New Indian credit to be in line with earlier LoC

The memorandum of understanding (MoU) signed between India and Bangladesh for the third line of credit (LoC) has retained all the terms and conditions as they were in the earlier LoC, according to diplomatic sources. Indian prime minister Narendra Modi had announced a new concessional credit line of USD 4.5 billion for the implementation of various projects in Bangladesh on Saturday.
“We are happy to announce a concessional line of credit of USD 4.5 billion for investment in priority sectors in Bangladesh,” Modi had said in a joint statement with his Bangladeshi counterpart Sheikh Hasina at Hyderabad House in New Delhi.
Former Indian PM Dr Manmohan Sigh had announced the first LoC of USD 1 billion during his visit to Bangladesh in 2010. Later, Modi had announced the second LoC of USD 2 billion during his visit in 2015.
The sources said the terms and conditions were incorporated in the MoU though the Indian side had proposed to include them. The sources, however, added that the terms

and conditions would be included in the agreement that will be signed after negotiations, as in the case of the second LoC.
As per the Indian proposal, the interest rate will be one per cent with a five-year grace period and 0.5 per cent commitment fee.
Sources said as per the Indian proposal, 75 per cent of procurement for the projects will have to be from India.
Meanwhile, eight projects out of 15 have been completed under the first LoC, and Indian Exim Bank of India has accepted the detailed project reports (DPRs) of 11 projects out of the 14 selected under the second LoC, ERD sources said.
Besides, India has disbursed USD 353 million of the first LoC of USD 1 billion except a USD 200-million grant. Bangladesh is utilising a USD 200-million grant of the first LoC in the Padma Multipurpose Bridge (PMB) project.
Talking to The Independent, former Bangladesh Bank governor Dr Salehuddin said the Indian LoC was basically one kind of buyer’s credit as per conditions. He said the government should be cautious about utilising the LoC as well as the quality of procurements since 75 per cent of them will have to be from India.
Salehuddin further said it was quite a long process to implement the project under the LoC. However, the government could use the LoC to implement projects rapidly, he added.
Former adviser to the caretaker government, Dr ABM Mirza Azizul Islam, said the third Indian LoC was not so much necessary at this moment, as the implementation of the second LoC was yet to start. Besides, there is no competition in the bidding process and the procurement is costly, too, he added.
Azizul also said that notwithstanding the low interest rate of the Indian LoC, it was practically buyer’s credit.
Both economists, however, agreed that the Indian LoC was better than the Chinese credit.
According to sources, 17 projects were incorporated under the third LoC and some more will be included later.
The projects that have been primarily selected are: Infrastructure development for Power Evacuation Facilities of Rooppur Nuclear Power plant (USD 940 million); Payra port multipurpose terminal (USD 350 million); the Buriganga river (new Dhaleswari-Pungli-Bangshi-Turag-Buriganga river system) restoration project (USD 196.18 million); construction of a new dual-gauge rail line from Bogra to Shahed M Monsur Ali Station in Sirajganj (USD 501.23 million); upgradation of Saidpur airport; four lanes for Benapole-Jessore-Narail Bhatipara-Bhanga road (135 km); Bay container terminal (Chittagong); development of rail and road based ICD at Ishurdi; transmission network development in the new alignment of NE-Bangladesh-NER( Katrihar-Parbatipur-Bornagar (765 KV inter-connection); upgradation of Mongla Port; Chittagong Dry Doc limited; four lanes for Ramgarh to Baruerhat road (35 KM); four lanes for of Comilla-Brahmanbaria-Sarail road (USD 75 million); establishment of special economic zone (Indian SEZ) at Mirersorai; Mollahat 100 MW solar PV power plant; supply of machinery for solid waste management in Dhaka South City Corporation; and installation of one lakh LED street lights in Dhaka, Chittagong and Rajshahi by Energy Efficiency Service Limited (EESL).

New Indian credit to be in line with earlier LoC

The memorandum of understanding (MoU) signed between India and Bangladesh for the third line of credit (LoC) has retained all the terms and conditions as they were in the earlier LoC, according to diplomatic sources. Indian prime minister Narendra Modi had announced a new concessional credit line of USD 4.5 billion for the implementation of various projects in Bangladesh on Saturday. We are happy to announce a concessional line of credit of USD 4.5 billion for investment in priority sectors in Bangladesh, Modi had said in a joint statement with his Bangladeshi counterpart Sheikh Hasina at Hyderabad House in New Delhi. Former Indian PM Dr Manmohan Sigh had announced the first LoC of USD 1 billion during his visit to Bangladesh in 2010. Later, Modi had announced the second LoC of USD 2 billion during his visit in 2015. The sources said the terms and conditions were incorporated in the MoU though the Indian side had proposed to include them. The sources, however, added that the terms and conditions would be included in the agreement that will be signed after negotiations, as in the case of the second LoC. As per the Indian proposal, the interest rate will be one per cent with a five-year grace period and 0.5 per cent commitment fee. Sources said as per the Indian proposal, 75 per cent of procurement for the projects will have to be from India. Meanwhile, eight projects out of 15 have been completed under the first LoC, and Indian Exim Bank of India has accepted the detailed project reports (DPRs) of 11 projects out of the 14 selected under the second LoC, ERD sources said. Besides, India has disbursed USD 353 million of the first LoC of USD 1 billion except a USD 200-million grant. Bangladesh is utilising a USD 200-million grant of the first LoC in the Padma Multipurpose Bridge (PMB) project. Talking to The Independent, former Bangladesh Bank governor Dr Salehuddin said the Indian LoC was basically one kind of buyers credit as per conditions. He said the government should be cautious about utilising the LoC as well as the quality of procurements since 75 per cent of them will have to be from India. Salehuddin further said it was quite a long process to implement the project under the LoC. However, the government could use the LoC to implement projects rapidly, he added. Former adviser to the caretaker government, Dr ABM Mirza Azizul Islam, said the third Indian LoC was not so much necessary at this moment, as the implementation of the second LoC was yet to start. Besides, there is no competition in the bidding process and the procurement is costly, too, he added. Azizul also said that notwithstanding the low interest rate of the Indian LoC, it was practically buyers credit. Both economists, however, agreed that the Indian LoC was better than the Chinese credit. According to sources, 17 projects were incorporated under the third LoC and some more will be included later. The projects that have been primarily selected are: Infrastructure development for Power Evacuation Facilities of Rooppur Nuclear Power plant (USD 940 million); Payra port multipurpose terminal (USD 350 million); the Buriganga river (new Dhaleswari-Pungli-Bangshi-Turag-Buriganga river system) restoration project (USD 196.18 million); construction of a new dual-gauge rail line from Bogra to Shahed M Monsur Ali Station in Sirajganj (USD 501.23 million); upgradation of Saidpur airport; four lanes for Benapole-Jessore-Narail Bhatipara-Bhanga road (135 km); Bay container terminal (Chittagong); development of rail and road based ICD at Ishurdi; transmission network development in the new alignment of NE-Bangladesh-NER( Katrihar-Parbatipur-Bornagar (765 KV inter-connection); upgradation of Mongla Port; Chittagong Dry Doc limited; four lanes for Ramgarh to Baruerhat road (35 KM); four lanes for of Comilla-Brahmanbaria-Sarail road (USD 75 million); establishment of special economic zone (Indian SEZ) at Mirersorai; Mollahat 100 MW solar PV power plant; supply of machinery for solid waste management in Dhaka South City Corporation; and installation of one lakh LED street lights in Dhaka, Chittagong and Rajshahi by Energy Efficiency Service Limited (EESL).