Bangladesh : Railway Sector Investment Program - Tranche 3

Transport / Rail transport (non-urban)

The objective of the Railway Sector Investment Program is to promote economic growth by improving the performance of the railway sector. This will be done by (i) implementing a program of organizational and policy reforms to improve BR's commercial orientation; and (ii) financing priority investments to overcome capacity bottlenecks in sectors where such investments are both economically and financially viable e.g. the Dhaka-Chittagong corridor.

Impact and Outcome. The impact will be efficient and safe railway transport in Bangladesh and the outcome will be improved railway transport capacity in the main line network of Bangladesh Railway.

Outputs. The outputs will be the commissioning of 50 broad gauge Passenger carriages and 100 meter gauge passenger carriages for Bangladesh Railway's main line network.

Implementation Arrangements. Bangladesh Railway (BR) will be the executing agency, a dedicated Project Director under the Project Implementation Unit (PIU) for Investment Projects, which was established under the first tranche, will be responsible for the implementation of Tranche 3.

Readiness for tranche implementation. An Appraisal Report with design documents for the rolling stock was prepared by consultants under Tranche 1 and the bid documents are ready to be issued.

A framework financing agreement (FFA) for the Railway Sector Investment Program (RSIP) was signed on 7 September 2006 between the People's Republic of Bangladesh (Bangladesh) and the Asian Development Bank (ADB). The RSIP was approved on 10 October 2006 by ADB's Board of Directors as a multitranche financing facility (MFF) for $430 million. The RSIP is based on the government's Sector Roadmap and Investment Plan for 2007 2013, which was since then superseded by the Railway Master Plan 2010 2030 and will improve the performance of the railway sector by implementing (i) a reform project of sector policy,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 the Dhaka Darsana Khulna corridors.

The MFF is structured such that the reform project will provide continuous support to implement the agreed reform agenda, whilst the investment program will be supported by a series of four tranches. The reform and the investment projects are integrated as approval of subsequent tranches for investment subprojects is dependent on the implementation of specific reform actions agreed upon in the railway reform action plan in the FFA.

The FFA originally provided for an availability period for submission of periodic financing request (PFR) under the MFF until 1 December 2011 and for the last disbursement under the MFF until 31 December 2013. The government requested ADB by a letter dated 25 July 2011 to extend this availability period until 2017. Due to the limitation of the duration of MFFs to in general 10 years, ADB approved on 9 September 2011 an extension of the availability period until 10 October 2015 and for disbursements until 10 October 2016.

The third PFR was received on 30 May 2013. The government requested for a loan of $100 million OCR to finance 50 broad gauge passenger carriages and 100 meter gauge passenger carriages for BR's main line network. BR has submitted an appraisal report and an updated economic and financial analysis. The procurement of passenger carriages is within the key development objectives identified under the MFF and will increase the transport capacity of BR in critical sections with high demand for passenger transport. The procurement of passenger carriages satisfies the conditions as set forth in the FFA.

1. ADB approved award for the 50 broad gauge (BG) passenger carriages on 15 Sep 2014 and for the 100 meter gauge (MG) passenger carriages on 18 September 2014. Contract was signed on 27 November 2014 for both packages.

2. Total 50 no. Broad Gauge (BG) carriages have been delivered to Bangladesh Railway by the end of 2016.

3. Total 100 no. Meter Gauge (MG) carriages have been delivered by the end of 2016.

ADB' already disbursed 100% of contract amount through commitment procedure.

Bangladesh Railway organized further consultations with the project stakeholders and beneficiaries to apprise them of economic development in the program states. The perceptions and priorities of the people was taken into consideration in finalizing the project design and preparing mitigation measures to address any risks. Consultation and participation took place. No separate consultation and participation (C&P) plan is prepared however, approach for C&P is outlined in the resettlement framework and resettlement plan.

ADB approved award for the 50 broad gauge passenger carriages on 15 Sep 2014 and for the 100 meter gauge passenger carriages on 18 September 2014. Contract was signed on 27 November 2014 for both packages.

Procurement will be carried out in accordance with ADB's Procurement Guidelines (2013, as amended from time to time). ADB will review documents and submission related to procurement at all major milestones prior to proceeding with the procurement process.

The procurement rules for selection of contractors required by international financial institutions such as the ADB are considered sufficiently robust to deter corruption. National procurement regulation has also improved through the Public Procurement Act, 2006, and through related Public Procurement Rules (2008) with subsequent amendments and the establishment of a Central Procurement Technical Unit under the Implementation Monitoring and Evaluation Division of the Ministry of Planning.