Project cost to shoot up by 80pc

The cost of the Joydebpur-Ishwardi rail line expansion project may increase to Tk 26,000 crore, over 80 percent higher than the original estimate, mainly due to long delay in starting work after China decided not to fund the project.

In November 2018, the Tk 14,250 crore project was taken up to turn the 165km Joydebpur-Ishwardi line, vital for Dhaka's link with the country's north-west, into a dual-gauge double line.

But work on the ground could not be started after China in March 2021 declined to fund it, more than five years after it agreed to finance it.

Japan, following Bangladesh's request, agreed to finance the project and reviewed its feasibility study. Japanese consultants estimated that it would now take Tk 25,949 crore to build the line, which is Tk 11,698.59 crore or 82 percent more than the original estimate.

China had pulled out four months after the Prime Minister's Office ordered reducing the cost of the project by Tk 1,495 (10.49 percent) crore, saying the project cost was inflated.

Now, the project would cost 82 percent more and its deadline would be June 2030.

Because of the delay, Bangabandhu Railway Bridge over the Jamuna, which cost Tk 16,781 crore and is expected to be opened in January, will remain underutilised for at least the next five years, as the double-line bridge will be fed by a single line.

Railways Ministry Adviser Muhammad Fouzul Kabir Khan, however, said, "This [line expansion cost] is an estimate by Japan and has not been finalised yet.

"We will discuss the cost with them," he told The Daily Star on November 30.

Fouzul said when Japan International Cooperation Agency officials met him, he appreciated Japan's support for development projects "but I told them that the projects have to be cost-effective."

He said a Japanese delegation is expected to visit Bangladesh later this month, and they would discuss the railway project, particularly its cost in detail.

WHY TRAINS TAKE SO LONG

Trains between the capital and the north-west region being late has become all too common over the last few years.

Dhaka and those regions are linked by the single-line section between Joydebpur and Ishwardi.

Twenty-two trains can smoothly run every day using the single line, but the line is being used by around 40 trains. As a result, most of the trains, except a few, have to wait at nearby stations to make way for oncoming trains, officials said.

This is made worse by the fact that the distance from one station to another between Joydebpur and Bangabandhu Bridge (East) Station is relatively long, causing each train to wait even longer.

PROJECT DELAY

To fix this, the government in November 2018 took up the Tk 14,250.61 crore project to turn Joydebpur-Ishwardi section into a dual-gauge double line.

This was 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.

China was supposed to provide Tk 8,756.75 crore for the line expansion and BR completed negotiation with China Civil Engineering Construction Corporation for implementing the project.

Between March 2019 and January 2021, the railways ministry wrote to the Chinese government several times requesting the signing of a deal.

But, China in March 2021 declined to finance the project citing several reasons, including "a lack of in-depth preliminary work and insufficient feasibility study".

Sources claimed that China's backtracking may have something to do with geo-politics. Bangladesh's rail communication, especially the operation of freight trains with India, would have got a boost once the double-line project was completed. The PMO's directive to cut costs also played a role, they said.

Amid allegations of inflated project cost, the PMO in October 2020 formed a committee to review negotiated contract prices related to three rail projects, to be implemented with Chinese loans under government-to-government initiative.

Under such initiative, the loan-providing country selects the contractor from its country without any competitive bidding.

Following the committee's report, the PMO in November 2020 directed BR to slash Tk 1,495.52 crore from the project's contract price.

COST ESCALATION

After China pulled out of the project, Japanese authorities reviewed the feasibility study. A JICA delegation also held a meeting with railway authorities about different aspects of the project in October this year.

As per the review report, the cost of the project will be Tk 25,949.2 crore, of which JICA will lend Tk 19,103 crore and the government will bear the rest, show documents.

BR sources attribute three major reasons behind such a big escalation of project cost.

When the project was approved in 2019, the cost was estimated following the rate schedule of 2013 but the new estimate was made following the rate schedule of 2023. Rate schedule is the rate or charge for a particular classification of product or service, a BR official said.

Besides, when the project was approved, the dollar-taka exchange rate was around Tk 85 but now it is around Tk 120.

"These two are the major reasons behind the cost escalation," the official said, wishing anonymity.

Moreover, an additional station will be built under the project, which will increase cost, the official said.

BR sources said the railways ministry was informed about the cost escalation and the ministry asked officials concerned to try to lower the cost while drawing the detailed design.

BR has already taken up a Tk 146 crore project to prepare a detailed design for the project.

Cost of the project may change a little after the detailed design, for which appointment of consultants is now at the final stage, sources said, adding that the design work and preparation of the bidding documents could take 15 months.

The sources said a JICA delegation is expected in Dhaka later this month and, if everything goes well, a loan deal is expected in March, they added.