Project execution on hold as Delhi yet to clarify procurement disputes
Sunday, 8 May 2011
FHM Humayan Kabir
The government agencies have failed to begin implementation of the projects under the Indian US$ 1.0 billion credit as Delhi hasn't come up with clarification on the procurement disputes that have emerged, despite Dhaka's plea, officials said. Officials at the finance ministry said they had sent 20 project details under the one billion dollar Indian loan to Delhi more than a month back, but they are yet to get the lender's above-mentioned clarification. "We have sent details of all the 20 projects more than a month ago to India seeking their opinion on the difficulties in procurement. But we are yet to get a reply," a senior Economic Relations Division (ERD) official told the FE. He said the implementing agencies have been seeking 'clarification' from them by sending repeated letters, "but we are failing to give them a positive feedback due to the non-availability of the lender's clarification on the dispute." As per the loan contract, Bangladesh will have to procure all goods, works and services from India for the schemes. Only 15 per cent goods, works or services can be procured from Bangladesh if the contractor fails to source them from India. The Indian government in August last year confirmed $1.0 billion in loan for Bangladesh to develop infrastructure, especially the transport sector, to facilitate cross-border communications between the two neighbours. The Bangladesh government has undertaken 20 projects for upgrading its railway, road, river and port facilities borrowing the fund from the Indian government. Indian state-owned EXIM Bank provides the loan at a rate of 1.75 per cent with 24 years' repayment period, where 0.5 per cent commitment fee will be applicable per annum on unutilised credit after 12 months from the date of contract. Another ERD official said the authorities entrusted with project implementation have fallen into trouble, especially in the procurement of works as Bangladesh needs to purchase at least 85 per cent of goods, works and services from India for its billion- dollar project. Due to the barriers, ERD and Bangladesh's project implementers sat with the lender EXIM bank in Dhaka in November 2010, where the bank directed the government to send project details for getting clarifications on the unsettled disputes, he said. "As per the suggestions of EXIM Bank, we have sent details of 15 projects about 50 days ago. Then the details of the remaining 5 were sent a month back. But we haven't got any feedback till now from the Indian government," the official said preferring anonymity. A Roads and Highways Department official said: "If we procure stones, cement, sand, bricks and all the works and services from India, the road construction cost will almost double." "So how can we say that it is justified to execute the project with such a costly option," he said requesting anonymity. The official said: "The Indian government wants to supervise some projects through their consultants. But in our projects there is no provision of appointing consultants. It has created another complexity." "We are in a dilemma over the project supervision issue. Most of the projects do not have consultant provisions. But after approval from the ECNEC, a new instruction has reached us for including supervisory consultants," he said. A planning commission official said most of the implementing agencies of the one billion dollar credit have not sought funds in the current annual development programme (ADP). "As they haven't sought funds this year, it means there will be no project works," he said adding, "The unsettled procurement issues have delayed the execution activities." A top planning ministry official said: "I don't know what will be the fate of the Indian credit-related programmes. Eight months have already passed but the project works have yet to start due to the procurement disputes." If the government agencies fail to begin work within 12 months from the date of the aid deal, they will have to pay 0.5 per cent additional charges as commitment fee to India, he said. Under the $1.0 billion credit line, the government has undertaken 12 projects for railway development, five for transport sector improvement and three for port development and other works.
The government agencies have failed to begin implementation of the projects under the Indian US$ 1.0 billion credit as Delhi hasn't come up with clarification on the procurement disputes that have emerged, despite Dhaka's plea, officials said. Officials at the finance ministry said they had sent 20 project details under the one billion dollar Indian loan to Delhi more than a month back, but they are yet to get the lender's above-mentioned clarification. "We have sent details of all the 20 projects more than a month ago to India seeking their opinion on the difficulties in procurement. But we are yet to get a reply," a senior Economic Relations Division (ERD) official told the FE. He said the implementing agencies have been seeking 'clarification' from them by sending repeated letters, "but we are failing to give them a positive feedback due to the non-availability of the lender's clarification on the dispute." As per the loan contract, Bangladesh will have to procure all goods, works and services from India for the schemes. Only 15 per cent goods, works or services can be procured from Bangladesh if the contractor fails to source them from India. The Indian government in August last year confirmed $1.0 billion in loan for Bangladesh to develop infrastructure, especially the transport sector, to facilitate cross-border communications between the two neighbours. The Bangladesh government has undertaken 20 projects for upgrading its railway, road, river and port facilities borrowing the fund from the Indian government. Indian state-owned EXIM Bank provides the loan at a rate of 1.75 per cent with 24 years' repayment period, where 0.5 per cent commitment fee will be applicable per annum on unutilised credit after 12 months from the date of contract. Another ERD official said the authorities entrusted with project implementation have fallen into trouble, especially in the procurement of works as Bangladesh needs to purchase at least 85 per cent of goods, works and services from India for its billion- dollar project. Due to the barriers, ERD and Bangladesh's project implementers sat with the lender EXIM bank in Dhaka in November 2010, where the bank directed the government to send project details for getting clarifications on the unsettled disputes, he said. "As per the suggestions of EXIM Bank, we have sent details of 15 projects about 50 days ago. Then the details of the remaining 5 were sent a month back. But we haven't got any feedback till now from the Indian government," the official said preferring anonymity. A Roads and Highways Department official said: "If we procure stones, cement, sand, bricks and all the works and services from India, the road construction cost will almost double." "So how can we say that it is justified to execute the project with such a costly option," he said requesting anonymity. The official said: "The Indian government wants to supervise some projects through their consultants. But in our projects there is no provision of appointing consultants. It has created another complexity." "We are in a dilemma over the project supervision issue. Most of the projects do not have consultant provisions. But after approval from the ECNEC, a new instruction has reached us for including supervisory consultants," he said. A planning commission official said most of the implementing agencies of the one billion dollar credit have not sought funds in the current annual development programme (ADP). "As they haven't sought funds this year, it means there will be no project works," he said adding, "The unsettled procurement issues have delayed the execution activities." A top planning ministry official said: "I don't know what will be the fate of the Indian credit-related programmes. Eight months have already passed but the project works have yet to start due to the procurement disputes." If the government agencies fail to begin work within 12 months from the date of the aid deal, they will have to pay 0.5 per cent additional charges as commitment fee to India, he said. Under the $1.0 billion credit line, the government has undertaken 12 projects for railway development, five for transport sector improvement and three for port development and other works.