Metrorail construction cost likely to exceed Tk 2 trillion

There are growing concerns over the estimated cost of two upcoming metro rail projects in Dhaka.

The total construction cost could exceed Tk 2 trillion (Tk 2,00,000 crore)—more than twice the government’s initial estimate of around Tk 940 billion (Tk 94,000 crore), according to the bids submitted by contractors so far.

Based on the current bids, the per-kilometre construction cost of the new metro lines is projected to exceed Tk 3 billion (Tk 300 crore).

By comparison, the existing metro rail from Uttara to Kamalapur is being built at a cost of Tk 330 billion, with a per-kilometre cost of nearly Tk 1.6 billion (Tk 160 crore).

According to Dhaka Mass Transit Company Limited (DMTCL), the agency responsible for metro rail construction and operations, recent metro rail projects in India have kept costs under Tk 5 billion (500 crore)  per kilometre. Metro projects in countries like Vietnam, Turkey, Thailand, and Australia are also being built at lower costs than those proposed for Bangladesh.

One major reason for the higher cost is the conditions imposed by Japan International Cooperation Agency (JICA), the primary lender. Another factor is limited competition—only Japanese companies participate in the bidding process, allowing little room for price negotiation and leading to inflated bids.

Muhammad Fouzul Kabir Khan, an adviser to the road transport and bridges ministry, told Prothom Alo: “The issue of increased metro project costs has been raised in our discussions. The prime adviser’s special assistant Sheikh Moinuddin and the metro rail managing director have been tasked with discussing the matter with JICA.”

When contacted later, Faruk Ahmed, the Managing Director of DMTCL, told Prothom Alo: “We want the metro rail, but we must consider the cost carefully.”

He added that the financial model of the project must be designed to encourage competitive international bidding, which could not only reduce costs but also attract world-class contractors.

The previous Awami League government had planned to build six metro rail lines in Dhaka by 2030. Of these, one (Line-6: Uttara to Kamalapur) is nearing completion. Two other lines currently under construction are MRT Line-1 (from Kamalapur to the airport and Kuril to Purbachal) and MRT Line-5 (from Hemayetpur in Savar to Gabtoli, Mirpur, Gulshan, and ending at Bhatara).

According to government estimates: MRT Line-1 was projected to cost Tk 525.61 billion (52,561 crore) and MRT Line-5 was estimated at Tk 412.61 (41,261 crore).

Both lines will be built as a combination of underground and elevated tracks. MRT Line-1 construction, including train procurement, is divided into 14 packages. Currently, depot development work is underway, being executed by a Japanese contractor.

According to Dhaka Mass Transit Company Limited (DMTCL), final bids for three underground packages (covering 13 km from Uttar Rampura to the airport and including eight stations) have already been received. Japanese firms are leading all three packages. The combined bid amounts to Tk 308.64 (30,864 crore), which translates to approximately Tk 23.74 billion (2,374 crore) per kilometre.

After receiving bids for several packages, DMTCL conducted a full project cost analysis. It found that if the current rate of cost escalation continues, the construction cost alone for the 31 km-long Line-1 could exceed Tk 600 billion (60,000 crore). Once additional expenses are factored in—such as land acquisition, rehabilitation, staff salaries, taxes and duties, consultancy fees, inflation, and potential project scope changes—the total project cost could rise to Tk 942.84 billion (94,284 crore). That means the per-kilometre cost would exceed Tk 30 billion (3,000 crore). Delays and inefficiencies in construction could drive costs even higher.

On the other hand, MRT Line-5 (Northern Route) will span a total of 20 kilometres. Of this, approximately 6.5 kilometres—from Hemayetpur to Gabtoli and Notun Bazar to Bhatara—will be elevated, while the rest will be underground. The line will feature 14 stations.

The construction of the line, including track, stations, and coach procurement, has been divided into 10 separate packages. Depot development is already underway, while the tender process for the main construction works is ongoing.

According to sources at Dhaka Mass Transit Company Limited (DMTCL), the contractor selection process is at its final stage for the underground segment from Kochukhet to Bhatara, which is approximately 5.5 kilometres long and includes three stations.

