ERD flags 65 slow-moving projects – Tk2.04 lakh crore loans, 90% unused

Infographic: TBS

The Economic Relations Division (ERD) has identified 65 development projects with sluggish utilisation of foreign loans, amounting to an estimated Tk2.04 lakh crore, in an effort to expedite their implementation.

According to ERD sources, despite three to over 15 years having gone by since their initiation, only Tk19,744 crore – just 9.69% of the total loan – has been utilised as of last December.

ERD officials say these slow-moving projects have been identified towards the end of the fiscal year to accelerate the utilisation of foreign loans. This will ensure that the allocated funds in the revised ADP are fully spent, with necessary measures taken accordingly.

According to ERD data, 16 ministries and divisions are implementing these 65 projects. In the current fiscal year's ADP, an allocation of Tk24,297.28 crore was earmarked for these projects. However, due to the limited capacity to utilise foreign loans, the allocation in the revised ADP has been reduced to Tk9,807.49 crore.

Explaining the reasons behind the under-utilisation of foreign loans, former Planning Division Secretary Md Mamun-Al-Rashid told TBS that development partners do not disburse funds until the preparatory work for projects is completed. Additionally, no foreign loan is released until international consultants are appointed.

"In some cases, disbursements are also delayed due to the policies of development partners," he said.

He added, "For projects involving land acquisition, progress often stalls. Utility relocations are also frequently delayed. As a result, project implementation is held up, leading to delays in fund disbursement."

He further explained that the disbursement of bilateral loans is often hindered by the policies of development partners. For instance, in some projects with China, cost estimates tend to be higher, leading to complications.

Meanwhile, disbursements under Indian loans are often delayed due to bureaucratic complexities, he noted.

Officials at implementing agencies noted that in infrastructure projects, foreign consultants or construction contractors are often reluctant to come. They perceive participating in tenders in Bangladesh as risky due to prevailing conditions, leading to repeated tender calls and delays in project implementation.

33 projects with 0%-1% fund disbursement

According to the ERD report, of the 65 projects identified, 33 projects have seen foreign loan disbursement between 0% and 1%. Among them, 23 projects have received less than 1% or no disbursement at all.

Meanwhile, 12 projects have had disbursements ranging from 2% to 10%, while eight projects received between 11% and 20%. The remaining 12 projects saw disbursements of 21% or more.

ERD officials say if a project is approved after completing feasibility studies, designs, land acquisition, utilities and all other preparations, and the loan agreement is signed, the disbursement complications will be resolved. Additionally, advance procurement for consultants must begin earlier.

Recently, advance procurement processes have been initiated even before project approval or loan agreements are signed. This arrangement has been made in a few projects with ADB and the New Development Bank (NDB), they say.

According to them, if the preparatory work is completed before signing the loan agreement, development partners do not charge a commitment fee. However, a fixed commitment fee is applicable on undisbursed loans.

According to a report by the Implementation Monitoring and Evaluation Division (IMED), development projects are often initiated without sufficient feasibility studies or consultations with stakeholders. In such cases, inputs and outputs are not properly documented, leading to complications during the implementation phase and delays in fund disbursement.

Eight road transport projects marked as slow-moving

ERD sources say eight Road Transport and Highways Division projects with a total foreign loan allocation of over Tk1 lakh crore has been identified for their sluggish foreign loan utilisation. Of this, Tk95,660 crore remains stuck in the pipeline.

The ERD report also lists two Japan-funded metro rail projects as slow-moving. Implementation of these projects began in 2019. Among them, the Airport to Kamalapur Line-1 project has seen only 2% of the allocated JICA loan disbursed so far, despite a total Japanese loan commitment of Tk39,450 crore.

Abul Kashem Bhuiyan, project director of the Dhaka Mass Rapid Transit Development Project (Line-1), told TBS that the tender process for the 11 construction packages of the project has not yet been completed. As a result, the disbursement of funds from Japan's loan has not yet started.

He expects that all contractor appointments will be finalised within this fiscal year.

Additionally, delays in land acquisition, utility relocations by various agencies, and repeated approvals from JICA are also causing delays in implementation, which in turn is affecting fund disbursement.

He added that due to these complications, the revised ADP for this fiscal year has set a target expenditure of Tk1,268 crore in foreign loans for the project. However, there are concerns about whether this amount can actually be spent.

In the MRT Line-5 Northern (Hemnayetpur-Mirpur 10-Gulshan-Bhatara) project, only 3% of the allocated loan has been disbursed in the past five years. Japan has provided a loan of Tk29,117 crore for this project.

Among the projects under the Road Transport and Highways Division with foreign loan utilisation below 1%, one is the Procurement of CNG Single Decker AC Buses for BRTC project, funded by Korea. This project, which began in June 2023, is scheduled for completion by December this year.

Md Abu Bakar Siddique, deputy general manager (planning) at Bangladesh Road Transport Corporation (BRTC), said that a consultant has already been appointed for the project, and tenders will soon be invited for bus procurement.

Due to delays in appointing consultants, the World Bank-funded Bangladesh Road Safety project has seen zero foreign loan disbursement even after three years. Similarly, fund disbursement for the Sylhet-Charkhai-Sheola Highway Improvement project has not yet started due to land acquisition and utility relocation issues.

Other projects with no progress include the Improvement of Comilla-Brahmanbaria 4-Lane National Highway.

Eight railway, six power sector projects in the list

The ERD has listed eight railway projects as slow-moving, including five funded by Indian loans. One project each is financed by ADB, Korea, and the European Investment Bank (EIB).

Three Indian-funded projects have seen only 1% loan disbursement. These include Construction of Dual Gauge Railway Line from Bogura to Shahid M. Mansur Ali Station, Sirajganj, Construction of Double Line Track Between Khulna and Darshana Junction, Conversion of Meter Gauge Line into Dual Gauge from Parbatipur to Kaunia.

Other Indian funded slow-moving projects listed by the ERD includes Rehabilitation of Kulaura-Shahbazpur, Construction of 3rd and 4th Dual Gauge Railway Track between Dhaka-Tongi section and Doubling of Dual Gauge Track between Tongi-Joydebpur.

The ERD has included six power sector projects in its list of slow-moving initiatives. Among them are two projects funded by Germany's KfW.

The report also highlights 15 local government projects with sluggish foreign loan utilisation. These projects have a combined loan target of Tk25,622 crore, but Tk25,505.57 crore remains undisbursed.

Similarly, the Ministry of Shipping has five projects with a total foreign loan target of Tk17,611 crore, yet as of December, only 1.1% has been disbursed, leaving Tk17,418 crore still in the pipeline.