Price is not everything
Calling mega projects ‘overpriced’ ignores the realities of underground construction, dense urban conditions, evolving economic pressures, and higher technical standards
Cost becomes the number one topic in public discussions in Bangladesh when assessing the feasibility and viability of major infrastructure projects, and the higher the price, the greater the doubt. This trend applies to the construction of the Dhaka Metro MRT Line-1, which is often viewed as overpriced compared with similar projects in Delhi or Pune.
However, comparing the costs of different metro systems can be misleading. It would be incorrect to compare the cost per kilometre of the Dhaka MRT Line-1 project with a similar project in Delhi, since, despite apparent similarities, there are several significant differences.
Dhaka's underground metro project will be more costly than other metro projects, as it involves underground construction, which entails greater engineering complexity and higher costs. On average, such systems worldwide are estimated to cost three to five times as much as elevated systems.
The city's population density should also be considered when evaluating the price per kilometre. Dhaka's population density is approximately 47,000 people per square kilometre; therefore, underground metro construction will require efficient traffic management, relocation of utilities, coordinated land use, and several other measures.
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Metro projects in Delhi were executed in stages over almost three decades, allowing the city to gain considerable experience in the design, planning, and financing of underground systems. This experience helped reduce construction costs and risks. However, it is difficult to compare metro construction across cities with different levels of experience in building such projects.
Several external factors also influence construction costs which cannot be ignored. It is necessary to consider changes in the economic environment over the past 10 years since the feasibility study was conducted.
The global economic slowdown triggered by the coronavirus pandemic led to increases in material and shipping costs worldwide. Moreover, inflation and the weakening of the Bangladeshi taka against the US dollar made imported goods more expensive. These factors contributed to the rise in metro project costs in Dhaka.
The global economic slowdown triggered by the coronavirus pandemic led to increases in material and shipping costs worldwide. Moreover, inflation and the weakening of the Bangladeshi taka against the US dollar made imported goods more expensive. These factors contributed to the rise in metro project costs in Dhaka.
The Dhaka MRT Line-1 is financed by the Japan International Cooperation Agency (JICA) and must comply with international and Japanese standards. While this increases costs, it ensures higher safety and performance quality and reduces the risk of unexpected issues.
The project also incorporates advanced technologies, including Communications-Based Train Control (CBTC) signalling and energy recovery systems, vibration control, and high-quality tracks built to European standards. In addition, the metro line uses a 1,500-volt DC traction system, which increases costs due to the need for multiple substations.
Procurement is also an important component of the project. Although there is a perception that JICA-funded projects favour Japanese contractors, they follow a competitive bidding process in which contracts are awarded based on merit, regardless of nationality. As a result, firms from countries such as China, India, Italy, and Turkey have participated in these projects.
While the number of contractors may appear limited, this is due to the technical requirements of underground construction. Some argue that costs could be reduced by delaying decisions or revising project designs. However, such approaches increase the risk of delays and potential project failure, which may ultimately raise costs further.
The cost of the project is only one factor to consider. The metro is expected to generate significant economic and social benefits. Reduced travel time and congestion will support economic activity and attract investment. As a result, the project's economic internal rate of return is positive. It is also expected to reduce carbon emissions and improve the city's overall livability.
However, this does not mean that the project should not be analysed further. Major infrastructure projects must undergo thorough review, and concerns about potential challenges during construction and after its launch are valid. However, criticism must be grounded in facts and supported by data.
Overall, labelling the project as too expensive is an overly simplistic conclusion. Multiple factors influence metro construction costs which must be considered in any meaningful assessment.
Zillur Rahman is a political analyst and president at the Centre for Governance Studies (CGS) and hosts 'Tritiyo Matra' on Channel i. His X handle is @zillur.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
