ADB approves record fund for Bangladesh railroad
The Asian Development Bank yesterday announced a $1.5 billion fund to build a key train line from Dohazari in Chittagong to Cox's Bazar, in its largest investment in railways in the continent.
In a statement, the ADB said the new railroad, which is part of the Trans-Asia Railway network, will also improve Bangladesh's access to Myanmar and beyond.
China had sought to finance the project, so this development will be yet another setback for Beijing, whose efforts to turn its Silk Road investments into workable projects are running into brick walls in parts of Asia.
The loan, which was approved yesterday in Manila, is the largest amount of funding by any multilateral lender on a single project in Bangladesh, superseding World Bank's commitments, which were all below $1 billion.
“The size of the project reflects our commitment to supporting development in Bangladesh, particularly in areas such as the southeastern region where the potential for growth is high,” Markus Roesner, principal transport specialist of ADB's South Asia department, told The Daily Star in an e-mail interview.
The Trans-Asia Railway is an initiative led by the United Nations Economic and Social Commission for Asia and the Pacific with the view to providing seamless rail links between Asia and Europe to better connect people and markets.
In an internal note in April, Finance Minister AMA Muhith said the Chinese government's interest in the project is very positive, so there is no scope to wait for the ADB to finance it.
However, due to much procedural delays the government has now decided to take the loan from the Manila-based multilateral lender.
Ecnec has already approved a project to lay a 129 kilometres of rail track from Dohazari in Chittagong to Gundum near the Myanmar border via Cox's Bazar at a cost of Tk 18,034 crore or about $2.28 billion.
The first part of the railroad will be 102km from Dohazari to Cox's Bazar and cost $2.01 billion, according to Roesner. Of the sum, the ADB will provide $1.5 billion, with the government footing the remaining cost.
The ADB will provide the amount in four parts, and another $1 million in technical assistance to help Bangladesh Railway with safeguards, safety awareness and procurement.
The ADB is preparing to partially finance the second phase of the project as well, which involves laying extension to Gundum at the border with Myanmar as well as connection to the new deep-sea port in Matarbari.
Apart from laying down the rail line, nine stations between Dohazari and Cox's Bazar will be built, according to ADB.
The stations will integrate design features that are friendly to the elderly, women, children and people with disabilities.
“The railway that ADB is building will end at Cox's Bazar. From there, it will be possible and easy for passengers and freight to move by road to the Myanmar border and beyond to Southeast Asia and East Asia,” Roesner said.
The new project will connect the southeastern Bangladesh to the Trans-Asia Railway network, which already provides a continuous railway connection from Bangladesh through to India, Pakistan, Iran and Turkey towards Europe.
The missing links between Bangladesh, Myanmar and Southeast Asian countries will be connected in the medium to longer term.
Initially, this will be achieved by improved road connectivity, similar to the BBIN agreements between Bangladesh, Bhutan, India and Nepal.
The railway lines will be dual-gauge tracks such that they can be used by broad-gauge and metre-gauge trains. The railway lines in Western Bangladesh and India are broad-gauge, whilst those in eastern Bangladesh, Myanmar and Southeast Asia are predominately meter gauge.
The ADB is also financing the conversion of the Dhaka-Chittagong section of the railway to dual gauge.
The railway will transform southeastern Bangladesh, Roesner said, adding that the immediate benefit of the planned Dohazari-Cox's Bazar railway will be to bring tourism and trade to southeastern Bangladesh.
“At present, around 1.9 million tourists visit the beautiful coastline and area around Cox's Bazar every year even though travel there is fairly difficult.”
The government is keen to develop the region into a tourism hub, and the railway is expected to boost tourism by at least 5 percent annually, he said.
Tourism growth will provide massive opportunities for local businesses.
In addition, better connections from Cox's Bazar to the port at Chittagong and to big markets and businesses in Dhaka will make it easier for final and intermediate goods to move more easily.