MRT Line-5 Cost to Soar 126%, Jumping From 410 Billion to 930 Billion Taka

❐ BD Digest Desk

The cost of the ongoing Dhaka Metro Rail Project MRT Line-5 Northern Route, funded by Japan, has been proposed to be increased by 125.98 percent. This will increase the total cost of the project from Tk 41,238.54 crore to Tk 93,190.96 crore.

As the cost of the Metrorail project continues to increase, the economic feasibility and implementation framework of the project have come under renewed question.

The project implementing agency, Dhaka Mass Transit Company Limited (DMTCL), has already prepared the first Revised Development Project Proposal (RDPP) for the project. The Road Transport and Highways Department sent the proposal to the Planning Commission for approval this week.

The concerned officials said that the cost of the project will increase by about 51,952 crore 42 lakh taka through the revision.

At the time of approval in 2019, the cost of implementing the MRT Line-5 Northern Route was estimated at Tk 41,238.54 crore. If the new proposal is approved, that cost will more than double.

The revised proposal also proposes doubling the government’s own financing share. The allocation for this sector has been increased from Tk 12,121.50 crore to Tk 24,259.72 crore.

Similarly, there is a proposal to increase the amount of foreign loans or project assistance by about 137 percent from Tk 29,117 crore to Tk 68,931 crore.

Not only is the cost increasing, but the project implementation time is also increasing. Initially, the target of completing the work by 2028 was set, but the revised proposal has pushed it back to 2034. In the meantime, a one-year defect liability period is planned.

However, DMTCL has said that it plans to launch the metro rail on this route in January 2033.

Project officials cited several reasons for the cost increase. According to them, the bids submitted by contractors for various construction packages are much higher than the previous estimates.

Along with this, domestic and global inflation, changes in foreign exchange rates, and overall market conditions have also played a role in increasing costs.

DMTCL officials said that the proposed rates of contractors for some major construction packages were so much higher than the previous estimates that the process of hiring contractors had to be postponed for about a year and a half. The cost gap was particularly noticeable in the two important construction packages in the underground section of the project.

Under the CP-05 package, an underground station and main railway line are to be constructed from the east side of Mirpur-1 station to Kachukhet. The cost of this work was estimated at Tk 3,442.71 crore in the original project proposal.

Later, the project’s consulting firm estimated the potential cost at Tk 5,212.6 million. But the lowest bidder in the tender, Japan’s SLTM, proposed a cost of Tk 11,177.67 million. That is, the proposed price is more than three times the original estimate.

A similar picture is seen in the CP-06 package. The construction of underground stations and main lines from the east side of Kachukhet station to the Bhatara transition section is covered by this package.

The original DPP estimated the cost at Tk 4,364.75 crore. The consultant’s later estimate increased it to Tk 6,126.30 crore. But in the tender, the Taisei-Samsung joint venture offered the lowest price of Tk 15,527.2 crore.

In addition to these two packages, DMTCL said that the cost of other construction works has increased, necessitating a reassessment of the financial structure of the entire project.

The agency also cited foreign exchange rates as one of the reasons for the increase in project costs. The original DPP assumed the exchange rate of 84 taka 50 paisa per US dollar. However, the latest RDPP workbook, based on the Bangladesh Bank exchange rate on July 30, 2026, has assumed the value of the dollar at 123 taka 82 paisa.

This means that the value of the taka against the dollar has decreased by about 46.53 percent compared to the time the project was approved.

The project has foreign currency expenditure in import-dependent rolling stock, railway and electromechanical systems, consultancy services and other sectors. As a result, the expenditure in these sectors has increased in terms of taka due to the impact of global inflation as well as exchange rate changes, said DMTCL sources.

However, experts have also raised questions about the project’s financing and procurement process, which is the reason for the cost increase. According to stakeholders involved in the project, the appointment of a Japanese consultant is mandatory as per the terms of Japanese financing.

In addition, the number of qualified contractors has been limited due to the conditions of following specific technical specifications and construction methods in some packages.

According to them, even though tenders are officially open, if competition for participation is actually limited, there is an opportunity for contractors to increase their bids.

Officials also said that differences of opinion have been going on between DMTCL and the Japan International Cooperation Agency (JICA) for several months. The Bangladesh side had taken a stand in favor of canceling the existing tender and inviting a new international competitive tender.

On the other hand, JICA said that their procurement policy was followed in evaluating the tenders and the price was higher due to global inflation and the risks of underground construction.

Professor Md. Hadiuzzaman of BUET’s Civil Engineering Department believes that the Metrorail tender process is gradually moving towards limited competition.

According to him, the design and construction methods of the project are being subject to certain specific technologies and technical conditions, which are specialized and in many cases based on Japanese technology or patents. As a result, the number of contractors capable of working with these methods is naturally decreasing.

He said that it is necessary to conduct a comparative analysis between the cost and contractor selection process of the metro rail projects being implemented under various financing agreements in Dhaka.

In particular, comparing the construction costs and contractor selection process of MRT Line-5 Southern, which is being implemented with the funding of the Asian Development Bank, with MRT Line-5 Northern and MRT Line-1, can provide a clearer idea of ​​the actual cost of the underground metrorail.

According to Professor Hadiuzzaman, such a comparison will make it possible to understand how reasonable the cost of constructing the underground metro rail in Dhaka is compared to international and regional standards and how much the financing and procurement process is influencing the cost determination.

He also warned about future operating costs in addition to construction costs. According to him, the operating costs of the underground metro rail will also be significant after its launch. Because artificial lighting, ventilation, and various electrical and mechanical systems will have to be kept operational at all times in the underground stations and railway lines.

Shamsul Haque, another professor at BUET, also expressed concern about the increase in the project’s cost. According to him, the fixed cost without adequate competition could create big questions in the future. The current cost that is being proposed is also not final – there is a risk that it will increase further in the future.

He also said that it is important to verify whether this cost is in line with international standards or benchmarks. Because the impact of high construction costs will not only be limited to the implementation of the project; the burden of long-term operation and maintenance costs after the metro rail is launched will also ultimately fall on the government.

The MRT Line-5 Northern route is expected to be about 20 kilometers long from Hemayetpur in Savar to Bhatara. Of this, 13.5 kilometers will be underground and 6.5 kilometers will be elevated. The route will have a total of 14 stations—nine underground and five elevated stations.

The project has been divided into a total of 10 contract packages, CP-01 to CP-10. Land acquisition for Hemayetpur Depot has been completed and land development is currently underway. Construction work is underway in some of the remaining packages, tender evaluation is underway in some, and negotiations with contractors are underway in others.

Overall, this proposal, which would more than double the cost and extend the time by several years, has sparked renewed discussions about cost management, contractor selection, and foreign financing conditions for metro rail projects.

Experts question how far the economic benefits and long-term operational capacity of the project can be ensured after such a large expenditure.