state-run standard and testing institute.

The number of projects was later expanded to 20, including the upgrade of Bangladesh's rickety railway, road, river and port facilities.