Home Substantial portion Bangladesh urged to bear half cost of India-funded road project

Bangladesh urged to bear half cost of India-funded road project

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Bangladesh government to bear almost half of the expenses of an India-funded road project in Brahmanbari to improve connectivity with eastern landlocked states following a new cost increase proposal, provide ministry officials.

The project executing agency, Department of Roads and Highways, wants the Government of Bangladesh to bear 67% of the incremental costs of Tk 2,229.75 crore for the Ashuganj-Akhaura 4-lane highway project executed in under India’s credit line, the officials said.

The remaining 33% of the additional cost will be borne by the Indian government, which has bet on the 50-kilometer route to streamline connectivity between its mainland and the eastern state of Tripura and other areas without direct maritime connection.

Planning Ministry officials said the project’s initial funding structure would see drastic changes if RHD’s new proposal is approved by the National Economic Council’s Executive Committee at a meeting on Tuesday.

With ECNEC’s approval, Dhaka’s financial participation in the project will rise to 49 percent from 36 percent previously, Planning Ministry officials said.

RHD Chief Engineer Md Abdus Sabur told New Age that the country’s financial involvement will increase due to the acquisition of additional land and the payment of taxes.

He noted that they needed to acquire additional land after the width of the road was decided to increase to 5.3 meters from the previous 3.0 meters.

The additional duty and value added tax were included in the proposed revision, he said.

In 2017, RHD started implementing the project at an estimated cost of Tk 3,567.85 crore, with New Delhi providing loans of Tk 2,255.76 crore and Tk 1,312 crore from Dhaka.

After the proposed revision, the new cost of the project will rise to Tk 5,791.60 crore with Delhi providing a total of Tk 2,982 crore and Dhaka providing Tk 2,808 crore.

RHD’s proposal also sought to extend the project’s mandate to June 2025 from an extended mandate of June 2022, said Md Mamun-Al-Rashid, a member of the planning ministry.

Planning Ministry officials said complex rules and regulations under India’s line of credit had delayed the launch of the first tender, limited to Indian contractors, by nearly two years.

The Covid pandemic has further slowed the project, they said, adding that less than 40% of projects had been completed through 2021.

Former Project Manager Arun Alo Chakma said that as the implementation of the project under the Indian Line of Control is new to the country, a significant amount of time was wasted in the documentation process.

The documentation is also checked by the EXIM Bank of India, he said.

Former acting government adviser Mirza Azizul Islam said the government should be more careful when negotiating foreign loans.

The mechanism to overcome lengthy approval procedures should be there to avoid delays that increase the cost of the project as well as liability for debt payment, he noted.

The progress of not only the Ashuganj-Akhaura 4-lane highway project but also many other projects implemented within the Lines of Control has not been satisfactory due to delays, officials from the Ministry of Planning.

Loans worth $865 million have been disbursed through October 2021 under the four lines of credit worth over $7.8 billion and linked to 43 projects.

The 19th Bangladesh-India LoC Review Meeting was held in Dhaka on October 27-28 to review the progress of the projects.

Officials from both countries have expressed optimism that the utilization rate of credit lines will increase significantly soon.