|Project Rationale and Linkage to Country/Regional Strategy
The SAARC Thimphu Summit in 2010 recognized the importance of developing transport infrastructure and transit facilities, especially for the landlocked countries to promote intra-SAARC trade. Agreements between Bangladesh and India in 2010 for regional connectivity is a critical stepping stone for opening connectivity, not only between Bangladesh and India, but also with Bhutan and Nepal, diversifying regional and international transport routes. This will enhance markets and opportunities of regional development in South Asia, leading to balanced regional growth and poverty reduction.
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, and Kunming, the key transportation hub in Southwest China. With the opening of the Bhangabandhu Bridge over River Jamuna (the Jamuna Multipurpose Bridge) and the provision of access to ports, e.g., Chittagong and Mongla, for these countries, the Northwest-Dhaka-Chittagong transport corridor and other strategic transport corridors can facilitate trade between Bangladesh and the northeastern states of India, the Indian state of West Bengal, Bhutan, and Nepal and thereby attract more foreign and domestic investment to the country. Bangladesh has major international and subregional trade corridors as identified in SAARC Regional Multimodal Transport Study and the Asian Highways network.
A study on transit traffic through Bangladesh estimates that the improvement of Bangladeshi sections of priority regional transport corridors could facilitate the movement of about 18 million tons of freight in Bhutan, India, and Nepal. A World Bank study shows that the impact of raising South Asia's trade facilitation performance toward international levels would result in large gains for both intra and inter-regional trade, e.g., intra-regional trade within South Asia would increase by almost 60% and trade with the rest of the world would increase by over 30%.
Throughout South Asia, trucks carry a substantial majority of inland freight. The road sector is central to the competitiveness of supply chains. An expansion in rail freight is both desirable and possible, but the absolute importance of road transport is unlikely to diminish, especially as the markets for higher value and higher volume goods increase with per capita incomes. Therefore, among these international trade corridors, the highest priority is SAARC Highway Corridors (SHC) 4 and 8, which provide Bhutan and Nepal with the access to Bangladesh ports (Chittagong and Mongla), including land ports. For trades between Bangladesh and India, the Benapole land port (BLP) is the priority to be improved as it is the busiest crossing, providing transshipment services for around 80% of the annual trades between the two countries, e.g., 450 trucks a day carrying in total an estimated 1.4 billion tones valued at $4 billion passed BLP in 2010/11.
The road network in Bangladesh is very poor in terms of capacity and conditions, and the demand for road transport is rapidly increasing. Insufficient funding and inefficient implementation of road maintenance have increased the number of roads that are beyond maintainable condition, and the backlog of deferred maintenance. A mix of motorized and non-motorized traffic, and encroachment onto roads, results in higher accident rates. The large number of rivers that are still crossed by ferries hampers smooth movement of traffic. To address these constraints, the Government of Bangladesh (GOB) developed and has been implementing the Road Master Plan (2007/2026). The road sector development strategy under Bangladesh's 6th Five-Year Plan (FY2011-2015) highlights (i) prioritized undertaking of development projects, (ii) cost recovery from users, (iii) streamlining procedures of pre-construction activities, (iv) private sector financing, and (v) road sector institutional strengthening, as provided in the Road Master Plan. One of the major tasks is the improvement of the regional road connectivity to boost trade and commerce, pursuing the policy of corridor based road development with a view to accommodate regional as well as international traffic in the country. GOB plans to upgrade the Asian Highway Network in Bangladesh into 4 lanes, with special emphasis on 3 arterial corridors: Dhaka-Chittagong, Dhaka-Northwest, and Khulna-Northwest. The road sector strategy in the 6th Five-Year Plan includes institutional changes, and capacity development in maintaining existing road network, addressing road safety issues, improving land port connectivity, and controlling overload.
RHD developed and manages major highways and urban areas. ADB-financed Road Network Improvement and Maintenance Project II provided a list of reform agenda for the road sector in Bangladesh, together with DFID and the World Bank, mainly covering (i) a long-term and integrated transport policy, (ii) modernization of the road sector institution, (iii) road maintenance financing, and (iv) private sector participation. The overall progress has been slow, but GOB took initiatives to address weaknesses. The road master plan has been approved and the national land transport policy is prepared. MOC and RHD have been restructured. RHD has computerized its financial management and asset management systems, supported by DFID. The central management system (CMS) is now spread for the RHD-wide use at the district level. The procurement capacity is being strengthened under the World Bank's Public Procurement Reform II, utilizing CMS and introducing e-procurement. Pending liability for major unpaid contracts has been eliminated except delayed release of the approved budget. The maintenance financing has substantially increased, and the latest approved budget for 2012/13 demonstrated the GOB's policy emphasis on the maintenance, e.g., increase by 20% for the revenue budget from 2011/12 while reduction for the development budget. PPP cell has been established in RHD and Pilot PPP road projects have been identified. The project will continue these reform agenda, as agreed in the Institutional Development Action Plan (Supplementary Appendix A).
The Land Port Authority (LPA) currently administers 16 land ports. As development and operations are mainly outsourced to private sector, LPA is a lean organization and financially self-sustained for the current level of operational efficiency and volumes. However, taking into account expected increase to trades among SASEC countries through land ports based on recent dialogue, it is urgently required to improve facilities for operational efficiency.
The project road is the common section of SHC 4 and 8, and also the Asian Highway No. 2, carrying the traffic, i.e., about 15,000 vehicles per day, excluding 2 and 3 wheelers, which is second busiest to the Dhaka-Chittagong road. However, this road section experiences substantial bottlenecks due to limited capacity, pavement deterioration and mixed traffic of slow moving vehicles, which also results in many traffic accidents at several accident-prone areas so-called safety blackspots. The Burmari land port is one of the northwestern end points of the Dhaka-Northwest corridor, providing a gateway to Bhutan through India via SHC 8. The Benapole land port is the busiest land port at the west end point of the Asian Highway No.1 and SHC No.1 in Bangladesh. Both Burimari and Benapole landports are complemented by the India's ongoing Integrated Customs Posts Program at Changrabandha and Petrapole, respectively on the Indian side. The proposed scope has been endorsed by the SASEC Trade Facilitation and Transport Working Group meeting held in Kolkata on 5 March 2012 (see Map).