Project Name MFF - Railway Sector Investment Program (Subproject 1)
Project Number 32234-023
Country Bangladesh
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2316-BAN: MFF - Railway Sector Investment Program (Subproject 1)
Ordinary capital resources US$ 100.00 million
Loan 2317-BAN: MFF - Railway Sector Investment Program (Subproject 1)
Concessional ordinary capital resources / Asian Development Fund US$ 30.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Transport - Rail transport (non-urban)

Gender Equity and Mainstreaming No gender elements
Description The Railway Sector Investment Program which is based on the Government's Sector Roadmap and Investment Plan for 2007-2013 will improve the performance of the railway sector by implementing (i) a reform project of sector policy, organizational, and capacity building reforms to make Bangladesh Railway (BR) more commercially focused, and improve governance and accountability; and (ii) an investment project of infrastructure and rolling stock capacity improvement investments to overcome capacity bottlenecks in sectors where such investments are both economically and financially viable, e.g., the Dhaka-Chittagong and Dhaka-Darsana-Khulna corridors where it can support major direct investment. The reform and the investment projects are integrated as approval of investment subprojects will be dependent on the implementation of specific sector reform actions.
Project Rationale and Linkage to Country/Regional Strategy Efficient transport is essential to achieve higher levels of economic growth needed for sustainable poverty reduction in Bangladesh. BR has been losing market share and consequently making financial losses thus relying on Government budgetary support. This financial support has not been enough to allow for additional investment needed in critical corridors such as the Dhaka-Chittagong and Dhaka-Darsana-Khulna corridors to overcome capacity constraints leading to poor operational performance of the railways. This in turn causes it to lose market railways will ease the pressure on land since Bangladesh has a very high population density and land is scare. It will also ease the pressure on the road network, which is congested in key corridors and thus benefit transport as a whole. This will require capital investments and reforms to ensure that the investments lead to a sustainable improvement in BR's operational and financial performance.
Impact Promote sustainable national economic growth and poverty reduction in Bangladesh. It will achieve this by improving rail transport efficiency and capacity.

Project Outcome

Description of Outcome Improve the performance of the railways sector through enhanced efficiency
Progress Toward Outcome

L2316: Construction of the Tongi-Bhairab Bazar Double Track is completed and under full operation.

L2317: Contract for procurement of videoconferencing equipment and other software and hardware awarded in June 2015.

The actions as agreed upon in the reform program for BR are under implementation.

(1) Restructure BR by Lines of Business (LOB) - An outsourcing/divesture plan for non-core services has been developed and approved. Performance of LOBs being reviewed.

(2) Improve financial governance system - New Acctg and Financial Mgt system implemented in Oct 2013 through ERP software based on the new accounting architecture, although some components need to be upgraded to interface with existing IT systemts.

(3) Improve human resource governance system - Job description of the LOB Heads has already been approved on 22 Mar 2011. LOB Heads now working according to the job description. Additional modules of the ERP IT System are rolled out progressively and nationwide coverage of the system is under implementation.

(4) Improve BR operation and maintenance practices and performance - TA Consultants submitted reports to improve maintenance practices for track and signaling system in Feb 2008, rolling stock in May 2008, and improving train operations efficiency in May 2008 and April 2010. The reports were sent to respective departments to implement at field level. New manuals on New Signalling, Way and Works and LWR, and Operations have been approved. Completion report sent to ADB in July 2013.

Implementation Progress
Description of Project Outputs

2316: Double track between Tongi and Bhairab Bazar completed

2317: BR becomes a commercially focused rail service provider

2317: BR corporate governance is improved

2317: BR safety record is improved

Status of Implementation Progress (Outputs, Activities, and Issues)

2316: Physical Infrastructure- Completed.

2317: Reform effort- Ongoing with 91.55% physical progress. New tariff policy is adopted by BR and corporatization of container service is in place.

Geographical Location

Safeguard Categories

Environment B
Involuntary Resettlement A
Indigenous Peoples C

Summary of Environmental and Social Aspects

Environmental Aspects Transport, especially vehicle emission, is the highest contributor to Bangladesh s air pollution problems. Improving the railway network will contribute significantly to reducing air pollution associated with vehicle emission especially in Chittagong, Dhaka and Khulna. The other expected potential environmental impacts are related to improving access, which will lead to increasing uncontrolled exploitation of natural resources. However, the gradual improvement in enforcing the Environmental Conservation Act, 1995 is expected to minimize the potential uncontrolled exploitation of natural resources and the environment. Nonetheless, implementation of the Investment Program has environmental consequences due to its physical intervention such as construction of railway networks. In this context, the Investment Project is categorized as a B project in accordance with ADB s Environment Policy, 2002. The initial environmental examination of the sample subproject systematically illustrates the potential environmental impacts, proposed mitigation measures, and how to implement the mitigation measures. The assessment of impacts at the subproject level will become an integral part of managing the Investment Project. The initial environmental examination for the Tongi Bhairab Bazar (64 km) section (as a sample subproject) shows that the environmental impacts associated with construction of additional tracks and formation of additional embankment, including bridge construction, are temporary and will occur only during construction. These impacts require mitigation measures that are manageable and mostly can be incorporated into construction works. 16 Therefore, the environmental management and monitoring plan, which clearly describes the required mitigation measures, will be incorporated in the bidding document to ensure that the contractors implement the mitigation measures properly. The plan provides overall guidance to address environmental impacts related to the sample subproject. For the follow-up subprojects, an environmental assessment review framework was prepared to guide the impacts assessment procedure.
Involuntary Resettlement The Project will lead to loss of agricultural land and structures both commercial as well as residential, and loss of livelihoods in many cases. To mitigate this adverse impact on the affected population, a resettlement plan was prepared for the core subproject. To address the resettlement impacts of noncore subprojects, a resettlement framework was prepared. Subproject resettlement plans have been prepared during implementation.
Indigenous Peoples No indigenous people will be adversely affected by the Project.
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation

Business Opportunities

Consulting Services International and national consultants will be required to support the reform and investment projects of the Investment Program. The consultants financed under the MFF loans will be engaged using ADB's quality- and cost-based selection procedures in accordance with ADB's Guidelines on the Use of Consultants. The Government has asked ADB to select the consultants.
Procurement All contracts will use international competitive bidding. Procurement will be in accordance with ADB's Procurement Guidelines.

Responsible Staff

Responsible ADB Officer Islam, Mohammad Nazrul
Responsible ADB Department South Asia Department
Responsible ADB Division Bangladesh Resident Mission
Executing Agencies
Bangladesh Railway
Rail Bhaban, Dhaka, Bangladesh


Concept Clearance 06 Jun 2000
Fact Finding 30 May 2004 to 04 Jun 2004
MRM 15 Jul 2004
Approval 13 Feb 2007
Last Review Mission -
PDS Creation Date 18 Mar 2008
Last PDS Update 28 Sep 2016

LoanĀ 2316-BAN

Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Feb 2007 15 Feb 2007 24 Apr 2007 30 Jun 2011 09 Oct 2016 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 132.50 Cumulative Contract Awards
ADB 100.00 13 Feb 2007 94.20 0.00 94%
Counterpart 32.50 Cumulative Disbursements
Cofinancing 0.00 13 Feb 2007 99.93 0.00 100%

LoanĀ 2317-BAN

Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Feb 2007 15 Feb 2007 24 Apr 2007 30 Jun 2011 09 Oct 2016 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 30.00 Cumulative Contract Awards
ADB 30.00 13 Feb 2007 29.09 0.00 99%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 13 Feb 2007 23.99 0.00 82%

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