Bangladesh looks for fresh funds as China leaves two railway projects after budget cuts

After Bangladesh decided to cut the cost of two railway projects, Chinese contractors have refused to work, leading the Chinese authorities to roll back plans to fund construction of the tracks.

Now Bangladesh Railway has asked the Economic Relations Division to source money to fund the projects to set up dual gauge lines from Gazipur’s Joydebpur to Pabna’s Ishwardi, and upgrade the Akhaura-Sylhet meter gauge lines to dual gauge tracks.

Railways Minister Nurul Islam Sujan said they contacted the ERD for new partner following instructions from the Prime Minister’s Office.

He also said Japan International Cooperation Agency, or JICA, has shown interest in funding one of the projects.

A top official at Bangladesh Railway said JICA wants to complete the Joydebpur-Ishwardi project in two phases – Joydebpur to Bangabandhu Railway Bridge in the first phase and the rest in the second, reports bdnews24.com.

The total proposed cost of the two projects was Tk 303.05 billion, including Tk 142.51 billion for the Joydebpur-Ishwardi project and Tk 161.04 billion for the Akhaura-Sylhet project, when they were approved by the Executive Committee of the National Economic Council in 2018 and 2019.

A committee headed by Shamima Nargis, then a member of the Planning Commission’s infrastructure division, recommended cutting the total cost by Tk 48.5 billion in 2020 after the high costs were questioned. Prime Minister Sheikh Hasina then ordered officials to trim the budget.

When informed about the new cost plan in January this year, the Chinese contractors refused to work, prompting the Chinese authorities to pull out of the projects. The railways ministry then sought new funds from the ERD.

The two projects were among the 27, on which Memoranda of Understanding worth $22 billion were signed during Chinese President Xi Jinping’s 2016 Dhaka visit.

China had agreed to provide Bangladesh with loans to fund 80 to 85 per cent of the project costs on some conditions, including one that Chinese companies must be given the jobs.

Bangladesh had awarded the projects to China Civil Engineering Construction Company and China Railway Construction Bridge Engineering Bureau Group following the deal.

But finally both of them refused to work, said Md Golam Mostafa, director of the Joydebpur-Ishwardi project. Md Shahidul Islam, director of the other project, declined to comment.

COST CONTROVERSY

The initial estimated cost of the Joydebpur-Ishwardi project was around Tk 585.2 million per kilometre, but the cost of a similar project from Akharura to Laksam is Tk 190 million per kilometre.

The cost had been set at Tk 505.4 million per kilometre for the Akhaura-Sylhet project, but a similar project from Kulaura to Shahbazpur required a funding of Tk 103.7 million per kilometre.

The Project Evaluation Committee at the Planning Commission found that the budget for the two projects was set severalfold higher than other similar projects. The findings prompted the authorities to form the other committee to find out the costs.

Md Shahriar Quader Siddique, additional secretary, Asia Wing at ERD, declined to comment. Another official said they have not heard from Bangladesh Railway and China on the matter.

Mamun-Al-Rashid, a member of the Planning Commission’s infrastructure division, said he did not have details of the two projects as he had not joined the commission when the projects were proposed.

 “But we’ve noticed a trend of adding extra costs to the new railway projects that were proposed after I had joined.”

The Planning Commission asked for Bangladesh Railway’s explanation about the extra cost. Only a few companies sell the things needed to set up railway tracks, and they do not disclose the prices on their website, which results in fluctuation in estimated costs, Bangladesh Railway told the Planning Commission, according to Mamun.

 “The prices should be right in this sector for the sake of financial order.”