MANILA, PHILIPPINES - The Asian Development Bank (ADB) is to help Bangladesh rollout planned transport projects to accelerate growth and stimulate economic activity across South Asia and beyond.
The ADB Board of Directors have approved a technical assistance loan of $23 million equivalent for the Subregional Transport Project Preparatory Facility, which will be used to hasten the passage of road and rail projects earmarked as priorities for the development of regional transport projects.
"Projects prepared under this facility will support economic growth and reduce poverty in Bangladesh, as well as strengthen cross-border links to stimulate more intraregional trade and investment," said Hiroaki Yamaguchi, Principal Transport Specialist in ADB's South Asia Department.
South Asia is one of the fastest growing regions in the world but internal trade remains well below the levels seen in other parts of Asia, with inadequate transport infrastructure a major stumbling block. Bangladesh - which borders India and Myanmar, and is geographically close to Bhutan, Nepal and Kunming in the People's Republic of China - has the potential to become a major transport and trans-shipment hub.
In the past, transport projects in Bangladesh have faced start-up delays because of a long lag time between loan approval and the final project design. The facility will address this and other obstacles to speedy implementation by supporting feasibility studies, design preparation, procurement, social and environmental safeguards, and capacity building for oversight agencies.
"These measures will accelerate the start of physical work following loan approval by at least a year compared with projects processed under conventional procedures," said Mr. Yamaguchi.
Road projects targeted for assistance will include cross-border routes identified by the South Asian Association for Regional Cooperation's Regional Multimodal Transport Study. The facility will help prepare projects covering around 300 kilometers of road works up for tender in 2012 and up to 1,700 kilometers by the end of 2013. The rail component will also focus on priority projects along the subregional transport routes.
The loan from ADB's concessional Asian Development Fund has a 32-year term, with an 8 year grace period carrying an interest charge of 1% per annum, and 1.5% for the balance of the term. The Government of Bangladesh will provide an additional $4.59 million for a total project cost of almost $28 million.
The Roads and Highways Department and Bangladesh Railway will be the executing agencies for the project, which is due for completion in June 2013.