Development projects under three Indian lines of credits (LoC) fails to pick up execution pace despite repeated instructions from the authorities on both sides, largely for fund-disbursement slowdown, sources said.
The disbursement of the LoC funds is US$1.73 billion so far, which accounts for only 23 per cent of the total outlay, ERD sources said.
"Though the political leaderships on both sides are very sincere about expediting the process, bureaucratic tangles from both the countries are responsible for the implementation delays," said one official.
With one-percent lending rate, the LoC is cheaper than other external lending but the slow progress and complicated conditions raised the project costs, offsetting the benefit of the soft lending.
India launched the LoC for Bangladesh in 2010 and committed $862 million for 15 projects.
A second loan agreement involving $2 billion for 12 projects was signed in 2016, which was followed by a third LoC worth $4.5 billion for 15 projects declared in 2017.
The ERD sources said out of the 42 projects under the three LoCs, only 14 are completed for which a total of 410 million dollars was disbursed.
Regarding progress on the other projects they said 8 projects involving over 2700 million dollars are going on while the process of appointing consultants has started for three projects.
For another 7 projects bidding was done for awarding contracts, sources said.
Citing examples, officials said projects like the 44-kilometre Dhaka-Tongi-Joydebpur rail line, the $78.10 million Kulaura-Shahbazpur railway, and the Khulna-Mongla railway project involving $399 million were much slower than expectation. All these projects started at least 12 years ago.
Experts, however, find various reasons for such snail's pace. Talking to the FE they identified taking too many projects, LoC conditions for project funding and wrong policies behind the slow going.
For example, for project funded by the World Bank or other development partners, ECNEC approval was taken beforehand while for the Indian projects the approval was given after the commitment. This, they regret, entailed bureaucratic tangles as the ECNEC approval was followed by a series of steps, including formulation of the DPP.
On the other hand, the strings binding the LoCs also caused delay as at least 75 per cent of the goods and services required for a project have to be bought from them.
A high-level monitoring committee was formed to expedite the implementation two years ago, with the ERD secretary and the Indian high commissioner in Bangladesh leading their respective side on the committee.
"It has started yielding some dividend as, since then, some projects' works picked up pace," one ERD official said.
Sources said the slow progress on the projects was also widely discussed in the summit meeting between the two prime ministers of the countries recently in Delhi.
India intended to announce new LoCs but they backtracked for some reasons, and one of the main reasons is the slow implementation of the existing LoCs, said an official in the know.
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