Two new Metrorail routes cost more than double than before, questionable tender process

• Cost per kilometer: Tk 3,618 crore, tender process under question
• ‘Collusion’ suspected in contractor appointment, controversy over JICA conditions
• Costs several times higher than other Asian countries

❐ BD Digest Desk

While the capital’s Uttara-Motijheel Metrorail cost Tk 1,574 crore per kilometer, the cost of the two new routes is estimated at Tk 3,618 crore per kilometer—more than double. The total cost of the two proposed lines stands at about Tk 1,84,500 crore. This huge cost has put the implementation of the two projects in doubt.

As the interim government has not taken a decision on this issue, the matter is now under the consideration of the elected BNP government.

One route awaiting construction is from Kamalapur via the airport to Narda-Purbachal, known as MRT Line-1 (over 31 kilometers long). The other is MRT Line-5 (North), from Hemayetpur in Savar to Bhatara via Mirpur and Gulshan, which is about 20 kilometers long. Both projects will have partial flyovers and partial underpasses.

According to analysts, limited competition in tenders is one of the reasons for the abnormally high costs. Currently, competition is mainly limited to Japanese contractors. If competition is increased, it is possible to reduce costs.

DMTCL Managing Director Faruk Ahmed said that due to some engineering conditions imposed by the financing agency, Japanese agency JICA, participation in the tender has been limited, resulting in increased costs.

There are allegations that Japanese companies are given priority in contracting work as per the loan conditions of Japan Development Cooperation Agency (JICA). The extension of the Uttara-Motijheel line is going up to Kamalapur; the entire route is 21.26 kilometers long and costs 33,472 crore taka.

The initial cost of the MRT Line-1 project approved in December 2019 was estimated at Tk 52,561 crore. However, based on the cost analysis received so far, the cost could increase to Tk 96,500 crore. Similarly, the initial cost of the Line-5 (North) project approved in October 2019 was Tk 41,238 crore, which could increase to about Tk 88,000 crore based on the cost analysis.

Initially, the total approved cost of the two projects was Tk 93,799 crore, but according to the current tender, it could increase to Tk 1,84,500 crore.

DMTCL’s analysis shows that the cost of constructing a metro rail in India, excluding land acquisition and salaries, is between Rs 150 crore and Rs 450 crore per kilometer. Although foreign loans are taken, there are no restrictions on hiring contractors, which reduces competition.

JICA said in an emailed response that it was aware of the additional costs, but that evaluation information could not be released until the contract was signed after the tender was opened.

In the fiscal year 2024-25, the Uttara-Motijheel line generated revenue of about Tk 400 crore (unaudited). However, the loan installments of Tk 465 to 740 crore will have to be paid annually until 2030-31.

According to DMTCL sources, the lowest bid for the Kachukhet-Bhatara underpass section was Tk 15,527 crore against the estimate of Tk 3,968 crore, which is about 391 percent more. This resulted in an additional cost of Tk 11,559 crore.

There have also been allegations of limited participation and possible collusion in the bidding process. In both packages, Shimuji Corporation and the Taisi-Samsung (Joint) Consortium ultimately submitted the final bids. Shimuji was the lowest bidder in one, and Taisi-Samsung in the other.

The interim government has urged lenders and contractors to reduce costs, but the project has not progressed due to lack of response. The Line-1 project is scheduled to end next December, while the Line-5 (North) project is scheduled to end in 2028. However, the appointment of a contractor has not yet been finalized.

In January, DMTCL wrote to the Ministry of Road Transport and the Planning Commission proposing to revise the cost of the two projects and recommend changing the conditions imposed by JICA to increase competition. The new government has not yet announced a final decision.

Shamsul Haque, a professor at the Department of Civil Engineering at BUET, said that the cost has increased abnormally due to non-competitive bidding. Implementing mega projects at this cost can be risky for the economy. According to him, it is important to ensure open competition to reduce costs.

Earlier, BNP Chairman Tarique Rahman announced at a function before the national election that if he comes to power, a plan will be taken to launch a monorail in Dhaka along with the metro rail. After being sworn in as the Prime Minister, the concerned circles are now looking at the decision of the new government.