Home Bangladesh China withdraws funding commitment for Railway
Bangladesh - January 9, 2023

China withdraws funding commitment for Railway

India and Japan may extend support

Zarif Mahmud: China has withdrawn financial support from the construction project of Joydebpur-Ishwardi and Akhaura-Sylhet railway lines. After China’s withdrawal, the implementation of three projects, including these two, became almost uncertain. After more than a year of searching for alternative financiers, Japan and India have extended their cooperation.
Japan will provide financial support for the mixed gauge double line construction project from Joydevpur in Gazipur to Ishwardi in Pabna. Meanwhile, Japan International Co-Operation Agency (JICA) is updating the survey on this project. The organization has announced that the project will be implemented in two phases.
Railway Minister Nurul Islam Sujan said that Japan’s financing of this project has been finalized. However, along with the delay in implementation, the cost may increase, on the other hand, India has shown interest in financing the project to convert the Akhaura-Sylhet railway line from meter gauge to broad gauge.
According to the Ministry of Railways, during the visit of Chinese President Xi Jinping to Bangladesh in 2016, the two countries signed a memorandum of understanding for the implementation of a total of 27 projects. China agreed to give a loan of $22 billion on a G2G basis. One of those 27 projects is the Joydevpur-Ishwardi railway line construction project. The National Economic Council Executive Committee (ECNEC) meeting chaired by Prime Minister Sheikh Hasina approved the implementation of this project at a cost of Tk 1523.29 crore in 2018.
In that project, China was supposed to give a loan of Tk 8,756.75 crore. It is known that for the implementation of this project in 2019, the Cabinet Committee on Procurement approved the contract of Tk 11,586.68 crore with CCGP contractor. This expenditure included various construction works of 198 km of railway including 162 km of main line. Where the construction cost per kilometer stands at more than Tk 59 crore. But the construction cost of railway line from Akhaura to Laksam in this distance is only Tk 19 crore.
If the issue of additional expenditure comes up in that project, the Planning Commission recommends reducing the expenditure from this project. Also recommended is Akhaura-Sylhet project which has been approved at the same time. Taking that recommendation into consideration, Prime Minister Sheikh Hasina ordered to reduce the cost of the two projects from 40 percent to 20 percent of the total project cost.
The Chinese contractor company China Railway Construction Bridge Engineering Bureau Group (CRBG) did not agree to work for less money due to the reduction of this amount of construction cost from the Joydebpur-Ishwardi railway project.
In that incident, China withdrew from the two projects of Joydevpur-Ishwardi and Akhaura-Sylhet. Since then, the Ministry of Railways started looking for alternative financing. A year later, JICA came forward with an interest in financing the project. The agency has started survey work from last June.
According to railway sources, JICA wants to implement the project by dividing it into two parts, 85.52 km from Joydevpur to the eastern end adjacent to Bangabandhu Bridge and 79.5 km from Ishwardi to the western end of Bangabandhu Bridge. Seven stations will be reconstructed and 14 stations renovated in two parts for this line. 66 major and 138 minor bridges are to be constructed. And to implement the entire project, 106 acres of land in Gazipur, Tangail, Sirajganj and Natore districts will be required.
Railway Minister Nurul Islam Sujan told in this regard that the implementation of the project was uncertain due to China’s withdrawal from financing. Now JICA will implement. However, the implementation of this project will be delayed. Implementation is initially scheduled for 2024, but it will take 2025 to begin. He also said, “Due to the increase in the price of construction materials, it is normal for the cost to increase.”
Meanwhile, the government has already spent about Tk 400 crore from its own funds for the implementation of this project. In this context, transport expert, Professor of Civil Engineering Department of Bangladesh University of Engineering and Technology. Shamsul Haque told, “A project is progressing on the way to its implementation by looking at its survey.” In many government projects, it has been seen that due to lack of proper survey, the implementation is facing hurdles. The Joydevpur-Ishwardi project was a G2G approach.
After ECNEC approval, there is no more hindrance in the implementation of the project. That is why ECNEC should have checked before making the proposal. Since the project will be implemented with foreign money, the cost could be reduced elegantly. Because if the cost is inflated. Then there were government officials in those negotiations. The manner in which the cost of the project was reduced created a crisis in the image of Bangladesh abroad.
He also said, “Because of the geography of Bangladesh, the project cost increases depending on the time and place.” On the other hand, the project proposal to convert Akhaura-Sylhet railway from meter gauge to broad gauge was sent in 2018. In that proposal, an expenditure of Tk 15,705 crore was proposed for conversion of 239 km meter gauge railway line to broad gauge. But in the cost review with similar projects, the issue of additional costs in this project comes to the fore.
As a result, the Planning Commission objected to the implementation of the Akhaura-Sylhet project by spending this amount of money.
The commission said in their report that the quantity and cost of stones, sleepers, rails and other materials in that project is much higher than other ongoing similar projects. The report also said that the cost of the Akhaura-Sylhet project is about seven times higher than that of four similar projects. The Planning Commission is of the opinion that it will not be appropriate to implement the project at such a cost.
At the same time, the Planning Commission also objected to the direct procurement method through a single contractor without competition for the physical works of the project. According to the commission, the opportunity to participate in the tender should also be kept for other Chinese bidders. The commission also said in its report that the frequency or rate of train movement will not increase if there is a dual gauge line from Akhaura to Sylhet. Construction of double line and dual gauge on this route will benefit from the project.
The then finance minister Abul Mal Abdul Muhith also raised an objection in this regard. He also wrote letters recommending construction of double line and dual gauge on this route. Despite the objection of the Planning Commission, it was not proposed in the meeting of ECNEC at that time, but the new Finance Minister AHM Mustafa Kamal approved the project after the change of government in 2019.
Akhaura-Sylhet mixed gauge rail line construction project has been approved by ECNEC, increasing the initial cost from Tk 15,705 crore to Tk 16,104 crore. Out of this, Tk 12,079 crore for the main construction work. After ECNEC approval, the issue of overspending on the project came up again.
In view of this, the rationalization committee on the instructions of the Prime Minister proposed to reduce the expenditure of Tk 3354.31 crore from the contractor’s share. Cost reduction is also proposed in the construction of railway lines. China withdraws from the project because it is not possible to implement it at a low cost due to cost reduction. Then Bangladesh Railway started looking for alternative financiers for Akhaura-Sylhet project like Joydevpur-Ishwardi project. India then showed interest in financing the project.
India then showed interest in financing the project. It is heard that the Indian contractor Ircon International will implement the Akhaura-Sylhet project.
Meanwhile, the cost negotiations with the Chinese contractor for the implementation of the mixed gauge double line construction project from Joydevpur to Jamalpur via Mymensingh were finalized.
But China withdrew from the financing of Joydevpur-Ishwardi, Akhaura-Sylhet project along with Joydevpur-Mymensingh project. Now there is hope in the implementation of two projects, Joydevpur-Ishwardi, Akhaura-Sylhet, but the project of Joydevpur-Mymensingh has become uncertain. Speaking to senior railway officials, it is said that the project is being considered to be scrapped if funding is not available.

Check Also

Govt debt increased 3-time with new note

Mahfuz Emran: The government has set a record of borrowing money from Bangladesh Bank. The…