India will release 92 percent of the $800 million line of credit this year, which was offered to Bangladesh for infrastructural development in 2010.
“Dr Dipu Moni and I are satisfied at the pace of utilisation of the LoC extended by India,” Salman Khurshid, India's external affairs minister, said at a joint press conference in Dhaka yesterday.
To date, the Indian government has approved 13 projects worth $733.84 million, according to a progress report from the finance ministry.
Of the 13 projects, commercial agreements have been signed for nine, with tender documents being processed for the remaining four.
The projects include procurement of 300 double-decker, 100 single-decker and 50 articulated buses, construction of second Bhairab and second Titas bridges with approach rail lines and Khulna-Mongla rail line, procurement of railway locomotives, tank wagons.
Of the $733.84 million, $48.89 million has already been released, said an official of the Economic Relations Division.
“The remaining amount [$684.95 million] will be disbursed this year,” he added.
The Indian government announced $1 billion loans for Bangladesh at an interest rate of 1.75 percent during Prime Minister Sheikh Hasina's visit in January 2010.
Then in May last year, the Indian government wrote off $200 million of the $1 billion credit as grant to be used for priority projects, and cut down the interest rate for the $800 million to one percent.
According to the loan deal, Bangladesh will have to procure 85 percent of the goods, works and services from India for the schemes and the rest 15 percent can be procured from Bangladesh if the contractor fails to source it from India.
Consequently, the Export-Import Bank of India credits the accounts of the Indian suppliers upon delivery of the goods and services.
“The entire consignment of buses has been delivered to Bangladesh. Deliveries of railway rolling stock will commence in the coming days,” Khurshid said.
“I am happy to announce that we are ready to release the first tranche of $50 million of the total grant of $200 million soon for projects of priority to Bangladesh.”