Metro rail: It will take 45 years to recover construction costs

Metro railFile photo

The coveted metro rail project, which was undertaken a decade ago to facilitate a smooth commuting experience and decrease traffic congestion in Dhaka, is now a reality and the trains are running dawn to dusk between Uttara and Motijheel.

Initially slated for completion by 2024, the project's timeline has been extended to 2025 due to the facility’s extension up to Kamalapur. The latest phase of construction, the Motijheel to Kamalapur section, has seen only 26 per cent progress as of January.

Japan is funding the metro rail project, which is being implemented at a much higher cost than that of similar projects in neighbouring countries. It will take 45 years in total for the authorities to recover the cost merely by selling tickets.

The project, known as MRT Line-6, was undertaken in 2012 to construct the metro rail line from Uttara to Motijheel, via Mirpur and Firmgate. The authorities started train operation on the Uttara-Agargaon portion in the first phase on 28 December and later on the Agargaon-Motijheel portion on 4 November.

The project was initially planned from Uttara to Motijheel, but was later extended to Kamalapur.

The project cost has surged by over 50 per cent through revisions in two phases, while the timeline rose from 12 years to 13 years.

The Executive Committee of the National Economic Council (ECNEC) approved an allocation of Tk 219.85 billion for the project in 2012. Later, the cost increased to Tk 334.72 crore due to expansions and land acquisitions for the extended portions.

As per an analysis, the authorities will require 45 years to realise the total cost through ticket selling.

The facility eased up the city life and mitigated the sufferings of waiting for hours in traffic congestion. It is expected to play a crucial role in the city’s overall traffic management and financial activities. However, its fares are higher than those in neighboring countries.

Muhammad Fawzul Kabir Khan, a former secretary and infrastructure expert, said, “While undertaking a mega project, it is crucial to consider if it will create new wealth in the country. If it does, there remains a high possibility of recovering the investment in a speedy manner. We need to observe if the businesses are growing thanks to the metro rail. Also, we have to consider how much the people are benefitting from the facility.”

How expensive the project is

The MRT Line-6 is the lone metro rail of Dhaka city and its stretch is 21.26 kilometers. The construction cost of each kilometer of the metro rail, including the stations, is Tk 15.74 billion, equivalent to more than USD 140 million as per the current exchange rate of Tk 110 per dollar. The construction work began in 2017, and back then, the price per dollar was lower.

In India, the third phase of the Delhi metro rail began in 2015. According to a Times of India report, the cost per kilometer of the elevated metro rail was INR 2.21 billion (Tk 2.92 billion in Bangladeshi currency), while the cost per kilometer of the underground metro rail was INR 5.52 billion ((Tk 7.28 billion).

In Pakistan, a metro rail project was undertaken in Lahore with a loan from China in 2015. The construction of the 27-km elevated railway cost $1.65 billion or a little over Tk 180 billion, with Tk 6.71 billion spent for each kilometer. The metro rail commenced operation in 2020.

In Malaysia, an initiative was undertaken to build a 58-km metro rail from Kuala Lumpur to Putrajaya in 2017. Here, the construction cost per km stood at Tk 12.76 billion. The metro rail began operation in 2022.

In China, the work of a 34-km metro rail began in Kunming in 2008, while it went into operation in 2012. The construction cost per km is Tk 14.55 billion.

MAN Siddique, managing director of Dhaka Mass Transit Company Limited, the supervising authority of Dhaka metro rail, does not think that the Dhaka mjetro rail project is being implemented at a relatively high cost.

While talking to Prothom Alo, he said, “We have analysed thoroughly. The project’s indirect benefits are much higher than the direct ones. These should be considered. Considering work hours and traffic congestion, it will save $3.8 billion a year,” he said.

The DMTCL MD also said university students from different countries come to see the Dhaka Metro rail project as part of their studies. They opined that this metro rail is better than those in Singapore or Thailand.

What about income?

According to DMTCL sources, if the metro rail operates at full capacity, a total of 500,000 passengers will travel on it every day, and the monthly income will range from Tk 7.20-7.30 billion.

If the fare remains unchanged, it will take at least 45 years to recover the construction cost of the metro rail solely from ticket sales revenue. During full-swing operation, the operating cost will be around Tk 10 billion per year. Some 75 per cent of the cost will come from ticket sales, while the remaining amount will be generated from station plaza shop rent, advertisement, and other sectors.

Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), highlighted three different economic perspectives on the metro rail. He said the rate of return on investment in such infrastructures is relatively low. If the fare is fixed as per the investment, the passengers will not be able to afford it. The authorities have to operate it with subsidies.

Secondly, the metro rail is quite effective for fast movement in traffic congested cities. It has positive economic utility.

Thirdly, there should be transparency and accountability in cases of investment in such projects. It needs to monitor whether the project is being implemented at a high cost or not, whether the project is completed on time or not.

He noted that if the project is completed cost-effectively and on time, its economic benefits become much higher.