The Indian Line of Credit (LoC) projects had started gaining pace in the last two years, but Covid-19 has pushed them back in slow lane again like other projects of the governments.

“Development projects in Bangladesh faced a setback during the corona crisis like elsewhere in the world as the pandemic brought most economic activities to a halt. Similarly, the pace of Indian LoC projects has also slowed down,” said an ERD high official.
A two-month countrywide corona lockdown was put in place from late March to late May, bringing most economic activities, including most of the projects’ work, nearly to a halt.

In a meeting at Prime Minister’s Office (PMO) in March, Prime Minister’s Economic Adviser Dr Mashiur Rahman instructed the authorities concerned to speed up LoC projects with increased project monitoring, ERD sources said.

But the project implementation was slowed down with the government-declared general shutdown from late March.

Dhaka has so far received $7,362 million loans from New Delhi under three Indian LoCs to implement some important infrastructure projects.

$710 million or 9.66 percent of the total credit arrangement has so far been released, Economic Relations Division (ERD) officials said.

Fund disbursement has not increased that much since the start of FY’21 as LoC fund disbursement stood at $685.6 million in FY’20 ending in June this year.
Only 14 projects out of 45 being implemented under the credit line has been implemented so far, including 12 from first LoC projects and two from second LoC projects.

Prior to the negative impacts of Covid-19, LoC projects got a boost in the last two fiscal years after bureaucratic tangles and individual project problems were addressed through a series of bilateral meetings, according to ERD officials.

Until FY’19 LoC projects’ implementation and fund release had been moving in a slow pace. In Fiscal Year 2018-19, $100 million fund was released, which rose further to over $130 million in FY’20.

Dhaka and New Delhi signed a loan deal for $1 billion first LoC in August 2010. The loan amount stood at $862 million after India declared $200m out of $1 billion credit line as grants and pumped another $62 million into it.

Of this first credit line, $613 million or 71 percent has been released. Out of 15 first LoC projects, 12 have so far been complete.

Three railway projects—Khulna-Mongla rail line, Dhaka-Tongi third and fourth dual-gauge rail lines and rehabilitation of Kulaura-Shahbajpur section—have been limping for a decade.

The second LoC of $2 billion was signed in March 2016 and the $4.5 billion third LoC was signed in October 2017.

Out of $2 billion second LoC, $92 million or only 4.6 percent has been released while $0.5 million or only 0.11 percent from the third LoC has been disbursed.

Two projects have been complete from 15 second LoC projects, but no projects from third LoC have been complete so far.

The two complete projects of second LoC are procurement of trucks, single-decker and double-decker buses for state-run BRTC. Four projects are running while another four at procurement stage and five at planning stage.

Of the third LoC projects, only power transmission infrastructure project for Rooppur nuclear power plant is going on and others are either at procurement or planning stage.