World record in metro rail construction cost: Proposed cost exceeds Tk 2 lakh crore

Experts concerned over interim government’s decision to double Sheikh Hasina’s government’s estimated spending

News report

The officials of the interim government claimed that all the development projects undertaken and implemented by Sheikh Hasina’s government were ‘unnecessary’ and examples of ‘irregularities’. But they could not prove any of these projects to be ‘unnecessary’, rather Dr. Yunus and his government officials could not find an alternative but to continue the projects under implementation.

The Metrorail system has proven to be a very urgent and effective project for the welfare of the busy Dhaka residents. The people of Dhaka have become completely dependent on this transport system since its launch. But in the July riots last year, the project was damaged by the protesters. Under public pressure, the Yunus government was forced to rebuild the stations and make them operational. At the same time, it was decided to rebuild the parts under implementation.

However, the Yunus government’s move to implement the project by inviting fresh tenders has already drawn widespread criticism. The cost of Dhaka’s two new metro rail projects—MRT Line 1 and MRT Line 5—has been shown to be twice as high as the estimated cost of Sheikh Hasina’s government. Concerns are growing among experts about the cost of these two lines.

The implementing agency, Dhaka Mass Transit Company Limited (DMTCL), said that based on the tenders received for these projects, the construction cost could exceed Tk 2 lakh crore, which is almost double the initial estimate announced by the government led by Prime Minister Sheikh Hasina.

This brings the construction cost per kilometer to more than 3,000 crore taka, whereas the previously constructed Uttara-Kamalapur Metrorail project cost an estimated 1,600 crore taka per kilometer.

Expenses are highest in Bangladesh compared to international comparison

Bangladesh is currently at the top of the world in terms of spending on MRT projects. In India, the 8-kilometer section of the Patna Metro is costing 4.5 billion taka per kilometer. In Thailand’s capital Bangkok, the cost is about 7.4 billion taka per kilometer. In comparison, the cost for the same length in Bangladesh is four to six times higher.

Bangladesh is also lagging behind in terms of consultancy fees. For example, the consultancy fee for India’s Bangalore Metro project was Tk 209 crore. However, Tk 1,374 crore has been allocated for this sector in Bangladesh’s MRT Line-1 project.

Detailed cost breakdown of the two projects

MRT Line-1:
The cost of the underground section of this line, as per the three tenders, is estimated at around Tk 31,000 crore, i.e. Tk 2,374 crore per kilometer. The total cost of the entire project, including land acquisition, employee salaries and taxes, could be over Tk 94,000 crore.

MRT Line-5:
The Japanese company Taisei Corporation has quoted a cost of 15,527 crore taka in the tender for the 5.5-kilometer underground section of this project, which is about 2,828 crore taka per kilometer.

However, in 2019, the initial budget for this part was only 3,968 crore taka. That is, the proposed cost has increased almost 5 times.

Experts believe that if the cost continues to increase like this, the cost of the entire project will exceed 1 lakh crore taka, which will create immense pressure on the state economy.

The main problem is the non-competitive tender system.

Experts see the main reason for the rampant cost increase as a lack of competition in the bidding process. The projects are being financed by the Japan International Cooperation Agency (JICA), under whose terms only Japanese companies are allowed to participate in the bidding.

DMTCL said that Japanese companies have control over every stage of the project, from initial feasibility study to implementation. Even the technical conditions of the tender have been formulated in a way that is not compatible with the technology of companies from other countries.

A DMTCL official, speaking on condition of anonymity, said that despite pre-qualification, only two Japanese companies ultimately submitted bids. This limited competition allows them to set their own prices.

Fears of turning into a ‘white elephant’ project

Dr. Shamsul Haque, a professor at the Department of Civil Engineering at BUET, believes that the cost of Tk 3,000 crore per kilometer is unprecedented in the world. In his words, “This is clearly an overvalued project.”

He added, “The government will have to provide a huge subsidy for a long time for this project, which will put extreme pressure on the state economy.”

According to Dr. Shamsul Haque, complete dependence on Japanese technology and consultants will increase the cost of project management in the future. And if the rent is determined accordingly, it will not be bearable for the common people.

Overall, questions are being raised in various quarters about the pace and structure of spending on the Dhaka Metrorail project.

Analysts say it is essential to ensure a transparent and competitive bidding process for the project’s effectiveness and sustainable development. Otherwise, the project could turn into a “white elephant” for which the general public will have to bear the burden.