Funding projects unlocked from Indian LoC looks uncertain

Uncertainty shrouds the fate of 11 projects dropped from the Indian Line of Credit (LoC) as exploring new sources of funding stalls for incomplete exit formalities, sources said.

The post-uprising government made the decision last March to unlock these projects from the long-drawn LoC but the formalities for their exit remained in limbo.

Sources say the Economic Relations Division (ERD) has sought such exit plans from the ministries concerned as per directives of a March meeting to submit reports with information on issues like dues and hidden or legal issues.

But no such plan had been submitted until Tuesday, they added.

A consensus on clipping the 11 out of 40 LoC projects was reached at a bilateral LoC-review meeting on March 5-6 at the ERD office in Dhaka. The projects were either at approval stage or approved but far from the physical-work stage.

However, the ERD later formed a technical committee comprising members of the ministries and agencies concerned. The committee held one meeting and decided to submit the reports with necessary information to facilitate the ERD finalise the exit plan.

However, sources at LoC-funded projects said they had not received any written directives from the ERD yet. But they have long been requesting the ERD to source funding for the projects to be implemented.

The projects offloaded from the credit line are mostly under the ministries of railways, shipping, energy and power, and civil aviation and tourism. The exclusion is likely to reduce the total LoC commitment to US$4.68 billion from $7.87 billion.

Of the total amount supposed to be provided under agreements - signed way back in 2010, 2016 and 2017 - only $1.88 billion was disbursed.

According to officials, most of the dropped projects have hardly made any progress due to delays in selecting consultants or a lack of approval from the Indian side.

Some projects were supposed to be implemented as a continuation of another project.

Of these projects, Bangladesh Railway has already decided to shelve Parbatipur-Kaunia and Khulna-Darsana rail-track-development projects but agreed to look for funding for Sirajganj-Bogura dual-gauge project, considering the significance of the line.

Other projects like Syedpur Railway Workshop, Mongla Economic Zone, and Bangabandhu Sheikh Mujib Industrial City Syedpur Airport, Payra Port Terminal, and several infrastructure projects were at the approval stages.

Railway officials say none of the railway projects has any pending issue but needs time to complete small portions either at the stage of feasibility study and detailed design work or in the stage of agreement.

However, the officials say, for not getting written directives from the ERD, they cannot prepare the report.

An ERD official rejects the allegation of not sending any letter to the ministries but says summary of the March meeting has not yet been finalised pending its signing between Bangladesh and India.

"Summary of the March meeting has been exchanged several times with notes but has yet to be final," he told the FE writer, preferring not to be quoted by name.

It is learnt that as meeting was focused on the dues and variation in the Rampal Power plant, finalisation of the meeting minutes is taking time.

smunima@yahoo.com