The road from Hatirjheel to Chittagong Road via Banasree and Demra is going to be upgraded to four lanes on the basis of Public-Private Partnership by China Communications Construction Company Limited, a Chinese state-owned company, and its sister concern China Road and Bridge Corporation.
An agreement worth Tk2,094 crore with the consortium of the two companies for the construction of 13.50-kilometre road is awaiting the final approval of the Cabinet Committee on Economic Affairs.
The four-lane motorway will help reduce traffic jam of Dhaka metropolis while people from the north and east part of the capital will be able to travel to Narayanganj and south-eastern region of the country easily in addition to Sylhet and Chittagong divisions while transportation of goods will also be easy, according to the project document.
The road will be maintained by the construction company for 21 years. Until then, the company will collect the toll and deposit it to the government treasury.
The investment will be repaid by the government in 42 installments. According to the PPP office sources, the feasibility study of a Canada-based organisation estimated the cost of the road construction at Tk262 million.
After the publication of the Request for Qualification notice in the investor selection, 7 companies applied and four came up in the short list. The consortium of Chinese companies achieved the highest score in the technical, commercial and financial proposal criteria.
The Cabinet Committee on Economic Affairs gave approval in principle in early 2016 for the construction of this road on PPP basis. The proposal was sent back late last year to add some more information to the proposition when it was presented to the Cabinet Committee on Public Procurement.
The Asian Development Bank (ADB) has said if the PPP proposal is processed, it will be used by about 32,000 vehicles per day by 2025. By 2035, this number will increase to 55,000 and by 2050 to 85,000.
However, the investor does not have to take any risk in terms of how many vehicles will actually use the road, or how much the toll will be.
Under the agreement, the government will pay Tk107.70 crore to the consortium every six months. In 21 years, the investor will get Tk4,523 crore. The Chinese investors will profit Tk2,429 crore.
Limited land acquisition and rehabilitation costs:
The government owns at least 90% of the land needed to upgrade the road to four lanes, said the Asian Development Bank.
As a result, rehabilitation costs will also be lower. However, a separate project costing Tk1,209.60 crore has already been undertaken to complete the land acquisition and necessary preparations. As a result, the Chinese consortium will get land easily for road construction.
What ADB says
With the economic development, the demand for transportation in the country is increasing at a rate of 8-10% every year, and 80% of these vehicles are Dhaka-centric.
Vehicles carrying people and goods from the country's most important Dhaka-Chattogram and Dhaka-Sylhet highways enter the capital through the same route.
As a result, a huge amount of working hours is wasted in traffic jam. In this situation, it is necessary to facilitate the entrance of the vehicles to the capital from the south.
The ADB added that the proposed road would play an important role in reducing gridlock in Dhaka. Through this, vehicles on the north and east side of the capital will be able to avoid jam on Dhaka-Sylhet and Dhaka-Chittagong highways.
Existing roads built six years ago
The construction of the existing 10-kilometre two-lane road from Demra to Hatirjheel via Banasree was completed in 2015. The road, which was started in 2003, cost Tk106.54 crore to complete.
What PPP office chief says
Sultana Afroz, chief executive officer of the Public Private Partnership Authority office, told The Business Standard that traffic jam in the capital is a major obstacle in transporting goods from the northern districts to the southern.
Due to the traffic congestion in Dhaka, a huge number of working hours are lost while transportation cost also increases. Considering this, the development of the proposed road is very important, she added.
The project has been taken up in line with the PPP's best practices at the global level and in this project, the construction company is not taking market risks like vehicle transportation and toll collection, but it is taking risks related to construction, maintenance, inflation and currency exchange rate, Sultana Afroz maintained.
The construction work will be better as the company is also in charge of maintenance, she hoped.