Railway ditches Akhaura-Sylhet upgrade after China cost talks fail

MUNIMA SULTANA | Monday, 1 April 2024

Bangladesh Railway (BR) has finally decided to shelve a flawed project to upgrade the country's important Akhaura-Sylhet line after nearly seven years of delays in negotiations over a costly Chinese proposal.
At a recent meeting, the Ministry of Railways decided to drop the project from the annual development programme after fresh negotiations with the Chinese company failed, according to sources.
The BR included the Tk 142.50 billion Akhaura-Sylhet section's conversion from metre gauge to dual gauge in the projects list for a Chinese loan.
The BR in 2015 signed an agreement with a Chinese firm for the erail corridor.
The firm, China Railway Construction Bridge Engineering Bureau Group Company Limited, proposed a higher-than-expected cost for converting the single line section into a dual gauge while maintaining train operations. The estimated cost was Tk 161.0 billion.
Based on the first draft commercial agreement proposing a government-to-government arrangement with a 66 per cent Chinese loan, the Cabinet Committee on Economic Affairs (CCEA) approved the project on April 9, 2019.
However, an interministerial committee was later formed to evaluate the project cost. Based on this report, the prime minister directed a cost cut of 20.80 per cent in October 2020.
The Ministry of Railways then formed another technical committee two years after the prime minister's directive, following a fresh proposal from the Chinese company in June 2022.
The Chinese firm offered 4 to 6 per cent cost cut, which eventually saw the fresh negotiation unsuccessful, according to a source.
Subsequently, the railway ministry at a meeting last month decided to drop the project from the ADP due to a lack of progress since its ECNEC approval, according to official sources.
An official said the ministry's performance has been affected by similar projects that have not been able to spend any funds. The meeting, chaired by the Railway Minister, decided to address this issue.
Another Bangladesh Railway (BR) official, who wished to remain anonymous, told The Financial Express that the BR had always advocated developing a new line instead of converting the existing single-line track during negotiations. However, this proposal was not accepted.
Despite writing to higher authorities about its plan, the BR's efforts were delayed due to unknown reasons, another official said.
The BR reportedly explored alternative funding sources to upgrade the project. However, the Chinese ambassador to Bangladesh urged the government to resume negotiations with the original company.
The Akhaura-Sylhet project is not the only one facing difficulties due to Chinese funding issues.
The BR's Joydebpur-Iswardi track development project also stalled after China withdrew its financial assistance.

[email protected]