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Indian $2bn LoC terms remain unsettled | Dhaka Tribune
today's paper >> business >> published: 00:51 october 20, 2015
Indian $2bn LoC terms remain unsettled
Kayes Sohel
Negotiation is still on to strike a draft agreement on new Indian $2bn Line of Credit (LoC) offered to Bangladesh by India around four months back.
In a latest round of inter-ministerial meeting last week, Bangladesh has decided to negotiate further on unsettled issues, including procurement of goods and services from both the countries, consultant appointment, seller selection, tax, VAT and procurement guideline to execute 13 projects under the LoC.
On the use of goods and services, the meeting decided to propose for reducing procurement of Indian goods and services to 65% or below it for civil works-related projects and more reduction for other projects.
Under the LoC, India primarily said a minimum of 75% goods and services needs to be of Indian origin and must be procured from India.
In response to it in July, Bangladesh had proposed India that 60% goods and services would be procured from India and the rest 40% from Bangladesh, and 50% construction materials like brick, sand and cement will be procured from India and 50% from Bangladesh.
On this proposal, India replied that for all projects, it would not be possible to cut the proposed procurement share but terms and conditions could be project-based like first LoC.
LoC is a promise to provide loans at subsidised rates from agencies such as Exim Bank of India.
These are normally conditional on the recipient, using the loan amount to buy equipment and services from Indian entities.
Both countries, however, agreed on forming a joint venture company for taking recommendation services. But in this case, Indian consultant company will play a lead role.
On the point of project management consultant (PMC), the meeting decided to negotiate further. Earlier, in response to Bangladesh proposal to make it optional and if needed, Bangladesh could appoint own-financed PMC from anywhere in the world. In response to it, India replied that it is important to appoint PMC in a critical project-related civil works under LoC. So, appointment of PMC should not be made optional.
On re-payment date, Bangladesh agreed on India’s proposal on fixing re-payment date after first installment of the loan.
The meeting laid emphasis on further discussion on seller selection, as earlier Bangladesh proposed that Bangladesh usually accomplishes all civil procurements in line with the internationally recognised rules in response to India’s seeking explanation on omission of two words – transparent and fair – from the deal.
On payment of custom duty, VAT and tax, the meeting decided to discuss further and was told that Indian must pay all personal and corporate taxes as per the country’s rules.
Earlier, India had requested Bangladesh to re-think about not giving tax and VAT waiver for its individuals and companies.
Both side agreed to handle letter of credit issue, borrower’s liability, immunity for the borrower, legal proceeding by court, specimen signature and amortization schedule.
India had offered new LoC at 1% interest and 0.5% commitment fee (on undisbursed amount) during Indian Prime Minister Narendra Modi two-day state visit to Bangladesh in first week of June. The loan will have to be repaid in 20 years with a five-year grace period.
In August 2010, Bangladesh signed first $1bn credit deal with India to support Bangladesh’s development works. Of which, $800m has so far been released.
The proposed 13 projects for fresh LoC are setting up of double railway tracks in Khulna- Darshana line, converting the Parbatipur-Kaunia metre-auge (MG) line to a dual-gauge track, upgrading the Syedpur railway workshop, installation of Barapukuria-Bogra-Kaliakor 400-kilovolt power-transmission line, procurement of 500 trucks and 500 buses for BRTC, procurement of modern equipment to upgrade the Roads and Highways Department, setting up of four medical colleges and hospitals, national burn and plastic surgery institute, construction of 49 polytechnic and teacher-training institutes, upgrading of Ashuganj river container port, and improvement of Ashuganj river port-Akhaura road.
Two other projects under the ICT ministry are also included in the list.
- See more at: Indian $2bn LoC terms remain unsettled | Dhaka Tribune
today's paper >> business >> published: 00:51 october 20, 2015
Indian $2bn LoC terms remain unsettled
Kayes Sohel
Negotiation is still on to strike a draft agreement on new Indian $2bn Line of Credit (LoC) offered to Bangladesh by India around four months back.
In a latest round of inter-ministerial meeting last week, Bangladesh has decided to negotiate further on unsettled issues, including procurement of goods and services from both the countries, consultant appointment, seller selection, tax, VAT and procurement guideline to execute 13 projects under the LoC.
On the use of goods and services, the meeting decided to propose for reducing procurement of Indian goods and services to 65% or below it for civil works-related projects and more reduction for other projects.
Under the LoC, India primarily said a minimum of 75% goods and services needs to be of Indian origin and must be procured from India.
In response to it in July, Bangladesh had proposed India that 60% goods and services would be procured from India and the rest 40% from Bangladesh, and 50% construction materials like brick, sand and cement will be procured from India and 50% from Bangladesh.
On this proposal, India replied that for all projects, it would not be possible to cut the proposed procurement share but terms and conditions could be project-based like first LoC.
LoC is a promise to provide loans at subsidised rates from agencies such as Exim Bank of India.
These are normally conditional on the recipient, using the loan amount to buy equipment and services from Indian entities.
Both countries, however, agreed on forming a joint venture company for taking recommendation services. But in this case, Indian consultant company will play a lead role.
On the point of project management consultant (PMC), the meeting decided to negotiate further. Earlier, in response to Bangladesh proposal to make it optional and if needed, Bangladesh could appoint own-financed PMC from anywhere in the world. In response to it, India replied that it is important to appoint PMC in a critical project-related civil works under LoC. So, appointment of PMC should not be made optional.
On re-payment date, Bangladesh agreed on India’s proposal on fixing re-payment date after first installment of the loan.
The meeting laid emphasis on further discussion on seller selection, as earlier Bangladesh proposed that Bangladesh usually accomplishes all civil procurements in line with the internationally recognised rules in response to India’s seeking explanation on omission of two words – transparent and fair – from the deal.
On payment of custom duty, VAT and tax, the meeting decided to discuss further and was told that Indian must pay all personal and corporate taxes as per the country’s rules.
Earlier, India had requested Bangladesh to re-think about not giving tax and VAT waiver for its individuals and companies.
Both side agreed to handle letter of credit issue, borrower’s liability, immunity for the borrower, legal proceeding by court, specimen signature and amortization schedule.
India had offered new LoC at 1% interest and 0.5% commitment fee (on undisbursed amount) during Indian Prime Minister Narendra Modi two-day state visit to Bangladesh in first week of June. The loan will have to be repaid in 20 years with a five-year grace period.
In August 2010, Bangladesh signed first $1bn credit deal with India to support Bangladesh’s development works. Of which, $800m has so far been released.
The proposed 13 projects for fresh LoC are setting up of double railway tracks in Khulna- Darshana line, converting the Parbatipur-Kaunia metre-auge (MG) line to a dual-gauge track, upgrading the Syedpur railway workshop, installation of Barapukuria-Bogra-Kaliakor 400-kilovolt power-transmission line, procurement of 500 trucks and 500 buses for BRTC, procurement of modern equipment to upgrade the Roads and Highways Department, setting up of four medical colleges and hospitals, national burn and plastic surgery institute, construction of 49 polytechnic and teacher-training institutes, upgrading of Ashuganj river container port, and improvement of Ashuganj river port-Akhaura road.
Two other projects under the ICT ministry are also included in the list.
- See more at: Indian $2bn LoC terms remain unsettled | Dhaka Tribune
