Bangladesh rejects India's 150 mn dollar loan offer for rail link

Bangladesh has rejected India's offer of a $150-million loan for constructing an Akhaura-Agartala rail link, apprehending that New Delhi might link it to the larger issue of transit facilities to reach its northeastern region.

Officials of the Economic Relations Division (ERD) cite "national interests" and say the rail link is "a political decision".

But they also maintain that if it is a loan India is offering, it should be left to Bangladesh to decide how best to use it.

The Indian offer has been "seemingly set aside" because Dhaka smelt the transit issue linked to the loan offer, BDNews news agency reported.

The report of the loan offer comes soon after Bangladesh decided to "suspend" Indian investor Tata's $3-billion proposals for investment in an array of industrial and infrastructure sectors, saying that the time was "not conducive", this being the "election year".

India has for long been seeking transit facilities through Bangladesh to reach its northeastern region, arguing that rapid economic development of that region would also help Bangladesh. However, it remains one of the numerous prickly issues in the bilateral relations.

"We will not accept any condition from outside at the cost of national interest," ERD Secretary Ismail Zabihullah told BDNews when asked about the fate of India's loan offer.

The Bangladesh Observer said no progress has been made after India made the offer at an official level meeting in August last year.

In the intervening year, the project has moved from the communications ministry to the foreign office to decide on the "political" aspects of the offer.

The two sides failed to reach a consensus, especially on the Akhaura-Agartala rail link, despite a series of negotiations since 2003 although there were no major differences between them on the interest rate, grace period and repayment period, ERD sources said.

"Giving rail link to India is a political decision...we informed the foreign ministry about the situation earlier this year, but we are yet to receive anything from them," said Mohammad Shahidullah, joint-chief, Communications Ministry.

At the 6th Joint Economic Commission meeting in Dhaka in 2003, India offered to help develop Bangladesh's entire railway infrastructure.

In August 2004, Bangladesh submitted proposals on implementing five railway projects with the loan, of which the Indian side wanted only two projects - Akhaura-Agartala rail link and Brahmanbaria-Agartala road link, to be implemented with the loan, the newspaper said.

"It is unacceptable that we do whatever India wants with the loan... This is a loan, not grant or relief and Bangladesh has to make optimal use of the fund," the news agency quoted a top ERD official, who did not want to be identified.

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