Metro rail: Govt to build second one, questions over cost

The incumbent government wants to restart the process of appointing a contractor for constructing a metro rail line from Kamalapur to the airport in Dhaka. The interim government had decided to cancel this contractor appointment process due to the much higher cost proposals.

For the new route, Japanese contractors are demanding nearly 97 per cent more per kilometre than the government’s estimate. During the interim government’s tenure, analysis based on the contractors’ cost proposals showed that the cost would stand at about Tk 36.18 billion per kilometre, while the government had estimated it at Tk 18.39 billion. By contrast, the metro rail from Uttara to Motijheel in Dhaka cost around Tk 15 billion per kilometre.

During the interim government’s tenure, Faruque Ahmed was appointed managing director of Dhaka Mass Transit Company Limited (DMTCL), which operates the metro rail. He has experience working on metro rail and large infrastructure projects in different countries. After analysing costs in various countries, he raised questions about the proposed cost of Dhaka’s new metro rail.

DMTCL then informed Japan’s development partner agency JICA through a letter, based on government decisions, that the contractors’ bids could not be accepted. The government was interested in calling for fresh tenders.

However, JICA, the lending agency for the project, did not agree. It said that cancelling the contractor appointment process at the final stage and calling for fresh tenders would conflict with the terms of the loan agreement. As a result, work on the metro rail project stalled.

After the BNP government came to power, changes were made in various institutions. Faruque Ahmed was also removed from his position as managing director of DMTCL.

According to sources at the road transport ministry after the new government took office, JICA representatives met with Road Transport, Rail and Shipping Minister Robiul Alam. Following this, the ministry instructed officials to hold discussions with JICA to move forward with work on Metro Rail Line-1.

Most recently, on 10 March, a joint meeting was held at the Economic Relations Division (ERD) involving JICA, metro rail authorities, and ERD. Sources at the meeting said JICA remained firm on appointing contractors by approving proposals with cost increases of 170 per cent and 25 per cent in two packages of the metro rail project. The agency cited expansion of work scope, depreciation of the taka against the dollar, and rising commodity prices as reasons. It even objected to media reports about the contractor appointment process.

Meeting sources also said that project authorities suggested continuing work on the two packages that had been cancelled during the interim government. However, they advised considering the overall increase in project costs.

The meeting decided that the ministry, project authorities, and JICA would continue discussions on the project. A detailed review would be conducted to reduce costs. Steps would be taken to revise the project proposal. It was also decided to ensure that information about the contractor appointment process does not leak outside.

Mohammad Ziaul Haque, secretary of the road transport ministry and chairman of DMTCL’s board, told Prothom Alo that the metro rail is very important for Dhaka. The government is very positive about moving the project forward.

He also said that he and the minister hold weekly meetings on the matter. He added that a review is underway to understand why project costs are rising and that they expect to have a clearer idea soon. After that, they will look for ways to reduce costs.

Experts, however, said that while discussions may reduce costs somewhat, significant reductions would require increasing competition. Contractors beyond Japanese firms must be allowed to participate in tenders, and that is not happening.

The metro rail line from Kamalapur to the airport is named MRT Line-1. It will run from Kamalapur to the airport, then to Narda and Purbachal. The total length is a little over 31 kilometres. The section from Kamalapur to the airport will be underground, while the Narda to Purbachal section will be elevated.

DMTCL sources said the project is being implemented in 12 packages. It was approved in December 2019 with an estimated cost of Tk 525.61 billion. So far, cost proposals from contractors have been received for 8 of the 12 packages. Based on these, DMTCL’s analysis shows that the project cost would rise to Tk 965 billion on average contractor bids.

According to DMTCL sources, work on one package for depot development in Purbachal is in its final stage. The contractor appointment process for two more packages was at the final stage. In one package, the proposed cost is 170 per cent higher than the estimate, while in another it is 25 per cent higher. Overall progress of the project is only 6 per cent.

The project is financed by JICA, and two loan agreements have already been signed. Due to slow progress, funds from one tranche have not been disbursed, while only a small portion has been released from the other. According to the agreement, the disbursement period will end in September next year. Loan repayment will begin from 2029.

These loan agreements were made during the Awami League government, which was ousted in the July mass uprising. The current government is now in a difficult position. There is public expectation regarding metro rail, while Japan is a long-standing development partner of Bangladesh. Cancelling the loan agreement could affect bilateral relations.

