Sunday, 28 November, 2021

Indian LoC fund release to reach $1bn in FY22

Says Indian high official

  • Staff Correspondent
  • 29 October, 2021 12:00 AM
  • Print news
Indian LoC fund release to reach $1bn in FY22

Fund disbursement from the Indian Line of Credit (LoC) is likely to stand at $1 billion at the end of this fiscal as many projects picked up under the credit are getting momentum, a visiting Indian high official said on Thursday.

“Of the total amount of $7.862 billion committed against three LoC projects, the disbursement to Bangladesh has so far reached $865 million and it is expected to reach the landmark of $1 billion by the end of June,” said Pankaj Kumar Singh, Adviser of the Indian Ministry of External Affairs.

“Many projects under Indian LoC will now hit the execution stage as solid tendering and contracting of those have been done,” he said, adding that contracts have already been awarded for $1.7 billion schemes.

Pankaj was interacting with local media at the Indian High Commission in Dhaka on Thursday evening after a two-day 19th bilateral LoC Projects review meeting with the government of Bangladesh.

He also expected that the work of the long-awaited Khulna-Mongla rail line being implemented under the first Indian LoC will end next year as all the complexities of the project have been addressed. 

However, two other unfinished first LoC projects—Dhaka-Tongi rail line and Shahbazpur rail line projects are facing many problems, including frequent changes in their design and alignments, he informed.

On the other hand, the first phase of the Rooppur nuclear power plant’s evacuation line advanced tremendously even amid the corona pandemic. The project saw 85 per cent progress so far.

Saroj Khuntia, General Manager, EXIM Bank India, also spoke on the occasion.

The LoC review meeting was held in Dhaka on 27-28 October 2021. Sridharan Madhusudhanan, Joint Secretary (DPA-I), Ministry of External Affairs, India led the Indian delegation and the Bangladesh delegation was led by Md Shahriar Kader Siddiky, Additional Secretary, Economic Relations Division (ERD).

Representatives of Indian companies executing the LOC projects in Bangladesh also participated in the meeting.

So far, some 14 projects have been completed out of 43 projects under the three LoCs, the Indian high official informed.

Apart from this, Pankaj was also hopeful about the completion of the street lighting project in Chattogram within the stipulated timeframe.

Apart from this, the Adviser said that the supply of road construction and maintenance equipment project under the Indian LoC would be completed by the middle of next year.

Pankaj noted that it usually takes much time in Bangladesh from identifying a project to the execution stage, which needs to be expedited. “We will have to push or accelerate the contracting process.”

Highlighting some salient features of the Indian LoC, Pankaj informed that some 65 countries have so far received Indian LoC with a volume of around $31 billion. The overall portfolio of Indian LoC was only $10 billion nearly six years back.

He said more than 600 projects have been identified under Indian LoC across Asia, Africa, Latin America and out of those, some 350 projects have already been completed.

In reply to a question, he claimed that LoC is lucrative compared to most other foreign loans as Bangladesh enjoys an interest rate of 1 per cent with 20 years repayment period and a five-year grace period.

Pankaj said the attractiveness, effectiveness and delivery of the projects have led the host countries to take more LoC projects which usually are concessional loans.

He said the Indian LoC loans focus on partnership of equals, there are no conditions while those are completely demand driven by the national priorities of the partner government.

Asked about the comparatively high interest rates under Indian LoC, the Adviser of the Indian External Affairs Ministry said, “We don’t want to say we’re the softest. But, this is the best loan that we can offer.”

The total disbursements as of 25 October 2021 are approximately $ 865 million. Under the first LOC of $862 million, 12 out of 15 projects have already been completed and 3 projects are under execution.

Under the second LOC of $2 billion, 2 projects are already completed and the other projects are under various stages of implementation. Under the third LOC of $4.5 billion, 1 project has reached execution stage, while the other projects are under various stages of DPP finalisation and tendering.

According to the Indian High Commission, there is considerable improvement in the speed of projects reaching the execution/tendering stage which has been made possible with active cooperation of the project-executing agencies of both sides and with the extensive coordination efforts between the ERD and the High Commission.

With an award of more than $990.85 million worth of contracts under the GoI LOCs during the past three years, and another $325.58 million being finalized within the next few months, the utilization rate of LOCs is set to increase significantly in the near future.

During the LOC Review Meeting, both sides expressed satisfaction with the robust cooperation on LOC projects.

A detailed discussion was held, line ministry-wise, to review project progress. Existing issues with project implementation and possible resolution mechanisms were identified. Detailed timelines were determined for all steps involved in project implementation.

Both sides agreed that the LOC review mechanism is an ideal platform to monitor the progress of projects, understand and remove procedural bottlenecks and ensure timely implementation.

The Indian delegation comprising MEA officials from Delhi, High Commission of India officials and Exim Bank of India officials visited the LOC project site for the Power Evacuation facilities of the Rooppur Nuclear Power plant, the Ashuganj Inland River Port project site as well as the Ashuganj-Sarail-Dharkhar-Akhaura Road project site on 25-26 October 2021.

The delegation met all the stakeholders involved in project implementation and in-depth discussions were held to review project progress and resolve the impediments to project progress.

It was agreed that the 20th Bilateral LOC Review Meeting would be held in Delhi in April 2021.