A consortium led by Japan’s Taisei Corporation has emerged as the lowest bidder, proposing a cost of Tk 155.27 billion (15,527 crore) for the segment. This translates to a per-kilometre cost of over Tk 28.28 billion (2,828 crore). In contrast, when the project was first proposed in 2019, the estimated cost for this segment was only Tk 39.68 billion (3,968 crore) in total.

DMTCL officials have expressed concern that if other packages come in at similarly inflated rates, the total project cost could reach Tk 1 trillion (Tk 1,00,000 crore). This would push the underground construction cost to about Tk 25 billion (2,500 crore) per kilometre, and when land acquisition, salaries, and other expenses are added, the total per-kilometre cost would exceed Tk 30 billion (3,000 crore).

Several senior DMTCL officials, speaking on condition of anonymity, told Prothom Alo that even the currently operational Uttara–Kamalapur metro rail has raised questions regarding its construction cost. Revenue from that line has not been sufficient to repay the JICA loan. They fear that building two more metro lines at such high costs, again with foreign loans, will place a significant burden on the public. As a result, DMTCL is hesitant to approve the contractors' high-cost proposals and is now waiting for guidance from the highest levels of government.

After receiving contractor bids for two new metro rail projects, Dhaka Mass Transit Company Limited (DMTCL) conducted a comparative analysis of metro rail construction costs across various Asian countries. The findings revealed that Bangladesh is spending significantly more on metro construction than its regional counterparts.

For example, in Patna, in the Indian state of Bihar, contractors were appointed in January this year for two segments of an underground metro line stretching over eight kilometres, with six stations.

According to DMTCL’s analysis, the cost per kilometre there is around Tk 4.50 billion (450 crore). Notably, the entire Patna metro line is also financed by JICA, like in Bangladesh, but the main contractors are all Indian firms—a stark contrast to the Japanese-dominated contracts in Dhaka.

Another ongoing project, in Indore, Madhya Pradesh, is being funded by the Asian Development Bank (ADB). In March, contractors were hired to build an 8.5-kilometre underground section with seven stations, at a cost of Tk 3.63 billion (363 crore) per kilometre. For the elevated portion of the same project, the cost per kilometre was only Tk 1.50 billion (150 crore).

Sources within DMTCL said India also implements metro projects using foreign loans but does not accept loan conditions that reduce competition in contractor selection—something that has contributed to high costs in Bangladesh due to limited bidders and high-priced Japanese contractors.

DMTCL’s study also reviewed recent metro projects in other parts of Asia and beyond. The per-kilometre costs, including land acquisition, salaries, and other expenses, were significantly lower compared to Bangladesh: Sydney, Australia: USD 15.6 million (Tk 1,747 crore), Istanbul, Turkey: Tk 672 crore, Abidjan, Ivory Coast: Tk 448 crore, Seoul, South Korea: Tk 784 crore, Bangkok, Thailand: Tk 740 crore and Ho Chi Minh City, Vietnam: Tk 1,552 crore

In contrast, MRT Line-6 in Dhaka cost around Tk 15 billion (1,500 crore) per kilometre, and for the new Lines 1 and 5, costs may exceed Tk 30 billion (3,000 crore) per kilometre—twice as high.

The overspending is not limited to construction alone. Bangladesh has also spent more on consultancy services. For MRT Line-1, DMTCL appointed consultants at a cost of USD 112.6 million (Tk 1,374 crore). In comparison, Bangalore Metro in India hired consultants for just USD 17.1 million (Tk 209 crore).

Back in 2018, the feasibility study, design, and tender documentation for Dhaka’s MRT Line-1 cost USD 33.9 million (Tk 414 crore). Around the same time, Sri Lanka hired consultants for similar light rail work for only USD 12.5 million (Tk 153 crore).

These comparisons have raised serious concerns about cost efficiency in Bangladesh’s metro projects, particularly as the country takes on massive foreign loans to fund them.

