Financing 2 Railway Projects: After China spurns, govt up for options

After failing to secure Chinese loans for two major railway projects, the government decided to look for alternative sources.

The projects were taken to improve railway connectivity between the capital and north-east and north-west regions.

The Railways Ministry on Wednesday wrote to the Economic Relations Division (ERD) asking it to search for alternative fund sources following the directives of Prime Minister Sheikh Hasina, officials said.

The two projects are the Tk 14,250.61-crore Joydebpur-Ishwardi double-line project and Tk 16,104.45-crore Akhaura-Sylhet dual gauge project.

Bangladesh Railway's Director General Dhirendra Nath Mazumder confirmed that the Prime Minister's Office asked the authorities concerned to find alternative sources. He declined to give any further details.

China last month rejected the Bangladesh government's request to re-evaluate its decision to not fund the Joydebpur-Ishwardi project citing "lack of in-depth preliminary work and insufficient feasibility study".

Besides, the Chinese contractors for these projects have already informed Bangladesh Railway (BR) that they would not work for the projects after the PMO slashed contract prices.

Moreover, the Joydebpur-Mymensingh-Jamalpur dual gauge conversion project is likely to face uncertainty as the PMO also gave directives to slash its cost, BR officials said. The contractor may not agree to work under a downsized cost, they added.

These three are among the projects for which Dhaka and Beijing signed a memorandum of understanding (MoU) during Chinese President Xi Jinping's Dhaka visit in October 2016.

Joydebpur-Ishwardi and Akhaura-Sylhet projects were approved by the Executive Committee of the National Economic Council (Ecnec) around three years ago. The Chinese contractors were selected through direct procurement method without any competitive bidding.

The Joydebpur-Mymensingh-Jamalpur dual gauge conversion project has not been approved by the Ecnec, and negotiations with China Railway International Group has yet to be completed.

The latest developments will result in further delay in the implementation of the projects and prolong people's wait for better train services from the capital to the north-east and north-west regions, officials told this newspaper.

Some 27 projects, including multiple mega-projects, were earmarked for implementation with the $20 billion pledged from China, but getting the funds from China has been a dawdling process.

So far, loan agreements have been signed for only eight of the projects.

Four, out of 27 projects, were about the railways sector. But, only the Padma Bridge Rail Link Project could win China's loan.

In November 2018, the government took up a project to turn the 174km Joydebpur-Ishwardi rail line into dual-gauge double lines. The project deadline was set in December 2024.

The China Civil Engineering Construction Corporation was supposed to implement the project and the Cabinet Committee on Government Purchase in December 2018 approved a Tk 11,586.68 crore proposal for it.

The BR in March 2019 sought a loan for the project from the Chinese embassy in Dhaka through the ERD. On seven occasions in the last two years, the BR reminded the embassy about the loan.

In the last letter sent in January this year, the BR asked the Chinese government to expedite the process of signing the loan deal, stressing the importance of synchronisation of the two projects -- the rail lines and the under-construction Bangabandhu Sheikh Mujib Railway Bridge on the Jamuna river -- in reaping the desired benefits.

In another development, the PMO in October last year, formed a committee to review the negotiated contract prices of three projects involving China.

As part of measures to bring down the cost of the Joydebpur-Ishwardi double-line project, the PMO in November last year directed the BR to slash Tk 1,495.52 crore (12.91 percent) from the project's contract price of Tk 11,586.68 crore approved by the Cabinet Committee on Government Purchase.

China was supposed to provide Tk 8,756.75 crore for the Tk 14,250.61-crore project.

It also asked the BR to reduce the cost of the Akhaura-Sylhet project by Tk 3,354.31 crore which is 20.8 percent of the total estimated cost.

The Ecnec in April 2019 approved the Tk 16,104.45-crore project to convert the metre-gauge railway line into dual gauge from Akhaura to the Sylhet section linking the capital to the Sylhet divisional headquarters.

The project titled "Conversion of Metre Gauge Rail into Dual Gauge in Akhaura-Sylhet Section of Bangladesh Railway" aims to convert 225km metre-gauge line into 239km dual gauge line by June 2025.

China is supposed to finance 66.16 percent of the total project cost.

Both the Chinese contractors disagreed with the revised costs and conveyed the message to the BR earlier this year.

Moreover, the PMO also asked the department concerned to slash Tk 1851.28 crore from the proposed contract price of Tk 8,808.88 crore for the Joydebpur-Mymensingh-Jamalpur project.

THE LATEST DEVELOPMENT

In August this year, the Railways Ministry, through ER, wrote to the Chinese government to re-evaluate its decision, but China, through its High Commission in Dhaka, last month informed the ERD that it would not change its decision.

Meanwhile, the railways ministry, following a meeting on June 9 this year, apprised the PMO over the problems regarding the Akhaura-Sylhet project.

The PMO recently conveyed to the Railways Ministry the prime minister's directives to search alternative funds for the two projects, BR sources said.

This correspondent talked with three BR officials to know whether China formally informed Bangladesh that it would not fund these projects. But they could not give any information about it.

However, in Wednesday's letter sent to the ERD, the railways ministry said China has declined to fund the Akhaura-Sylhet project.

Meanwhile, the BR already started talking with Japan for funding the Joydebpur-Iswardi project and JICA representatives recently held a meeting with the railway secretary over the issue, a BR official said.

"Japan is funding the Bangabandhu Railway Bridge and they are aware that the bridge would not be effective without the expansion of the rail link. So, we have started the talks with a positive note. But it would take some more time to know whether Japan will actually finance the project or not," the official said, wishing not to be named.

Meanwhile, IRCON International Limited, an Indian government company, in March this year wrote to Railways Minister Nurul Islam Sujan expressing interest to execute two railway projects, including Akhaura-Sylhet, through funding from Exim Bank of India.

But officials said they did not receive any formal proposal from the Indian government in this regard.