Project to buy carriages: After 6 years, it now needs a fresh start

"We have decided to cancel the commercial contract with the Chinese contractor and now we have to go for a new investor for the project."

— BR's Director General Dhirendra Nath Mazumder

Another railway project involving a Chinese contractor has plunged into deep uncertainty after a government committee directed the authorities not to take the hard loan arranged by the company.

The project, undertaken in October 2016 to procure 200 rail carriages, was supposed to be implemented with the fund arranged by the contractor.

In November 2018, Bangladesh Railway signed a commercial contract with CRRC Sifang Company Ltd, which reportedly managed a financier which would provide a hard loan for the project.

A meeting of the project steering body led by the railways ministry secretary yesterday decided to cancel the contract with the Chinese company following the government committee's directive over the hard loan, according to two meeting participants.

"We have decided to cancel the commercial contract with the Chinese contractor and now we have to go for a new investor for the project," BR's Director General Dhirendra Nath Mazumder told The Daily Star last night.

BR has to find out a new financier -- be it the government or foreign lender -- for the Tk 927.52 crore project, six years after the project was taken up, and the revised deadline of the project was set at June 2024.

It means, the authorities will have to start this already-delayed project almost afresh, which includes an invitation for bidding. 

Asked about the reason behind this decision, a BR official said years have gone by but still the loan contract could not be signed, making both the contractor and their financier apparently lose interest.

"Besides, the Chinese contractor and their financier even didn't provide the necessary documents sought by the ERD [Economic Relations Division]. So in line with ERD's recommendation, the government committee changed its position on the hard loan."

The development came after two other major railway expansion projects fell into uncertainty.

The Chinese government early last year informed Bangladesh that it would not fund the Joydebpur-Ishwardi project for a "lack of in-depth preliminary work and insufficient feasibility study".

Besides, the Chinese contractor for Akhaura-Sylhet rail line expansion project declined to work after downward revision of project cost.

According to a recent report, the BR owns a total of 1,671 carriages and 47 percent of them have crossed economic life, causing a rise in maintenance costs and safety risks.

In October 2016, the Executive Committee of National Economic Council (ECNEC) approved the project to procure 200 metre-gauge passengers' carriages to improve BR's capacity.

Out of the total project cost of Tk 927.52 crore, the government was supposed to pay Tk 214 crore while Tk 713.52 crore was supposed to come from the financier arranged by the contractor, show documents. Already Tk 84.51 lakh has been spent from the government coffers.

The government's standing committee on non-concessional loan in October 2019 gave on-condition approval to the hand loan proposal.

As per the condition, a team will visit the supplier country to check the quality of the goods and the supplier's capacity before signing any loan contract.

But as the team could not visit China due to Covid-19 situation, online inspection or third-party inspection was suggested.

In this given situation, the railways ministry in March wrote to the Economic Relations Division to reconsider the condition.

But the standing committee in a meeting on August 2 cancelled its October 2019 approval for the hard loan proposal.