ADB gives $505m loans for rail links

The Asian Development Bank will provide Bangladesh with $505 million in loans to help improve the country's railway network and boost sub-regional trade.

Senior Secretary of Economic Relations Division Mohammad Mejbahuddin and ADB Country Director in Bangladesh Kazuhiko Higuchi signed an agreement to this effect at the ERD auditorium in Dhaka yesterday.

“The assistance will help railways better serve the needs of people and movement of goods, and help improve domestic and sub-regional trade,” Higuchi said.

“This project will also help improve the overall railway transport system in Bangladesh, and aims to reduce transport costs and improve logistics of strategic corridors, such as Dhaka-Chittagong link, for sub-regional trade,” he added.

The South Asia Sub-regional Economic Cooperation (SASEC) Railway Connectivity: Akhaura-Laksam Double Track Project will help upgrade the 72-kilometre Akhaura-Laksam section of the Dhaka-Chittagong railway corridor to a double track dual-gauge railway line, along with modern signalling equipment, an ADB statement said.

The existing track will be upgraded in accordance with the requirements of the trans-Asia railway network. Eleven railway stations will be reconstructed with special facilities for the elderly, women, children and the disabled.

The ADB said the Akhaura-Laksam section is part of a major sub-regional corridor and the trans-Asia railway network. The project was endorsed by the SASEC Trade Facilitation and Transport Working Group at a meeting in Singapore in October 2013.

The total project cost is $805 million. The European Investment Bank will co-finance the project with $175 million, while the government will provide $125 million. The project will be executed by Bangladesh Railway and is expected to be completed by 2022.

As Bangladesh borders India and Myanmar and is close to the landlocked countries of Bhutan and Nepal, it has the potential to become a transport and transhipment centre for the sub-region, according to an ADB report.

The South Asian Association for Regional Cooperation (Saarc) Regional Multimodal Transport Study determined priority corridors in Bangladesh that include six out of 10 road corridors, two out of five rail corridors, and two principal ports -- Chittagong and Mongla.

The ADB report said a major constraint in sub-regional rail connectivity is the lack of connectivity between the rail networks. The key issues are the differences between the rail gauges in the member states, the potential incompatibilities in rolling stock, and the overall condition of the rail network, especially in northeastern India and Bangladesh.

The ADB said the market share of the railway in the sub-regional transport is low; only 11.9 percent or 876,855 tonnes of Bangladesh's imports from India and only 1.1 percent or 17,832 tonnes of exports from Bangladesh to India were transported by rail in 2011.

The lender said the main reasons for the limited cross-border rail traffic are missing links and congestion in main domestic railway corridors, which do not allow operating additional trains for domestic and international traffic.