Joydebpur-Ishwardi Double-Line Project: ERD urged to budge China on funding
The railways ministry recently requested the Economic Relations Division to urge the Chinese government to re-evaluate its decision to not finance the Joydebpur-Ishwardi double-line project.
The ministry also explained the points raised by the Chinese authorities as reasons for not funding the Tk 14,250.61-crore project, making the railways expansion project uncertain.
After a meeting on June 9, Bangladesh Railways (BR) wrote to the railways ministry mentioning the explanations.
The ministry on August 4 wrote to the ERD mentioning the explanations, said officials familiar with the development.
An ERD official on Thursday confirmed receiving the railways ministry's letter and said the letter would soon be forwarded to Chinese embassy in Dhaka.
On March 29, the Chinese embassy in Dhaka said that the Chinese government would not fund the project because of a "lack of in-depth preliminary work and insufficient feasibility study".
Further deepening the crisis, the Chinese contractors for this project and the Tk 16,104.45-crore Akhaura-Sylhet dual gauge project said they would not work in the projects after the Prime Minister's Office (PMO) reduced the amounts to be paid to the contractors.
Dhaka and Beijing signed a memorandum of understanding (MoU) during Chinese President Xi Jinping's visit to Dhaka in October 2016 to implement several infrastructure projects with Chinese assistance.
The two aforesaid projects are among those projects.
Both the projects were approved by the Executive Committee of the National Economic Council (Ecnec) over two years ago. The Chinese contractors were selected through direct procurement method without any competitive bidding.
The latest developments will result in further delay in the implementation of the two projects and prolong people's wait for better train services from the capital to the north-east and north-west regions, officials told this newspaper.
WHAT IS THE ISSUE?
In November 2018, the government took a project to turn the 174km Joydebpur-Ishwardi rail line into dual-gauge double lines. The project deadline was set to December 2024.
The China Civil Engineering Construction Corporation was supposed to implement the project and the Cabinet Committee on Government Purchase in December 2018 approved a Tk 11,586.68 crore proposal for the initiative.
The BR in March 2019 sough for a loan for the project from the Chinese embassy in Dhaka through the ERD. On seven occasion in the last two years, the BR reminded the embassy about the loan.
In the last letter sent in January this year, the BR asked the Chinese government to expedite the process of signing the loan deal, stressing the importance of synchronisation of the two projects -- the rail lines and the under-construction Bangabandhu Sheikh Mujib Railway Bridge on the Jamuna river -- in reaping the desired benefits.
In another development, the PMO in October last year, formed a committee to review the negotiated contract prices of three projects involving China, including Joydebpur-Ishwardi and Akhaura-Sylhet projects.
The other project -- Joydebpur-Mymensingh-Jamalpur dual gauge conversion project -- has not been approved by the Ecnec, and negotiation with China Railway International Group is yet to be complete.
As part of measures to bring down the cost of the Joydebpur-Ishwardi double-line project, the PMO in November last year directed the BR to slash Tk 1,495.52 crore (12.91 percent) from the project's contract price of Tk 11,586.68 crore approved by the Cabinet Committee on Government Purchase.
It also asked the BR to reduce the cost of Akhaura-Sylhet project by Tk 3,354.31 crore which is 20.8 percent of the total.
Both the Chinese contractors disagreed with the revised costs and conveyed the message to the BR earlier this year.
The railways ministry on June 9 held a meeting to discuss the developments and find out solutions regarding the projects.
Presided over by Railways Minister Nurul Islam Sujan, the meeting decided to send a letter to the Chinese authorities through ERD regarding the Joydebpur-Ishwardi project.
Chinese authorities cited four reasons for not funding the project.
China authorities said detailed investment estimation of the project was missing and the unit cost was too high.
BR said detailed cost of the project was included in the revised feasibility report. The total investment cost of the project was $1230.10 million, excluding IT-VAT.
However, as per the PMO-commissioned cost rationalisation committee, construction cost of the project would be reduced by $ 152.39 million, the BR wrote.
About Chinese authorities observation that the earning from the project is low and debt repayment after operation will be at a great risk, the BR said detailed analysis shows that the project will return enough revenue from travelers and freight operations. There are other indirect benefits as well.
"Moreover, the national economy of Bangladesh is growing at a very fast rate ... . Besides, Bangladesh government has a good track record of repaying foreign debts."
China had also said the basis for prediction of freight volume was insufficient and the financial calculation did not reflect the actual financial situation.
In this regard, the BR said the project would increase the line capacity from 28 trains per day to 74 trains per day, out of which, 10 would be freight trains.
"Hence, it is clearly understood that freight volume of the section will be increased by more than 5 percent annually and it will accumulate more revenue for Bangladesh Railway," the BR said.