|Project Rationale and Linkage to Country/Regional Strategy
Bangladesh has the potential to become a transport and transshipment center for the subregion. It borders India and Myanmar and is close to the landlocked countries of Bhutan and Nepal. Together with the Bhangabandhu Bridge over River Jamuna (the Jamuna Multipurpose Bridge) and the provision of access to Chittagong Port, the Dhaka Chittagong corridor can facilitate trade between Bangladesh and with the northeastern states of India, the Indian state of West Bengal, Bhutan, and Nepal, creating the potential to attract more foreign and domestic investments to the country. Bangladesh is located on major international trade corridors, as identified in the South Asia Association for Regional Cooperation (SAARC) Regional Multimodal Transport Study and the Trans-Asian Railway network. However, the market share of the railway in the subregional transport is low; only 11.9% or 876,855 tons of Bangladesh's imports from India and only 1.1% or 17,832 tons of exports from Bangladesh to India were transported by rail in 2011. Only one passenger train operating two times a week links Dhaka the capital of Bangladesh with Kolkata in India, and on average only one freight train per day crosses the border. In comparison, Bangladesh Railway was operating 289 passenger and 48 freight trains per day in FY2011/12 for the domestic market. The main reasons for the limited cross-border rail traffic are missing links and congestion in main domestic railway corridors, which do not allow operating additional trains for domestic and international traffic.
Dhaka and Chittagong are the two major metropolitan areas of Bangladesh. Dhaka is the main commercial and administrative center of the country, while Chittagong is the primary seaport, accounting for about 90% of imports and exports. More than a quarter of Bangladesh's population of 142 million lives in the Dhaka Chittagong corridor. Travelling by railway in Bangladesh is more safe, energy efficient, environmentally friendly, and reliable than other modes of transport; railway transport is also considered more comfortable than long-distance buses. Intercity trains operated by Bangladesh Railway are very popular. Thus, the occupancy of intercity trains is very high, especially in the east zone (98%); intercity trains in the Dhaka Chittagong corridor are usually sold out. About 40% of Bangladesh Railway's passengers travel by intercity trains, which accounts for more than 75% of passenger revenue. The high demand for intercity service in the Dhaka Chittagong corridor cannot be met fully because of insufficient line capacity, thus, no additional trains can be scheduled to tap into these lucrative markets for Bangladesh Railway with high revenue potential. Because Bangladesh's economy is growing by more than 6%, a rising demand for domestic and regional railway transport is expected, but it cannot be satisfied with the existing limited infrastructure.
The Chittagong Port handled 1.44 million twenty-foot equivalent unit (TEU) containers in 2012. According to the traffic forecast in the base case scenario of the Strategic Master Plan for Chittagong Port, the number of containers handled is expected to increase to 2.94 million TEU by 2020, to 6.09 million TEU by 2030, and to 10.20 million TEU by 2043, which means an average growth of 6.5% per year compared with an annual growth of 10.1% from 2002 to 2012. The number of containers transported by Bangladesh Railway between Chittagong Port and the Dhaka Inland Container Depot has however been stagnant, and Bangladesh Railway transported about 67,000 TEU in 2012. Bangladesh Railway's market share was declining to less than 10%; it cannot maintain its market share mainly because of the capacity constraints in the Dhaka Chittagong corridor, which limits the number of container trains between Chittagong Port and the Dhaka Inland Container Depot to two daily trains.
About 203 km out of the 321 km Dhaka Chittagong railway line is still only single track, constraining the demand to increase the number of trains in the corridor. There are two projects under construction for laying double tracks on the railway line: (i) the 64 km Tongi Bhairab Bazar section is financed by ADB's Railway Sector Investment Program , and (ii) the 61 km Chinki Astana Laksam section is financed by the Japan International Cooperation Agency. Both projects are scheduled to be completed in 2015. The Government of India finances the construction of the second Bhairab and the second Titas river bridges with about 7 km of approach railway lines. India is also supporting the construction of the Akhaura Agartala railway line on a grant basis, which will link the Dhaka Chittagong railway corridor to the Indian state of Tripura. Thus, the only remaining 72 km single track section between Akhaura and Laksam will become the critical bottleneck for domestic and subregional traffic in this corridor.
The government's Sixth Five-Year Plan, 2011 2015, therefore, assigns the highest priority to increasing the capacity of the Dhaka Chittagong corridor by completing double tracking on the entire corridor, which accounts for more than 40% of all passenger journeys by railway in Bangladesh. The project is, therefore, in line with the government's transport sector development strategy and ADB's country partnership strategy, 2011 2015. The strategy aims to reduce high transport and logistical costs to overcome the economic isolation of large parts of the country from national and regional markets through improvements of strategic links on the main corridors facilitating subregional trade, such as the Dhaka Chittagong.