The government is going to form a 10-member team to negotiate with the Indian Exim Bank to finalise the draft of a new $2.0bn credit line, aimed at implementing infrastructural projects, officials said.
The negotiations is likely to take place in the third week of this month to finalise the credit line which is said to be good for Bangladesh’s development budget.
Economic Relations Division sent letters to nine ministries and divisions to select their representatives for the negotiation team. It will be led by ERD additional secretary.
The team will include officials from ERD, Prime Minister’s Office, Finance Division, Legislative Division, National Board of Revenue, Planning Commission, Foreign Ministry, Railway Ministry and Roads and Highway Division.
According to the draft, the contract will be signed between the government of Bangladesh and the Export-Import Bank of India.
Sources in the ERD said the negotiations would focus on the proposed interest rate of the credit.
The proposed interest rate for the dollar-denominated line of credit is 1% per year, but in the event of default, the interest rate will increase to 2% per year. The proposed commitment fee for the credit line is 0.5% per year. Goods and services, including consultancy services, worth at least 75% of the contract price must be supplied by Indian firms, but will be procured by Bangladesh.
The remaining 25% of goods and services to be procured by Bangladesh must have Indian consent.
Procurements will be made via competitive bidding and publicised in the local and Indian press, but India’s Exim Bank will approve the Indian bids.
Moreover, the Exim Bank of India will not be held liable for the cancellation or suspension of the procurement of any good or service, according to the draft.
Earlier, a number of ministries sought relaxation of the conditions for the fresh Indian line of credit for their proposed projects.
The project executing ministries and other regulatory government agencies concerned in last meeting in Dhaka called upon the ERD to negotiate with New Delhi to simplify terms and conditions of the fresh loan.
The ERD convened the last meeting at its office in Dhaka to take opinions from the ministries which will implement the proposed 13 development projects under the LoC.
During his Dhaka visit in June this year, Indian Prime Minister Narendra Modi pledged the loan to help Bangladesh develop its infrastructural and social-economic sectors.
Currently, Bangladesh Railway has undertaken the highest 13 projects, out of total 15, under the $800m Indian LoC for upgrading its infrastructures and service facilities.
Bangladesh in August 2010 signed a $1.0bn credit deal with Indian government to support its development works, especially the transport sector linking the two neighbouring countries.
