$630m loan deal inked with JICA

The long-struggling Joydebpur-Ishwardi double-line railway project is going to get a big boost as Japan has come forward with massive $630-million assistance for installing the tracks, officials said on Friday.

On Friday in Dhaka, the Japan International Cooperation Agency (JICA) confirmed the $630 million loan (JPY 92,077 million) for the project connecting Bangladesh's north and north-west regions with the capital, officials said.

Under the 2nd batch of the 46th Japanese ODA loan package, a (tranche-1) deal was signed by Shahriar Kader Siddiky, secretary of the Economic Relations Division (ERD), and Mr ICHIGUCHI Tomohide, chief representative of the JICA office in Bangladesh.

The government has already been forced to increase the project's cost and extend the deadline for implementation delays mainly caused by the lack of funding confirmation from China, the previous project aid provider.

Initially, the "Construction of dual-gauge double line between Joydebpur and Ishwardi section project" was envisioned with Chinese funding.

But China later withdrew, leading to a new feasibility study with Japanese assistance.

Initiated in 2014 with Chinese funding, the Bangladesh Railway (BR) project had its first feasibility study in 2015, which estimated the cost at Tk 80 billion.

A second study, conducted in 2018, revised the estimate to Tk 142.5 billion.

Bangladesh Railway has already taken initiatives to make a detailed design for the construction of the 162.023km lines with financial assistance from the JICA.

The project will include the construction of 162km dual-gauge main lines, 25km loop and siding lines, reconstruction of 11km of the existing tracks, construction of three new stations, and other associated works.

The Japanese government will provide funding for the project in different phases.

Previously, a loan agreement of JPY 4,228 million (approximately $32 million) was signed with the Japanese government for the engineering services of the project.

For this first tranche, the interest rate is 2.0 per cent for construction works, 0.65 per cent for consultancy services, and a front-end fee (at a time) of 0.20 per cent.

The repayment period of this loan will be 30 years, which includes a 10-year grace period.

Officials said the 162km lines were scheduled to be constructed under government-to-government initiatives between Bangladesh and China.

Later, China backed out of the project.

According to officials, Bangladesh Railway completed negotiations with China Civil Engineering Construction Corporation for the project's implementation and the Cabinet Committee on Government Purchase in December 2018 approved a Tk 115.87 billion proposal for the work.

But China in March 2021 declined to finance, they added.

As per the documents, the Executive Committee of the National Economic Council (ECNEC) approved the project in November 2018 at a cost of Tk 142.51 billion (nearly $1.70 billion) to reconstruct the 162km lines to meet the growing demand for rail operations to north and north-western Bangladesh.

Bangladesh Railway officials said the physical work of the lines will start in early 2026 and be completed in 2028-29.

They said the new lines will be installed on the north side of the existing ones and the project authorities will have to acquire 56 acres of land for this purpose.

Meanwhile, with financial support from the JICA, a dedicated dual-gauge, double-line 4.8km railway bridge over the River Jamuna has already been constructed to link the capital to the country's northwestern part.

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