Bangladesh seeks revision of India’s LOC agreement for enhancing use of local materials

Bangladesh has requested revision of India's Line of Credit (LOC) agreement for enhancing use of local materials as the high officials of the two countries reviewed progress of the LOC projects on January 3.

Bangladesh had earlier said one of the reasons for slow implementation of LOC projects is that 75 percent raw materials need to be procured from India.

Officials of both countries in the first High Level Project Monitoring Committee Meeting emphasised on removing procedural bottlenecks to ensure timely implementation of the projects.

The virtual meeting was led by Bangladesh's Economic Relations Division Secretary and Indian High Commissioner to Bangladesh.

According to a statement of the Indian High Commission issued today, India's total commitment under LOCs to Bangladesh is USD 7,862 million.

Out of 46 projects currently covered under the three LOCs, 14 projects are completed (USD 412.85 million), 8 projects are ongoing (USD 1,013.74 million), 15 projects are under tendering (USD 3,195.44 million) and 14 projects are under DPP (USD 3,081.34) preparation stages.

In value terms, about 83 percent of the projects are still at planning stages.

GOB's project agencies have awarded contracts of value USD 1,276.39 million so far which are approximately 17 percent of total LOC portfolio. Under such contracts, disbursements of value USD 719.78 million (56% of the contract value) have, so far, been made by Exim Bank of India. Out of the first LOC, USD 200mn has been converted into grant, the statement said.

The meeting discussed that follow-up mechanism will be taken to expedite various projects which are at different stages.

Special focus will be given to expedite completion of preparation of DPP (Development Project Proforma) for projects which have been identified to be executed out of LOC funds so that steps can be taken for early floating of tenders.

The two countries also agreed that steps will be taken to ease tendering process, which will in turn speed up process of awarding contracts to the winning bidders and early implementation of projects.

The statement said the projects under implementation will be monitored effectively and measures will be taken to ensure timely mobilization and improve the payment cycle which has direct impact on progress of projects.