Two new metro rail routes will be constructed in Dhaka. On these two routes, the cost of building metro rail per kilometre is estimated to be Tk 36.18 billion. Yet the approved cost per kilometre is Tk 18.39 billion. After project approval, the cost is doubling even before work begins.
The metro rail line from Kamalapur to the airport and from Nadda to Purbachal is under the project named MRT Line-1. The other is MRT Line-5 (North), from Hemayetpur in Savar through Mirpur and Gulshan to Bhatara. Some parts of both metro rail lines will be elevated and some underground. Costs are doubling on both lines.
Dhaka Mass Transit Company Limited (DMTCL) is responsible for constructing and operating metro rail in the capital. Sources at the organisation say the work on the two metro rail lines will be implemented in 22 parts (packages). For this, separate contractors are being appointed for each package. In three packages, contractors proposed costs several hundred times higher than the estimates, so a decision has been taken to cancel them. However, approval from the financing agency JICA is required in all cases of cancelling or accepting tenders. After letters were sent seeking approval to cancel two packages, JICA advised appointing contractors at the higher price.
Two projects cost Tk 1.75 trillion
DMTCL officials say that due to conditions of JICA loans, competition in the tender process is decreasing. In some cases, at the final stage only two Japanese contracting firms are submitting bids. The rule is to select one of them as the lowest bidder. As a result, higher cost proposals are coming.
DMTCL Managing Director Faruk Ahmed told Prothom Alo that the lending agency has attached several engineering conditions to financing the two projects. As a result, competition in contractor selection has decreased. That is why costs are extremely high. He said when competition is limited, instead of real market dynamics, a few bidders determine prices. This makes tender prices much higher than regional and global benchmarks. Similar metro projects in neighbouring countries have been implemented at much lower cost.
In 2019, the then Awami League government took up projects to build two metro rail lines in Dhaka with financing from Japan’s international aid agency JICA. Dhaka’s first metro rail line from Uttara to Motijheel is now operating, though it is being extended to Kamalapur. Construction of this line cost about Tk 15 billion per kilometre. This line was built entirely on elevated track.
Abnormal bids due to lack of competition
Final tenders for one package of MRT Line-5 (North) were opened on 9 December. Under this, an underground metro path and station from Mirpur to Kachukhet will be built. It was found that a consortium led by Japan’s Shimizu Corporation became the lowest bidder at Tk 111.78 billion. The government estimated Tk 37.86 billion for this work, meaning the contractor bid 295.25 per cent higher than the estimate. The additional cost would be Tk 73.92 per cent.
DMTCL sources said earlier, on 18 June last year, another tender was opened for building an underground metro path and station from Kachukhet to Bhatara. It was found that Japan’s Taisei and South Korea’s Samsung (jointly) became the lowest bidder at Tk 155.27 per cent. The estimated cost for this section is Tk 39.68 per cent. The contractor’s bid is 391.31 per cent higher than the estimate. The additional cost would be Tk 115.59 billion.
According to JICA conditions, if there is no error in the proposed price, Shimizu Corporation and Taisei-Samsung (joint) will be appointed as lowest bidders. But DMTCL authorities have decided not to accept Taisei-Samsung’s bid. Not appointing Shimizu is also under consideration.
DMTCL officials say there is suspicion of “collusion” behind the abnormal cost proposals in two packages.
Sources also said work on MRT Line-1 and Line-5 (North) is being divided into packages for tender. All top Japanese contracting firms have got or are in the process of getting work in some package. Some are getting multiple packages.
DMTCL authorities have written to the Road Transport Ministry and the Planning Commission seeking decisions on the future course for the two metro line projects. In two letters, they mentioned the huge cost increase and said project proposals must be revised. The deadline for Line-1 project will end next December, and Line-5 (North) runs until 2028. Yet contractor appointment has still not been completed.
In this situation, DMTCL authorities have suggested various ways to reduce costs. These include changing engineering conditions imposed by JICA to bring open competition in contractor selection.
‘Project proposals must be revised’
The interim government urged the lending agency and contractors to reduce costs, but not getting a response, it did not show interest in building metro rail at such huge cost.
On 20 January, at an event, BNP Chairman Tarique Rahman said if BNP comes to power, monorail will be introduced in Dhaka alongside metro rail. He presented plans to connect monorail with metro rail from areas including Mohammadpur and Banani. He has already taken oath as Prime Minister on 17 February.
Professor Shamsul Hoque of the Civil Engineering Department at Bangladesh University of Engineering and Technology told Prothom Alo that reports about contractor selection in metro projects confirm there is no competition. That is why the burden of huge costs is being imposed. If mega projects are done at this cost, Bangladesh will go bankrupt.
Shamsul Hoque said the main task of the new government should be ensuring competition to reduce costs. For this, loan conditions must be changed. No country in the world accepts such suicidal conditions. If competition is introduced and unnecessary conditions removed, costs will fall significantly—there is no doubt.