Bangladesh is in a dilemma in implementing projects, using US$1.0 billion Indian credit. As a result, the government has sent project details to the lender for getting clarification on emerging differences about procurement.
Officials at the Ministry of Finance and the Ministry of Planning Wednesday said the local project implementation authorities have been facing obstacles in starting work due to emerging disputes on the procurement provision of the credit deal.
"We've recently sent proposals of 15 projects, out of the total 20, to India for getting their opinion. However, the lender is yet to give any feedback in this regard," said Economic Relations Division (ERD) secretary M Musharraf Hossain Bhuiyan.
"Since some issues have emerged and created impediments to the implementation of the projects, taken under the Indian $1.0 billion credit, we have sought clarification from them," he told the FE.
The Indian government in August last confirmed the loan to develop infrastructure in Bangladesh, especially of transport sector, to facilitate cross-border communication between the two neighbouring countries.
Under the $1.0 billion Indian credit line, the government of Bangladesh has undertaken 12 projects for development of railway system, five for transport sector, and three for development of port and other works.
Indian state-owned EXIM Bank has been providing the loan at an interest rate of 1.75 per cent, with 24 years repayment period. Besides, 0.5 per cent commitment fee would be applicable per year on unutilised credit after 12 months from the date of signing the contract.
The local project implementation authorities are facing problems, especially in procurement. According to the condition of the loan deal, Bangladesh needs to purchase at least 85 per cent of goods, works and services from India.
The project implementation authorities of Bangladesh sat with the lender EXIM Bank in November 2010 in Dhaka to discuss about the provision. The bank directed the government of Bangladesh to send project proposals to India for getting clarification on the dispute, a senior ERD official said.
Then the ERD sought project details from the implementing agencies in a specified format, and sent 15 out of those to the Indian government for clarification.
An official of Roads and Highways Department (RHD) said: "For goods, it is easy to comply with the condition of 85 per cent procurement from India. But when we will go for construction of roads or any other infrastructure, it would be difficult to abide by the condition of the credit deal."
"So, we need clarification from the Indian side to start implementation of the projects."
The official said: "The Indian government wanted to supervise some of the projects through their consultants. But in our projects there was no provision for appointment of consultants. It created complexities in execution of the projects."
"We were in a dilemma over supervision of the projects, as most of the projects had no provision for appointment of consultants. But after approval from the ECNEC, a new instruction has come to us for including supervisory consultant," he added.
An official of the Planning Commission said most of the agencies, implementing projects under the Indian credit, have not sought any fund in the current annual development programme (ADP).
"As they haven't sought fund this year, it means there will be no project work," he said.
"The unsettled procurement issues have delayed execution of the projects," he added.
A top official at the Ministry of Planning said: "I don't know what will be the fate of the Indian credit projects. Eight months have already passed, but implementation of the projects has not started yet due to the procurement disputes."
If the government agencies fail to begin work within 12 months from the date of signing the aid deal, they will have to pay 0.5 per cent additional charge as commitment fee to India, he added.
http://www.thefinancialexpress-bd.com/more.php?news_id=130975&date=2011-03-31
Officials at the Ministry of Finance and the Ministry of Planning Wednesday said the local project implementation authorities have been facing obstacles in starting work due to emerging disputes on the procurement provision of the credit deal.
"We've recently sent proposals of 15 projects, out of the total 20, to India for getting their opinion. However, the lender is yet to give any feedback in this regard," said Economic Relations Division (ERD) secretary M Musharraf Hossain Bhuiyan.
"Since some issues have emerged and created impediments to the implementation of the projects, taken under the Indian $1.0 billion credit, we have sought clarification from them," he told the FE.
The Indian government in August last confirmed the loan to develop infrastructure in Bangladesh, especially of transport sector, to facilitate cross-border communication between the two neighbouring countries.
Under the $1.0 billion Indian credit line, the government of Bangladesh has undertaken 12 projects for development of railway system, five for transport sector, and three for development of port and other works.
Indian state-owned EXIM Bank has been providing the loan at an interest rate of 1.75 per cent, with 24 years repayment period. Besides, 0.5 per cent commitment fee would be applicable per year on unutilised credit after 12 months from the date of signing the contract.
The local project implementation authorities are facing problems, especially in procurement. According to the condition of the loan deal, Bangladesh needs to purchase at least 85 per cent of goods, works and services from India.
The project implementation authorities of Bangladesh sat with the lender EXIM Bank in November 2010 in Dhaka to discuss about the provision. The bank directed the government of Bangladesh to send project proposals to India for getting clarification on the dispute, a senior ERD official said.
Then the ERD sought project details from the implementing agencies in a specified format, and sent 15 out of those to the Indian government for clarification.
An official of Roads and Highways Department (RHD) said: "For goods, it is easy to comply with the condition of 85 per cent procurement from India. But when we will go for construction of roads or any other infrastructure, it would be difficult to abide by the condition of the credit deal."
"So, we need clarification from the Indian side to start implementation of the projects."
The official said: "The Indian government wanted to supervise some of the projects through their consultants. But in our projects there was no provision for appointment of consultants. It created complexities in execution of the projects."
"We were in a dilemma over supervision of the projects, as most of the projects had no provision for appointment of consultants. But after approval from the ECNEC, a new instruction has come to us for including supervisory consultant," he added.
An official of the Planning Commission said most of the agencies, implementing projects under the Indian credit, have not sought any fund in the current annual development programme (ADP).
"As they haven't sought fund this year, it means there will be no project work," he said.
"The unsettled procurement issues have delayed execution of the projects," he added.
A top official at the Ministry of Planning said: "I don't know what will be the fate of the Indian credit projects. Eight months have already passed, but implementation of the projects has not started yet due to the procurement disputes."
If the government agencies fail to begin work within 12 months from the date of signing the aid deal, they will have to pay 0.5 per cent additional charge as commitment fee to India, he added.
http://www.thefinancialexpress-bd.com/more.php?news_id=130975&date=2011-03-31
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