The Japan International Cooperation Agency (JICA) offers a different rationale for the high costs of Dhaka’s metro projects. In an interview with Prothom Alo during his visit to Dhaka on 1 July, JICA’s senior vice president Miyazaki Katsura said, “We prioritise high-quality infrastructure projects. If initial construction costs are low, the long-term maintenance and repair costs often turn out to be high, and such infrastructure is more vulnerable to natural disasters.”

She added that high-quality infrastructure typically comes with higher upfront construction costs, but lower maintenance and repair expenses—citing Dhaka Metro Rail as an example.

An email was sent to JICA on the morning of 27 July inquiring about the high construction cost of the metro rail in Bangladesh and the strict loan conditions. JICA responded to Prothom Alo’s queries around 3:00pm on 28 July. Later, the response of JICA was added to this report after 7:00pm on 28 July in Bangla online edition (and after 7:00pm on 3 August in English online edition) of Prothom Alo.

JICA stated that metro rail construction costs vary significantly from country to country and are not directly comparable. These costs are influenced by various factors, including the employer’s design specifications, labor and material costs (whether sourced locally or imported), construction and geotechnical complexity, inflation, exchange rate fluctuations, and project- or country- specific risk premiums.

Regarding the issue of limited competition in contractor selection for projects implemented with JICA loans, the Japanese development agency said that loans provided for metro rail projects are “general untied.” This means companies from any country in the world are eligible to participate in the bidding process.

On the possibility of changing loan conditions for future metro rail projects, JICA stated that they are always open to discussions on projects. However, JICA’s Official Development Assistance (ODA) loans are determined through the Exchange of Notes, a formal diplomatic agreement exchanged between the two governments. This process ensures that the loan framework is mutually agreed upon at the government-to-government level.

However, both DMTCL officials and experts argue that metro construction costs in Bangladesh are higher than similar Japan-funded projects elsewhere, largely due to restrictive loan conditions.

In nearly all JICA-funded projects in Bangladesh, both contractors and consultants are predominantly Japanese. In some cases, local or third-country firms participate only as junior partners. From feasibility studies and design work to tender preparation and implementation, Japanese firms dominate almost every stage. Additionally, every procurement decision—including tender documents—requires JICA’s prior approval. This model applies to all ongoing and completed JICA-backed projects in the country.

According to sources in the road transport and bridges ministry, loan conditions provide Japanese contractors and consultants with a competitive advantage. The tender documents often specify methods and technologies that are nearly impossible for non-Japanese firms to meet.

For instance, the tender for MRT Line-1 mandates that underground tunnel construction be done using the “one-pass joint” method, a technique that gives Japanese contractors a clear edge.

Speaking to Prothom Alo on condition of anonymity, a senior DMTCL official said: “Because of these conditions, even in an open bidding process, non-Japanese contractors rarely participate. In most cases, only two or three Japanese firms end up submitting final bids. And whatever price they quote, we are left with little option but to accept it.”

For example, in Package 4 of MRT Line-1, there were six pre-qualified firms.

Five purchased the tender documents, but only two Japanese companies submitted final bids. A similar pattern occurred with Package 6, where seven pre-qualified firms all bought the tender, yet only two Japanese bidders submitted proposals.

Professor Shamsul Haque, a transportation expert and faculty member at the Department of Civil Engineering, Bangladesh University of Engineering and Technology (BUET), told Prothom Alo that spending nearly Tk 3,000 crore per kilometre for metro rail construction might set a world record.

“This is undoubtedly an overvalued development. It will become a white elephant. We'll be forced to sink into subsidies until we're bankrupt,” he said.

He added that patented Japanese technologies and loan conditions are eliminating real competition in the bidding process. “We’re forced to purchase Japanese contractors, consultants, and products—often at higher prices. Even maintenance requires the same technology and products, which drives up long-term costs.”

“For instance, metro rail systems were recently built in Kolkata and Jakarta with JICA financing, but the cost in Dhaka is multiple times higher,” he said. “As a result, fares in Dhaka are also higher than in Jakarta or Kolkata. Now, with even more expensive metro projects in the pipeline, the key question is: how much will people be charged to cover these inflated costs?”