According to road transport ministry sources, JICA is urging the continuation of contractor appointment processes for the two packages that had been halted by the interim government. It also wants discussions to continue on how to reduce costs in other packages currently under evaluation.

A senior official of the ministry, speaking on condition of anonymity, told Prothom Alo that the terms of JICA loans offer limited scope for cost negotiation. For packages at the early stage of tendering, some costs can be reduced by scaling down work or modifying designs, but this cannot be considered a real reduction in overall costs.

According to ministry sources and experts, the main disagreement between JICA and the interim government was over loan conditions and the tendering process. There has been no fundamental change in JICA’s policy in discussions with the new government. As a result, opportunities to significantly reduce costs remain limited.

JICA loan conditions tend to favour Japanese companies in contractor selection, limiting competition in tenders. In most JICA-funded projects, contractors and consultants are from Japan, with local or other international firms participating only as partners in some cases. Japanese dominance exists in feasibility studies, design, tender preparation, and implementation stages. All procurement decisions require JICA’s approval before execution.

Sources said tender documents often include methods and technologies that are difficult for non-Japanese firms to meet. For example, the MRT Line-1 tender requires tunnel construction using the “one-pass joint” method, which favours Japanese contractors.

A DMTCL official, speaking anonymously, said that despite open tenders, non-Japanese contractors rarely participate. Usually, two or three Japanese firms submit final bids, and their proposals must be accepted. Especially in underground work, opportunities for others are very limited.

In a written response on 7 April, JICA told Prothom Alo that it is aware of public interest in MRT Line-1 and MRT Line-5 (North). It said it continues constructive dialogue with the government of Bangladesh to advance these important urban transport projects.

JICA stated that the projects are being implemented according to its procurement guidelines. Under these rules, evaluation and related information cannot be disclosed after bid opening until contract completion. Therefore, it cannot comment on specific tenders at this stage. However, it supports transparency after contracts are finalised.

JICA also said its loans are part of a long-term commitment to sustainable urban transport in Bangladesh. Despite rising costs due to global inflation, supply chain disruptions, and exchange rate fluctuations, the importance of these projects remains unchanged. It will continue working with the government and stakeholders to advance them.

Like MRT Line-1, another JICA-funded metro rail project—MRT Line-5 (North)—is also ongoing. It will run from Hemayetpur in Savar through Gabtoli, Mirpur, and Gulshan to Bhatara. The Hemayetpur–Gabtoli section will be elevated, while the rest will be underground. The total length is about 20 kilometres.

This project was approved in October 2019 with an estimated cost of Tk 412.38 billion. Analysis of contractor bids for five packages shows the cost could increase to Tk 880 billion. Work on the depot in Hemayetpur is nearing completion, but contractor appointments for the remaining work have stalled due to increased costs.

Ministry sources said discussions on the next steps for Line-5 (North) have not yet gained momentum, and its future depends largely on decisions regarding Line-1.

JICA is also the lender for the Uttara–Motijheel metro rail, which will be extended to Kamalapur. The total length is 21.26 kilometres, and work on the Motijheel–Kamalapur section is ongoing. The total cost is Tk 334.72 billion, or Tk 15.74 billion per kilometre—also a subject of debate.

If projects proceed based on contractor bids, the combined cost of the two new lines (Line-1 and Line-5) will reach Tk 1.85 trillion. DMTCL’s analysis of metro projects in other Asian countries shows that excluding land acquisition and salaries, metro construction costs in India range from Tk 1.50 billion to Tk 4.50 billion per kilometre. India also uses foreign loans but does not impose conditions that restrict competition in contractor selection.

Professor Shamsul Haque of the Department of Civil Engineering at Bangladesh University of Engineering and Technology (BUET) said the main issue is the lack of real competition due to Japanese loan conditions. Ensuring competitive bidding would reduce costs significantly.

He raised two key questions: whether JICA will relax its conditions to allow competition, and if not, whether the government will proceed with higher costs and increased debt burden.

The depreciation of the currency and the increase in commodity prices are not issues limited to Japanese or any specific country’s contractors; they apply to all. The government would accept the bid that emerges through effective competition. But in a controlled tender process, the government cannot determine the true price, Shamsul Haque added.