The government on Wednesday signed $100 million loan agreement with the Asian Development Bank (ADB) for improving the country’s railway infrastructure.
Mohammad Mejbahuddin, Secretary, Economic Relations Division (ERD), and Kazuhiko Higuchi, Country Director of ADB’s Bangladesh Resident Mission, signed the loan agreement on behalf of their respective sides held at ERD office in the city.
“The government signed the agreement for a $100 million loan with ADB as third tranche of Railway Sector Development Investment Programme,” an ERD official said.
He added that ADB would provide the loan under the $430 million multitranche financing facility agreed in 2006 between the Manila-based global lender and Bangladesh to revamp the entire railways system.
Under the programme, ADB has already provided $130 million and $150 million as first and second tranches respectively for double-tracking the Tongi-Bhairab Bazar section, implementing reforms, rehabilitating yards, extending loops at different stations on the Darshana-Ishurdi-Sirajganj section, and upgrading signaling at 11 stations between Ishurdi and Darshana.
The ERD official further said that the last tranche of the loan will help finance commissioning of 50 broad gauge passenger carriages and 100 meter gauge passenger carriages for the railway’s main line network.
“The new carriages will be added to Bangladesh Railway’s (BR) fleet of rolling stock and increase the transport capacity provided by BR. The new carriages will use the increased line capacity created with ADB assistance provided earlier, and thus improve BR’s position in the passenger market,” he added.
The assistance will help increase the number of annual railway passengers by 10 per cent from 66 million in 2011 by 2017. By 2019, BR is also expected to operate an additional 916 million passenger kilometers per year from 8,787 million passenger kilometers in 2011.
The loan will have a 25-year term, including a grace period of five years and an annual interest rate determined in accordance with ADB’s London Inter-bank Offered Rate (LIBOR).
Officials said, upgradation of railway network will reduce transport costs for Bangladesh’s major exports, especially ready-made garments. The improved railway system will ease the pressure on the road network, which is congested, and thus benefit the transport sector as a whole. It will also help promote regional trade and investment by improving a cost-effective communication network.
