The state-owned Export Import Bank of India, or Exim Bank, has raised a “red flag” pointing out that a large number of hugely concessional lines of credit (LoCs) extended by India to highly indebted poor, low and middle income countries in Africa and the sub-continent during the last 10 years have been cornered by four little-known companies.
Of these, an investigation by The Indian Express has revealed, a bulk of the 510 projects awarded by 61 countries from 2004-2014 — 62 projects in 28 countries worth $1.1bn — has gone to Delhi-based Angelique International Ltd, headed by Ajay Krishna Goyal.
The three other companies — Overseas Infrastructure Alliance (Pvt) Ltd (OIA), Lucky Exports and Jaguar Overseas Ltd — have together contracted 110 projects. OIA has executed 20 projects, Lucky Exports 17 and Jaguar Overseas 11. The Exim Bank has alerted the finance and external affairs ministries about these findings.
With most of these LoCs extended to African countries, the “red flag” assumes significance with at least 54 heads of government from the continent scheduled to gather in Delhi from October 26-29 for the Africa Summit.
LoCs are essentially soft loans with interest rates as low as one per cent per year for tenures upto 20 years, with a moratorium of five years for repayment. They serve as an important tool in the government’s outreach endeavour and provide a diplomatic lever in enlisting the support of poor and developing countries on a range of issues.
Documents examined by The Indian Express show that the cumulative value of contracts that Angelique has been awarded stands at $1.183 bn. In terms of the number of projects, it is just 12 per cent, but in terms of value, this accounts for almost 17 per cent of the total contract value of $7.035 bn.
The bulk of countries (24) where Angelique has executed or is still undertaking projects are in Africa. It has also contracted nine contracts in Cuba, Honduras, Myanmar and Lao PDR.
When contacted, Exim Bank chairman and managing director Yaduvendra Mathur, a 1986-batch IAS officer, told The Indian Express: “We have pointed this out to the ministries of finance and external affairs. These are projects awarded by foreign countries. There is not much we can do about it.”
A detailed questionnaire sent to Angelique on September 21 and subsequent calls to its spokesperson Joydeep Mukherjea failed to elicit a response.
Exim Bank raises funds for these LoCs from international debt markets and signs agreements with foreign countries on behalf of the Government. It receives a subsidy called the ‘interest equalisation support’ for providing such concessional finance. In the last 10 years, the Government has allotted through the Budget Rs 1,904 crore to make up for the difference between the cost at which it raises funds and the concessional rates at which it lends to the countries.
Initiated in 1985, the LoC programme got a new direction in 2003-04, the last year of the previous NDA regime. In Budget 2003-04, then finance minister Jaswant Singh said it was time for India to review its dependence on external donors and re-examine the LoC route of international assistance to others.
Initially called the India Development Initiative, it was renamed as the Indian Development and Economic Assistance (IDEA) Scheme and gathered momentum under the subsequent UPA government. The scheme was extended by the UPA in March 2011 for five years till 2014-15 — a review is pending for over six months now.
When contacted, a spokesperson in the Ministry of External Affairs (MEA) said the ministry was aware that a few companies were bagging most projects, but could not do much since the projects are tendered by the foreign countries. An official in the Ministry of Finance said Exim Bank has made a case for reviewing the rules under the IDEA Scheme.
Responding to a detailed questionnaire, the MEA said that projects under LoCs are awarded by the borrowing countries in accordance with their own procurement laws and regulations. “(But) it is correct to say that a small number of our companies who compete aggressively for these projects have won a majority of the contracts,” it said.
Asked about the pending IDEA Scheme review, the MEA said: “It expired on March 31, 2015 and is currently in the process of being renewed. The accompanying LoC operational guidelines are also being reviewed with inputs from multiple sources, including Exim Bank. The objective is to try and improve the process so that projects are better conceived, prepared, appraised and implemented. Greater transparency and accountability is also sought to be engendered.”
Angelique International Ltd
> Number of countries it operates in: 28
> Number of contracts: 62 out of 510
> Value of contracts: $1.1 billion of $7 billion
Other major players
> Overseas Infrastructure Alliance: 20 contracts
> Lucky Exports: 17 contracts
> Jaguar Overseas: 11 contracts