ADB approves $ 360m loans to support BR’s reforms

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 DHAKA, Feb 21, 2018 (BSS) – The Board of Directors of the Asian Development Bank (ADB) has approved loans totaling $360 million to buy modern rolling stock and brining reforms in Bangladesh Railway to help promote a shift from roads to rail.

Starting with a Railway Sector Improvement Programme in 2006, the ADB has provided four loans totaling $2.81 billion to the government for the development of railway sector.

Three loans invested in network improvement in key sections of the railway, with two targeting enhanced South Asian sub-regional connectivity, said an ADB press release here today.

The Railway Reform Project under the 2006 programme introduced financial reforms and an enterprise resource planning information technology (IT) system. A loan approved in 2015 is also procuring rolling stock and maintenance equipment, for which work is ongoing to 2020.

This latest project seeks to address the investment and modernisation needs of Bangladesh Railway. It will procure 40 broad gauge locomotives, 125 luggage vans, and 1,000 wagons for freight trains for use on major lines of the rail network.

The rolling stock will introduce auxiliary power units (APU) to Bangladesh Railway to significantly reduce diesel consumption when the locomotives are idling. The project will also draw up investment plans for urgently required maintenance facilities, establish training programmes for the drivers, and run the enterprise-wide IT system.

The total cost of the project is $ 453.37 million, of which $93.37 will be met by the government. It is due for completion around the end of June 2022.

Accompanying the loans is a technical assistance grant of $ 500,000 to devise a training scheme for drivers in the use of the APU and recommend potential approaches to achieving overall energy efficiency. ADB will administer the grant, to be provided by the Asian Clean Energy Fund under the Clean Energy Financing Partnership Facility, established by the Japan government.

“Railways in Bangladesh potentially offer a cheaper, safer, and more fuel-efficient means of transport of goods and passengers than roads, but have been held back by lack of investment and aging and unreliable rolling stock,” said Tsuneyuki Sakai, an ADB Senior Transport Specialist.

“The ADB Railway Rolling Stock Operations Improvement Project will boost the operational performance of Bangladesh Railway by introducing new technology, equipment, and processes that will be cleaner and more efficient, cutting carbon dioxide emissions.” the ADB official said.

The ADB release said historically, railways enjoyed a monopoly as a carrier and transported most commodities. However, its market share has dropped because of inadequate investment in railway infrastructure and rolling stock over an extended period.

This has resulted in unreliable freight operations and uncomfortable experiences for passengers. Most rolling stock is more than 30 years old, and much is past the end of its economic life. Maintenance facilities have also not improved over time and are not adequately equipped.

Under its Seventh Five-Year Plan for fiscal years 2016-2020, the government has placed special emphasis on railway development, setting targets to increase the market share to 15 percent in freight transport and 10 percent in passenger movements by 2020.

Bangladesh Railway has also been incurring loss while its operating cost is about double what it makes from revenue.

Under the railway reform supported by ADB, the government has taken steps to boost revenue by raising the level of passengers and freight tariffs that have remained unchanged for decades. An increase in the operational capacity through new rolling stock is needed to generate more revenue.

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