Some projects, which are still not ready, are likely to be dropped from the Indian credits to expedite Indian Line of Credit (LoC) projects as officials from both Bangladesh and India have agreed on it, official sources confirmed.
A two-day LoC review meeting ended in Dhaka on Thursday, where an Indian delegation was led by Suja K Menon, director for credit lines at India’s Ministry of External Affairs, while Bangladesh side was led by Mirana Mahrukh, additional secretary to the Economic Relations Division (ERD).
During the meeting, a concensus was also reached to implement the upcoming projects with Indian funding through project-based agreement instead of an “Umbrella agreement” so that each project gets full LoC facilities, including repayment and grace period, which was not possible under the existing arrangement because of delayed execution process.
“We’ve discussed very positively to streamline or rationalise the project list. Officials from both the countries have agreed on the issue from their view points so that LoC projects do not face further hurdles,” Mirana Mahrukh said the meeting.
The number of the projects facing fresh scrutiny may be 10-12, including at least three railway projects, out of some 40 schemes picked up under three LoCs totaling $7.36 billion, according to ERD officials.
They, however, clarified that the shortisting will exclude projects, contracts for which have already been signed, and a final decision regarding the review committee’s recommendation will only come from the high-ups of the two governments.
Contracts have been signed for a number of projects to be implemented with $2.8 billion Indian credit and the negotiation was held on Thursday for the rest of $4.56 billion funding.
The railway projects under scrutiny are the construction of a dual gauge railway line from Bogura to Sirajganj; Khulna-Darsana rail line; and dual gauge line from Parbatipur to Kaunia Section, which were supposed to get $800 million loans from India.
After the project cancellation, the size of LoCs might be smaller or new projects might be included, ERD officials added.
Apart from project-specific arrangements, the upcoming project contracts may have new terms and conditions unlike the previous ones signed 10 years ago.
Additionally, the review meeting also decided to lower the mandatory project materials purchase provision to 65 percent from existing 75 percent. The percentage may be even curtailed further for specific, if negotiated with the Indian authorities individually, official sources said.
They expected that the meeting will help speed up Kulaura-Shahbazpur rail line project, while resolving the problems linked to third and fourth duel-gauge rail line projects in Dhaka-Tongi and Tongi-Joydevpur sections.
Bangladesh and India signed the first LoC agreement involving $862 million in August 2010, the second one involving $2 billion in March 2016 and the third one involving $4.5 billion in March 2017.
So far, $1.88 billion was disbursed as of January 2025 against a total of 40 projects or project components. In the current fiscal year, only $81 million has been disbursed as project execution face troubles after the July mass uprising.
Since Bangladesh first signed LoC with India in 2010, several projects have been excluded from the LoC framework due to implementation challenges.
At Bangladesh’s request, multiple projects have been dropped as delays and cost escalations have prompted a reassessment of Indian financing.
Bangladesh is the highest recipient of Indian soft credit. Some important projects like Rooppur Nuclear Power Evacuation project and Khulna-Mongla Rail line project.
