Interest in Chinese loans for 9 railway and road projects

Bangladesh is interested in Chinese loans for nine road and railway projects and the issue could be raised during prime minister Sheikh Hasina’s upcoming visit to China.

Already the bridges and railways ministries have sent a list of these projects to the foreign ministry.

According to the sources in the road transport and railway ministries, there are six railway projects in the list.

The other three projects are - construction of a metro rail line from Gabtoli in Dhaka to Narayanganj, construction of a new bridge over the river Kocha in Pirojpur and repair of the Muktarpur bridge in Munshiganj.

Prime minister Sheikh Hasina is likely to visit China from 8 to 11 July. Sources in the foreign ministry say Chinese loans for these projects may get priority in the bilateral discussions during the visit.

According to the sources in the railway ministry, the foreign ministry asked for a list of projects that need Chinese fund. In response, the railway ministry sent a list of six railway projects to the foreign ministry.

The construction of 172 kilometre railway on either sides of the Padma Bridge based on the understanding between Bangladesh and China under the g2g method is in its final stage.

The period for China's Exim Bank loans for the project has expired. The Bangladesh Railway wants to extend the deadline till next November. For this reason, it has been added to the list of projects that need Chinese loans.

The deadline for completing the Padma Rail Link Project worth Tk 392.76 billion ended in June this year. The amount of Chinese loans for this project was USD 2.67 billion. Already trains are being operated from Dhaka to Bhanga in Faridpur on the new railway track. Train movement on the Bhanga-Jashore portion is likely to start within two or three months, sources relevant to the project said.

The government has a priority for the construction of a new railway track from Faridpur’s Bhanga to Payra sea port and Kuakata in Patuakhali through Barishal. This project will ensure direct connectivity of the Payra port with the rest of the country. It will also bring four southern districts – Barishal, Jhalokathi, Barguna and Patuakhali under rail connectivity.

According to railway sources, Chinese state-owned construction enterprise China Railway Group Limited (CREC), which is implementing the Padma Rail Link Project, has shown interest to implement the project to construct a railway track up to the Payra port. The Chinese ambassador to Bangladesh Yao Wen recently visited Barishal to get an idea in this regard.

According to the pre-project proposal of the Bhanga-Kuakata railway project, the cost is estimated at Tk 410.80 billion.

If China agrees to provide the loan for this project, then it’s likely to be implemented under the g2g project. In that case, the Chinese government will choose the contractors for the projects.

There are criticisms that various conditions are set in favour of the contracting companies and the project cost increases for showing inflated rate of materials.

The other railway projects listed for Chinese loans include constructions of dual gauge rail track from Joydebpur in Gazipur to Jamalpur, broad gauge railway track from Dhalarchar in Pabna to Panchuria in Faridpur, a railway workshop in Rajbari and conversion of the metre gauge line to dual gauge from Bhairab Bazar to Mymensingh.

Speaking to Prothom Alo on Sunday, railway minister Zillul Hakim said many were interested in getting the contract for the Bhanga-Kuakata railway track. China is likely to finance that project.

Speaking regarding the other projects the minister said, “Not all projects are financed by the same source. The directorate of the government concerned chooses the best option for finance through discussions and negotiations.”

A total of six projects have been taken up to construct six metro railway tracks within 2030 under the road transport and bridges ministry. Already the metro rail service from Uttara to Motijheel in the capital is in operation. The loans for the metro rail line-2 from Gabtoli to Narayanganj is not yet confirmed. The ministry is keen to get the loans for this project from China. The ministry has submitted a proposal to the ERD in this regard.

Efforts are also on to secure a Chinese loan for the construction of another China-Bangladesh friendship bridge over the Kocha river in Pirojpur. Already a bridge has been constructed over the river Kocha separating Pirojpur and Jhalokathi.

The new bridge will be constructed at Charkhali point between Bhandaria and Indurkani. The length of the bridge is a little more than one and a half kilometres. The estimated cost of this project is around Tk 40 billion. Besides, the Muktarpur bridge needs repair. The bridge was constructed with loans from China. Now the government is expecting Chinese loans for its repair.

Bridges Division secretary Md Manzur Hossain told Prothom Alo that they have proposed some projects. However, it’s the government who will decide the financial source of these projects.

Bangladesh signed a number of agreements and memorandum of understandings (MoUs) during Chinese president Xi Jinping’s visit to Bangladesh in 2016. After that, the amount of Chinese loans for infrastructural development in Bangladesh and in the power and energy sector gradually increased. There are probabilities of China approving loans worth USD 7 billion for Bangladesh during prime minister Sheikh Hasina’s upcoming China visit.

Mega project expert Fouzul Kabir Khan told Prothom Alo that the economy of the country is already struggling. There are pressures on forex reserves. Therefore, before taking the loans, we should consider what would be the benefit and whether we will be able to repay the loan or not.

He further said, “Our past experience says the projects financed by China are centred on the Chinese contractors and their Bangladeshi agents. The contractors are not appointed on the basis of competition. So the project cost rises by 15 per cent to 25 per cent.”

*This report appeared on the print and online versions of Prothom Alo and has been rewritten in English by Ashish Basu