Govt looks for alternative funds as Indian LoC in limbo

The government is looking for foreign funds from development partners to implement the protracted Sirajganj-Bogura rail line project, as India is unwilling to finance it from the line of credit (LoC) programme, officials say.

The project would require nearly $350 million in foreign assistance, they said on Monday.

Earlier, the Indian government in its LoC deal assured of lending some $320 million for the project.

Bangladesh Railway (BR) started implementing the project in 2018, which still drags on.

The slow response from India and the selected consultant mainly led to the delay, officials involved in the process told The Financial Express.

"Since the Indian contractor has not started work and the lender has not responded positively, we have decided not to receive the LoC funds. We will arrange fresh aid from another source," said a BR official. "We have requested the Economic Relations Division (ERD) through our line ministry to look for funds from alternative sources," he added.

An ERD official has told The Financial Express they are looking for alternative funds as it is one of the priority projects of the government.

The confirmed LoC has not been furnished after the 2024 July-August political changeover, and India has not responded positively since then either, he says.

In October 2018, the Executive Committee of the National Economic Council (ECNEC) approved the Tk 55.79 billion project, and work was supposed to be completed between July 2018 and July 2023.

But physical work has not started yet, although BR selected an Indian contractor for that in 2021.

In September that year, an agreement between BR and the Indian consultant - a joint venture of RITES Ltd and Aarvee Associates - was signed.

The agreement involves the construction of a dual-gauge main line and loop lines, stations, platforms, bridges, administrative facilities, laying tracks from Bogura to Sirajganj, and installing lighting and overhead sign structures.

Former railways minister Md Nurul Islam Sujan and erstwhile Indian high commissioner to Bangladesh Vikram Doraiswami inked the deal on behalf of their respective parties.

Senior officials from the railways ministry, BR, High Commission of India in Dhaka, Exim Bank of India's Dhaka representative office, RITES, and Aarvee Associates were also present on the occasion.

The funds were supposed to be disbursed through Exim Bank of India.

The new direct rail link from Bogura to Shahid M Mansur Ali station in Sirajganj will be developed to further modernise railway infrastructure and enhance connectivity.

The scope of consultancy services in the project includes updating the feasibility study; detailed engineering designs and drawings of all infrastructure, including bridges, embankments, railway tracks, stations, signalling, and all other facilities; route alignment; mathematical modelling; tendering; and construction supervision.

When completed, the project will establish a shorter dual-gauge link between the western and northern parts of Bangladesh, as well as the eastern and southern areas, via Dhaka.

It will reduce travel distance by about 112 kilometres, thus saving about three hours of travel time from Dhaka to the northern districts.