Tk2,460cr Jica fund for underground metro unused, being returned

The chronic delays in foreign-aided projects shows no sign of improvement even in this tough time of revenue slump and falling reserve; the country's first underground metro rail project says it is unable to utilise the money from Japanese loan allocated for this fiscal year.

The Dhaka Mass Transit Company Limited (DMTCL) has opted to return Tk2,460 crore in unutilised funds due to failure in land acquisition and tender approval for the Mass Rapid Transit (MRT) Line 1 project.

The DMTCL, tasked with constructing six metro rail routes in Dhaka, formally communicated its decision to the Economic Relations Division (ERD).

Expressing concern, analysts say sending back unused foreign funds is alarming at a time when the country is facing fiscal stress with poor revenue and slow inflow of external finance.

MRT-1 Project Director Abul Kashem Bhuiyan told The Business Standard that the intricacies of land acquisition and challenges in gaining approval for procurement proposals from the lender as the key factors behind the failure to spend the allocated funds.

The Tk52,561 crore project, comprising 31.24 kilometres of underground and elevated rail lines, was approved in 2019 with a completion target in 2026. However, construction progress lagged significantly, completing just 3.47% after four years.

According to DMTCL sources, the project includes 12 packages. The project work was inaugurated in February this year by developing land for the depot area, but work on the construction packages is yet to start.

The DMTCL planned to start work on the project's four packages which include the underground section and stations. For the current fiscal year, Tk3,910.50 crore was allocated for the project, of which, Tk2,700 crore was foreign funds.

However, only Tk39.90 crore was spent in the first four months of FY24, which is only 1.02% of the allocation. Approval for the four procurement packages from the lender Jica has also been delayed.

Project Director Abul Kashem Bhuiyan said final approval for one of the four packages is expected by June 2024. So the amount allocated for Mobilisation Advance (an initial payment made to the contractor for work) of these four packages is being refunded.

Consequently, achieving the 2026 deadline for project completion is no longer possible. This delay also escalates overall project costs.

Voicing concern over the delay, Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, told TBS, "The anticipated benefits of this project will inevitably face delays."  

Dr Hadiuzzaman, a professor of civil engineering at Buet, said the authorities have not given enough attention to the implementation of this crucial project aimed at reducing traffic congestion.

Expressing concern, he said, "If construction starts next year, there will only be two and a half years available to complete the project, which is practically impossible. As a result, both the time and budget required for project completion will inevitably increase."

According to DMTCL, Jica is providing Tk39,450 crore of the entire cost of the project.

What prompted the return of JICA funds?

According to DMTCL sources, proposals for preliminary approval of four packages were sent to Jica between November and December last year. In accordance with this, tender documents were sent to the organisation during February and March this year.

However, Jica suggested revising three packages while giving preliminary approval for one package.

Tenders for the approved package were invited on 26 June and the tender box was opened on 14 November.

However, Jica's assessment will be needed for finalising the contractors. Technical evaluation, technical Concurrence, and technical approval are required by Jica after opening the tender, sources said.

After getting approval at all stages, the contractor will be finalised by the DMTCL board.

DMTCL sources said the completion of each underground section package will require five years following the final approval. So, the construction of the country's first underground metro rail is likely to extend beyond the initial deadline.

Project Director Abul Kashem Bhuiyan acknowledged the uncertainty surrounding the appointment of contractors for the approved package, stating that it may or may not be completed within the current financial year. That is why it has been proposed to return the allocated funds.

Implication on project implementation

The protracted delay in the MRT-1 project implementation put the government's objective of reducing severe traffic congestion in the capital in doubt.

According to project officials, 25 sets of trains having eight coaches each will operate daily on the line. The maximum capacity of a train will be 3,088 persons.

With the MRT-1 in operation, around eight lakh passengers will be able to travel every day.

It will take only 34 minutes to commute from Dhaka Airport to Kamalapur, 20 minutes from Natun Bazar to Purbachal, and 35 minutes from Kamalapur to Purbachal.

Transportation expert Hadiuzzaman said it is disappointing that even after four years of approval, the construction of important facilities like Metro Rail cannot be started.

He said the implementation of government projects is already being delayed due to revenue shortfall, depleting foreign currency reserves, and exchange rate volatility.

"The overall economic situation of the country is not good and returning foreign aid could further worsen the situation," he added.

The MRT Line-1 will have two parts — a 19.872km part from Hazrat Shahjalal International Airport to Kamalapur (Airport route) which will be underground with 12 stations and an around 11.37km elevated line from Natun Bazar to Purbachal (Purbachal route) having seven stations, while Natun Bazar and Nadda stations will be underground as part of the airport route.

In February this year, Prime Minister Sheikh Hasina unveiled the inaugural plaque of the construction work of the MRT-1 at Sector 4 at Purbachal New Town Project in Narayanganj's Rupganj.