Railway gets $360m boost from ADB

The Asian Development Bank has approved $360 million in loans to help Bangladesh buy modern rolling stock and support reforms in its railway.

"Railways in Bangladesh potentially offer a cheaper, safer, and more fuel-efficient means of transport of goods and passengers than roads, but have been held back by a lack of investment and aging and unreliable rolling stock," Tsuneyuki Sakai, a senior transport specialist of the bank, said in a statement yesterday after its board okayed the loans.

He said the ADB Railway Rolling Stock Operations Improvement Project will boost the operational performance of Bangladesh Railway by introducing new technology and processes that will be cleaner and more efficient.

According to the statement, the loan will address the investment and modernisation needs of Bangladesh Railway.

It will procure 40 broad gauge locomotives, 125 luggage vans, and 1,000 wagons for freight trains for use on major lines of the rail network.

The rolling stock will introduce auxiliary power units (APU) to Bangladesh Railway to significantly reduce diesel consumption when the locomotives are idling, said the ADB.

The lender said the project would also draw up investment plans for urgently required maintenance facilities, establish training programmes for the drivers, and run the enterprise-wide IT system.

The total cost of the project is $453.37 million, of which $93.37 will be met by the government. It is due for completion around the end of June 2022.

Accompanying the loans is a technical assistance grant of $500,000 aimed at devising a training scheme for drivers in the use of the APU and recommending potential approaches to achieving overall energy efficiency.

The ADB will administer the grant, to be provided by the Asian Clean Energy Fund under the Clean Energy Financing Partnership Facility established by Japan.

The ADB said historically railways enjoyed a monopoly as a carrier and transported most commodities. However, its market share has dropped because of inadequate investment in railway infrastructure and rolling stock over an extended period.

This has resulted in unreliable freight operations and uncomfortable experiences for passengers. Most rolling stock is more than 30 years old, and much is past the end of its economic life.

Maintenance facilities have also not improved over time and are not adequately equipped.

As part of its Seventh Five-Year Plan for fiscal years 2016-2020, the government has placed special emphasis on railway development, setting targets to increase the market share to 15 percent in freight transport and 10 percent in passenger movements by 2020.