India has tagged a tough condition with the proposed $2 billion loan to Bangladesh. Bangladesh would have to spend as much as 75 per cent of the loan to purchase Indian goods for the projects to be undertaken with the loan.
Officials in the Economic Relations Division (ERD) said Bangladesh would need to procure construction material and hire consultants from India for the projects.
During the visit of Indian prime minister Narendra Modi to Bangladesh last June, Bangladesh and India signed a memorandum of understanding (MoU) for India to provide Bangladesh with a fresh $2 billion line of credit.
India’s Export Import or EXIM Bank would provide the loan. Bangladesh had taken a $1 billion loan from India earlier. But the conditions of that loan were comparatively softer. The condition was that Bangladesh would make 65 per cent of its purchases from India in the case of infrastructural construction and would make 75 per cent purchase in other cases.
It was said at the time of signing the second line of credit that the conditions of the loan were like that of the first one.
But India has recently informed Bangladesh that it would have to make 75 per cent purchase from India for any type of projects to be undertaken in the second line of credit programme and the responsibility for implementing the projects would have to be given to the Indian firm.
Bangladesh’s neighbour said firms from no other country would be able to take part in the tender process.
Indian High Commission in Dhaka has written to the ERD expressing its interest to complete the agreement between the Bangladesh government and the EXIM bank by August.
When contacted, Centre for Policy Dialogue executive director Mustafizur Rahman told Prothom Alo that it would not b e possible to take up several of the projects under the first LOC programme due to the purchase conditions.
He said it was said at the beginning of the first LOC that Bangladesh would need to make 80 per cent of its purchase from India under the projects but later it was cut down to 65 per cent.
“This time too, we will have to bargain to soften the purchase condition. Besides, we will have to choose such projects where we can benefit even out of the given condition,” he added.
Mustafizur said Bangladesh as a least developed country is trying to trying to avail unconditional soft loans. “And developed countries have agreed to some extent as well. So, we will have to bargain with India.”
The government has already fixed 13 projects to be taken under the second LOC from India and those are: turning Parbatipur-Kaunia metre-gauge railway line to double-gauge railway line, Khulna-Darshan double-lane railway line, Development of rail factory in Syedpur, Construction of 400KV line Baroaukuria to Bogra to Kaliakoir, Purchasing 500 trucks, 500 buses (300 double-decker and 200 articulated) for BRTC, Purchasing equipments for the roads and highways department, establishment of four medical college and hospital, setting up of National Burn and Plastic Surgery Institute, setting up of 49 Polytechnic Institute and Teachers Training Institutes, Construction of an inland container river port at Ashuganj and development of roads for the river port.
Two projects in the information and technology sector are also included in the list.
The ERD is scheduled to hold a meeting on Sunday (2 August) with the concerned ministry to discuss how the LOC would be effective to implement those projects.
“Officials concerned will put forward their opinions at the meeting and the agreement will be signed with the Indian side on the basis of their opinions,” ERD’s additional secretary Asif-uz Zaman told Prothom Alo.
He said Bangladesh may propose to soften the condition where it is applicable.
Most of the projects to be taken under the second LOC are of the public works department.
ERD officials said India would give Bangladesh a total of $230 million for constructing four-lane road from Ashuganj to Akhaura land port. If an Indian firm is required to implement the project, equipment worth over $170 million will have to be purchased from India, they said.
They also said earth, bricks, sand and cements would have to be purchased from India. And even, labourers would have to be hired from India because the rest of 25 per cent of the LOC would be required to give compensations to those whose lands would be acquired for constructing the road.
Source: Prothom Alo