Bangladesh Railway turns to ADB for loans again

Asian Development Bank (ADB) has already topped the lenders' list of Bangladesh Railway (BR). But with several new projects coming up, the state-run transport agency has sought more loan from the bank.

Of these new projects, BR has placed five infrastructure projects as priority ones, which will require around $8 billion for implementation. It also placed several other projects — both infrastructural and mechanical -- for ADB's consideration.

BR officials placed the proposals, as an ADB delegation led by its director general (South Asia department) Kenichi Yokoyama, met Railways Minister Nurul Islam Sujan at the capital's Rail Bhaban yesterday.

The ADB delegation, however, did not give any clear assurance to BR, rather asking it to speed up its reform programme, reduce operating ratio and increase rail fare, meeting sources said.

Currently, BR spends Tk 287 to earn Tk 100, but the ADB asked the agency to bring this down to Tk 150 per Tk 100.

Despite this, BR Director General Dhirendra Nath Mazumder, who accompanied the railways minister, termed the meeting "fruitful".

Replying to a question, he said the delegation was not empowered to say whether ADB will provide the loan or not, but were tasked with placing the proposal before their board.

WHY RELYING ON ADB?

BR is implementing a 30-year master-plan for 2016 to 2045 divided into six phases. A total of 230 projects, with an estimated cost of Tk 5,53,662 crore, have been proposed in the plan.

Currently, BR is implementing nine projects with ADB loans of about Tk 23, 337.07 crore.

Meanwhile, India, China, Japan and South Korea are financing 10 more BR projects.

However, two other BR projects, which were supposed to be financed by China, are facing uncertainty, after China declined to fund one, and the Chinese contractors selected by their government declined to work with a curtailed budget.

Of the seven projects financed by India, six are loans while the other is a grant. But, all the projects are running behind schedule, with the neighbouring country having no immediate plans to give more loans to railway, BR officials said.

Japan and Korea are financing one project each. Two more projects are now in the pipeline with Korea, while BR sought a loan from Japan for the Joydebpur-Iswardi double line project, where China declined to finance.

BR earlier sought loans from the World Bank but is yet to get any formal assurance. Some companies from countries such as Russia, UK, China and Turkey had expressed interest to invest in BR, but those proposals are yet to see any visible progress.

Given this, BR is leaning towards ADB, even though the Manila-based bank had earlier imposed some conditions for the loans, including raising rail fare, BR sources said.

At yesterday's meeting, the railways minister termed ADB "a good partner" while seeking the loan, sources said. 

THE PROJECTS

Five priority projects BR is seeking loans for are construction of a new Inland Container Depot (ICD) at Gazipur's Dhirasram; conversion of Laksam-Pahartali metre gauge (MG) double track to dual gauge (DG) double track; conversion of Chattogram-Dohazari MG track to DG track; conversation of Tongi-Bhairab Bazar-Akhaura MG double track into DG double track; and construction of a chord line from Dhaka to Cumilla via Narayanganj.

Except the ICD project, the other projects are related to the development of the Dhaka-Chattogram-Cox's Bazar corridor, the most important transport corridor of Bangladesh. BR has already completed feasibility study for this under a technical assistance with ADB's loan.

Currently, most parts of the Dhaka-Chattogram corridor is MG double line, while conversation work of Akhaura-Laksam section into dual gauge double track is ongoing with ADB's loan.

As the Kamalapur ICD is unable to cope with the growing demand, authorities want to shift it to Dhirasram. The estimated cost of the project is $362.28 million, of which BR wants $289.82 million from ADB.

The estimated cost for the conversion of 123.76-km Laksam-Pahartali MG double track to dual gauge (DG) double track in Chattogram is $ 1,841.95 million. BR has sought $1,486.82 million from ADB.

Conversion of 52-km Chattogram-Dohazari MG track into DG track would require $1,168.39 million. BR has sought $767.60 million from ADB.

Estimated cost for conversation of the 95.37-km Tongi-Bhairab Bazar-Akhaura MG double track into DG double track is $1,720.15 million. BR has sought $1,455.34 million from ADB.

Construction of the chord line from Dhaka to Cumilla via Narayanganj will reduce the distance from Dhaka to Chattogram by 100 km. BR has taken up a project, with ADB loan, to carry out a feasibility study for it. The project cost will be approximately $3,000 million.

Meanwhile, besides the priority projects, some more projects were proposed for ADB's consideration, including construction of a rail track from Panchagarh-Banglabandha, construction of a carriage and wagon maintenance workshop at Rajbari, and construction of another workshop at Gazipur's Dariapara.