Metrorail revenue inadequate to repay loans

Metro rail services are now operating at near-full capacity, especially during peak office hours when many passengers struggle to board on their first attempt due to overcrowding.

Despite the heavy ridership, revenue from fares remains insufficient to cover the loan repayments for the project.

An analysis of the current income from metro operations and the loan repayment obligations shows a financial shortfall.

Officials and transport experts suggest that the government will need to subsidise the loan repayments.

At present, the MRT Line-6 runs between Uttara and Motijheel, with approximately 400,000 passengers using the service daily. Construction is underway to extend the line to Kamalapur. Additionally, the government plans to construct five more metro rail lines in Dhaka.

According to the MRT-6 project proposal, trains are scheduled to run every 3.5 minutes during peak hours. However, they currently operate every 8 to 12 minutes, and services do not run after 10:00 pm.

According to provisional data, ticket sales in the last fiscal year generated around Tk 4 billion (400 crore). However, between 2025 and 2031, the government will need to repay between Tk 4.65 billion (465 crore) and Tk 7.4 billion (740 crore) per year in loan installments.

Although the government has waived VAT on metro fares, experts note that Dhaka’s metro fares remain high compared to neighbouring countries.

Given the current fare structure, there is limited scope to increase ticket prices. Instead, revenue could be increased by extending service hours, developing parking facilities near stations, and leasing out commercial spaces within or near stations.

The original MRT-6 project, launched in 2012, aimed to connect Uttara to Motijheel via Mirpur and Farmgate. The first phase, from Uttara to Agargaon, opened on 28 December 2022.

The Agargaon–Motijheel segment was inaugurated on 4 November 2023. Though the initial plan stopped at Motijheel, it was later extended to Kamalapur, raising the total project cost to Tk 334.72 billion (33,472 crore).

Of this, around 59 per cent was financed through loans from the Japan International Cooperation Agency (JICA).

The Dhaka Mass Transit Company Limited (DMTCL) is responsible for building and operating the metro rail system.

Managing Director Farooq Ahmed told Prothom Alo that the company is working to recruit more personnel, increase train frequency, and extend operating hours. Efforts are also being made to cut unnecessary costs and boost revenue by leasing unused station spaces for commercial use.

According to DMTCL sources, the government did not have to repay the principal loan amount for the first 10 years, as part of a grace period during construction. However, limited repayments began in June 2023, with approximately Tk 750 million (75 crore) already paid. An additional Tk 100 million (10 crore) is due this year.

Starting May next year, larger repayments will begin, with approximately Tk 4.65 billion (465 crore) due over the following year.

DMTCL sources indicate that the repayment amounts will increase further in the coming years. Between 2026 and 2031, Bangladesh will need to repay over Tk 37 billion (3,700 crore) in total for the MRT-6 loan — averaging about Tk 7.4 billion (740 crore) per year.

The loan agreement with JICA was signed by the Economic Relations Division (ERD) under the finance ministry.

DMTCL remits repayments to the finance ministry from its fare revenues, and the ministry then pays JICA.

As many as Tk 197.18 billion has been borrowed from JICA through five separate agreements for the MRT Line-6 project. This loan must be repaid over the next 30 years in two annual instalments, including interest. If the value of foreign currencies increases, Bangladesh’s repayment amount in local currency will also rise accordingly.

A senior official at the Ministry of Road Transport and Bridges told Prothom Alo on condition of anonymity that there are plans to build five more metro rail lines. Given how costs are rising for the newly undertaken metrorail projects, cost will be several times higher than that of MRT Line-6, and a large portion of this expenditure will come from loans.

According to this official, there is no way to repay such massive loans from the metro rail’s income alone. So, the government will have to provide subsidies to cover the repayments.

The official further said the expenses of MRT Line-6 too raised questions, so cost-awareness is necessary from the outset.

Sources said the provisional (unaudited) income of the DMTCL company was around Tk 4 billion in the 2024–25 fiscal year. Revenue from ticket sales was approximately Tk 2.44 billion in the previous 2023–24 fiscal. Income during the 2022–23 fiscal year exceeded Tk 2.20 million after partial operations began in 2022.

With an increase in the number of trains and extended operating hours, the income could be raised to around Tk 5 billion. However, it will take at least two more years to fully extend operations to Kamalapur. When that happens, revenue is expected to grow further. Still, the operational costs of metro rail will also continue to rise. Currently, a contractor firm is responsible for maintenance and equipment oversight, but DMTCL itself will have to bear these maintenance expenses from January next year.

Officials involved in metro rail operations said that even if ticket sales generate Tk 7 billion annually, it would still take over 50 years to recover construction costs. As the metro rail system ages, both maintenance and operating costs will increase.

According to DMTCL sources, more than Tk 1 billion was spent last fiscal year just on salaries, electricity, and other recurring expenses. From next year, DMTCL will also need to purchase and maintain equipment on its own. In that case, annual expenses will be more than double—leading to a drop in profits.

Professor Shamsul Haque of BUET’s Civil Engineering Department told Prothom Alo that the construction cost of Dhaka’s metro rail has already been high. As a result, fares are higher than in neighbouring countries. Increasing fares further will be difficult. Meanwhile, maintenance costs will rise over time. Increasing the number of trains and extending operating hours could help boost revenue. Authorities concerned must keep an eye to avoid unnecessary expenses. Leasing metro rail infrastructure for commercial purposes could also help raise additional income.

Pointing out that MRT Line-6 runs through the busiest areas of Dhaka and was built on elevated tracks, he observed that other lines might not have as many passengers.

"Moreover, underground routes are more expensive. Therefore, cost considerations must be taken seriously in constructing new metro rail lines, and designs should also factor in strategies for generating extra income," Shamsul Haque added.