Dhaka-Ashulia: Another expressway with onerous Chinese loan

A worker puts the finishing touches at an elevated expressway in Dhaka.Prothom Alo

The government is constructing another elevated expressway in the capital city, stretching from the Dhaka airport to Savar EPZ, at a cost of Tk 175.33 billion. The construction project will be implemented with loans taken from China on some hard conditions and by a Chinese contractor. 

The facility, named as Dhaka-Ashulia elevated expressway, is scheduled to be operational in 2026. It is expected to make commuting easier through the capital city. 

The construction work of an earlier project – Dhaka elevated expressway -- is now underway in the Hazrat Shahjalal International Airport (HSIA) area, where the new expressway is planned to begin. The previous expressway will connect the airport area to the Dhaka-Chattogram highway, via Tejgaon, Moghbazar, Kamalapur, and Mayor Hanif flyover, while the new one will connect the area to Ashulia of Savar.  

The authorities said the two expressways would connect the airport area to the six national highways of the country and speed up the communication of north and south-western districts with the east and southern regions. The vehicles will run through the capital city without facing any traffic jam. 

The length of Dhaka-Ashulia elevated expressway is 24 kilometre (km) while that of the Dhaka elevated expressway is 20 km. The maximum speed limit on both expressways was set at 80 km per hour in the project plan. A commute from Savar EPZ to Jatrabari would take less than one hour once the expressways are completed. 

According to the plan, the vehicles coming from the northern districts would directly reach the airport area through the Dhaka-Ashulia elevated expressway. Later, they would go to Jatrabari using the Dhaka elevated expressway. The vehicles, coming via Aricha ghat and Dhaka-Mymensingh highway, can also use the expressways.  

There will be arrangements for getting on or off the expressways at some places inside Dhaka. After getting off the expressway at Jatrabari, the vehicles would run towards the eastern districts via Dhaka-Chattogram and Dhaka Sylhet highways and towards the southern districts via Dhaka-Mawa highway. 

The vehicles, however, have to pay toll on both expressways. 

The bridges division is implementing the two projects. Prime minister Sheikh Hasina inaugurated the construction work of the Dhaka-Ashulia expressway on 12 November. The government has a target to open the airport to Tejgaon section of the Dhaka elevated expressway next month, December, though uncertainty prevails there. 

Shahabuddin Khan, director of the Dhaka-Ashulia elevated expressway project, told Prothom Alo that the expressway would enable vehicles coming from different parts of the country to run through the capital city without facing any traffic jam. 

The vehicles of Dhaka can also use the expressway to leave the city and avoid the common traffic congestion at the entry points, he explained, adding that the facility would especially ensure a smooth commute for the goods-carrying trucks and covered vans. 

Regarding the construction work, Shahabuddin Khan said the necessary equipment was brought seven to eight months before the inauguration of the construction work by the prime minister. The construction site is also ready. The piling work will start soon.

Strict loan terms

The depletion in the country's forex reserve and the abnormal appreciation of the US dollar have posed a crisis in the economy. There have been discussions on how the import expenses and installments of foreign loans will be met in the coming days. 

The authorities adopted utmost caution over taking up and implementing development projects. But, the government could not retreat from the Dhaka-Ashulia elevated expressway project as it was finalised one decade ago. 

Now, the mega project is being implemented with Chinese funds involving strict conditions, under a government to government (G2G) deal. The total project cost has been estimated at Tk 175.33 billion, where China will provide Tk 109 billion and the government will bear the remains. 

The project sources said China had initially pledged to bear the entire project costs while the government would meet the land acquisition, rehabilitation and other local expenses. But the lender stepped back from full financing and agreed to provide 83 per cent of the total project costs.

Bangladesh has to count a 2.4 per cent interest on the loan, including service and commitment charges. There is a five-year grace period for the loan, but the commitment charge shall remain out of its purview. 

Put simply, the total amount – principal and interest – must be repaid in 15 years commencing from May, 2027. 

Bangladesh pays less than 1 per cent interest for the loans taken from the World Bank, Asian Development Bank (ADB), and Japan International Cooperation Agency (JAICA). Moreover, they provide 30 years to repay the loans. 

The government must begin repayment of the Chinese loan in 2027, no matter the elevated expressway opens to traffic or not by then.  

According to sources, the bridges division reached a deal with the China National Machinery Import and Export Corporation (CMC) as per conditions of the G2G agreement. There was no open tender for the project and the government had to appoint a Chinese contractor. 

Several committees of the bridges division bargained with the contractor and fixed the project cost. The final agreement was signed between them with the consent of both governments. 

An official of the bridges division, on condition of anonymity, said the negative issue of a G2G agreement is that it does not allow price verification through bids of multiple contractors. Also, the contractor has to provide a higher quotation rate, which gets importance in case of a variation in the project. 

The official also said almost everything, including highly paid engineers, machinery and important materials, come from abroad in cases of such big projects. Thus, most of the project costs go abroad in dollars.

Delay in beginning 

The Dhaka-Ashulia elevated expressway project was approved in-principle by the Executive Committee of the National Economic Council (ECNEC) on 20 July, 2011. The Bangladesh University of Engineering and Technology (BUET) conducted a pre-feasibility study  in 2012 and estimated the possible project cost at around Tk 70 to 80 billion. 

Later, a consortium, led by an Australian firm, conducted the final feasibility test in 2016 when the project cost was estimated at around Tk 100 billion. The bridges division signed a memorandum of understanding with the CMC in January, 2015 to implement the project. It was then assumed that the cost would rise by 8 per cent due to the hike in labour and material prices. 

The government extended the final approval to the project in 2017 with an estimated cost of Tk 169 billion. The project period was determined from September, 2017 to June, 2022. But the plan did not work out due to the failure to reach a concrete deal on availing loan from China. 

Bangladesh managed to sign a deal with the Exim Bank of China to secure the loan on 26 October, 2021, which came into effect on 10 May this year. 

Following the delay, the authorities revised the project proposal, fixed the estimated project cost at Tk 175.53 billion, and extended the period until 2026. The bridges division sources said no big projects can be completed on time here. An extension in the project period would require additional cost. 

Ahsan H Mansur, executive director of Policy Research Institute (PRI), said there is a need for the Dhaka-Ashulia elevated expressway project. He is not in favour of the Rooppur project, Padma Bridge rail link or construction of railway line from Cox's Bazar to Ramu, but supports the Dhaka-Ashulia expressway project.

However, Ahsan Mansoor slammed the activities of the Chinese contractor and said the project cost might go up after they start working. Some local officials connive such practices. 

He placed a question whether the project cost will remain Tk 175.53 billion at the end? 

***This story first appeared in the print version of Prothom Alo and has been rewritten in English by Misbahul Haque.