The South Asia Subregional Economic Cooperation (SASEC) Railway Connectivity Investment Program (the investment program) will improve the performance of the railway sector in Bangladesh by implementing a series of infrastructure and rolling stock capacity improvement investments to overcome capacity bottlenecks in sections with subregional impact, e.g., the Dhaka Chittagong Cox's Bazar Myanmar Border and the Dhaka Ishurdi Indian Border corridors. The subprojects to be financed under the investment program were selected based on the priority investments identified in the Government's Railway Master Plan for 2010 2030 as important missing links or bottlenecks in the railway network in Bangladesh.
The impact of the investment program will be improved domestic and subregional trade flow in Bangladesh. The outcome will be an improved railway transport system in Bangladesh. The outputs of the investment program are summarized in Table 1 and will be (i) about 300 km of railway infrastructure constructed and improved according to Trans Asia Railway standards, (ii) improved rolling stock maintenance capacity of BR resulting in an increase in rolling stock availability for revenue operation to 80% and (iii) improved capacity of BR in project management and implementation.
|Project Rationale and Linkage to Country/Regional Strategy
Background. The market share of the railway in the subregional transport is low; only 11.9% of Bangladesh's imports from India of 876,855 tons and only 1.1% or 17,832 tons of exports from Bangladesh to India in 2011 have been transported by rail. For passengers, only one train operating three times a week links Dhaka with Kolkata in India and average, only one freight train per day crosses the border. Bangladesh Railway (BR) was operating 289 passenger and 48 freight trains per day in FY 2011/12 for the domestic market. Main reasons for the limited cross-border rail traffic are as follows: (i) due to different track gauges with Broad Gauge of 1,676 mm in Western Bangladesh and Meter Gauge of 1,000 mm in Eastern Bangladesh, all cargo between East and West Bangladesh has to be transshipped between different trains and passengers have to change trains; (ii) missing links in the railway network between Bangladesh and North-Eastern India as well as between Bangladesh and Myanmar; (iii) insufficient infrastructure not providing adequate capacity in the Ishurdi Dhaka Chittagong corridor to operate more domestic and subregional trains; (iv) load restrictions of Jamuna bridge prevent full loaded Broad Gauge trains to cross the bridge and reach Dhaka from India; (v) lack of a container transshipment facility near Dhaka with dual gauge access and high capacity to satisfy higher demand; and (vi) operational constraints such as the exclusive operation of block-trains for freight in India combined with the lack of containerization in the freight traffic between India and Bangladesh prevents the railways from access to the break-bulk cargo markets.
Chittagong Port handled 1.39 million twenty foot equivalent container units in 2011, with number increasing at about 10% per annum. The number of container transported by BR between Chittagong Port and Dhaka Inland Container Depot (ICD) has been stagnant in recent years and BR is now only transporting less than 10% of the container from Chittagong Port bound for Dhaka. Due to limitations in the line capacity of the Dhaka-Chittagong railway corridor as well as the saturated capacity of the existing ICD in Dhaka and container handling facilities in Chittagong Port, BR cannot increase its market share in this lucrative freight market or provide additional subregional container services.
Travelling by railway in Bangladesh is more safe, energy efficient, environment-friendly and reliable compared with other modes of transport. According to passenger surveys, railway transport is also considered more comfortable compared with long distance buses. Intercity (IC) trains operated by BR are very popular. Thus occupancy of IC trains is very high, especially in the east zone (98%); IC trains in the Dhaka Chittagong corridor are usually sold out. About 40% of BR's passengers travel by IC trains which account for more than 75% of passenger revenue. The high demand for IC service in the Dhaka Chittagong and Dhaka Ishurdi (Western Bangladesh) corridors cannot be fully met due to insufficient line capacity and rolling stock available, thus no additional trains can be scheduled to tap into a lucrative market for BR with high revenue potential. As Bangladesh's economy was growing by more than 6% in recent years, rising demand for domestic and subregional railway transport is expected, but cannot be satisfied with the existing limited infrastructure and rolling stock.
Strategic Context and MFF Road Map. The subprojects to be financed under the investment program (Table 1) were selected based on the priority investments identified in the Railway Master Plan for 2010 2030, the Government's road map for development in the railway sector. In addition, all subprojects are sections in the Trans Asian Railway network and included in the SAARC Multimodal Transport Study as sections of subregional corridors. The investment program was endorsed during the SASEC Trade Facilitation and Transport Working Group meeting in Singapore in October 2013 and is included in ADB's Regional Cooperation Operations Business Plan for South Asia (2013 2015). The Investment Program is in line with ADB's Country Partnership Strategy (CPS) for Bangladesh (2011 2015), which aims at reducing high transport and logistical cost to support sustainable and inclusive economic growth by connecting all parts of the country with national and regional markets. The investment program supports the key thematic drivers of the CPS for (i) environmental sustainability and climate resilience by climate-proofing infrastructure and minimizing carbon footprints; (ii) regional cooperation by investments conducive to subregional economic cooperation; (iii) private sector development by supporting implementation for public-private partnerships in the logistics and rolling stock maintenance subsectors; and (iv) partnerships by integrating cofinancing from development partners in the design of the long-term investment program.