Despite the completion of rail-track work on the Padma Bridge, the Padma Bridge Rail Link Project now faces financial challenges.
A portion of a $228 million Chinese loan may be withheld due to Bangladesh Railway’s inability to complete some major works by the project’s end date of June 2024, according to sources.
They said some key components, such as station constructions and signalling systems, may not be finished within the deadline.
On condition of anonymity, the sources close to the project say that if issues with the loan disbursement from the Chinese Exim Bank are not resolved by May, the government will be responsible for shouldering the remaining costs.
Bangladesh Railway — the project’s implementing agency — has requested an extension of the loan availability period from the China Exim Bank but has yet to receive a response.
The last request letter was sent through the Economic Relations Division in November 2023, according to the sources.
To accommodate the project’s extended timeline, they say, an additional year for loan availability is required. The project office needs at least six months after completion to settle claims, finalise bills and start the final disbursement process through the ERD.
The Bangladesh Railway signed a $2.667 billion contract with the China Exim Bank in 2018 to construct the 169-kilometre rail line connecting four districts via the Padma Bridge.
China Railway Group Limited (CREC) was awarded the contract, valued at $3.138 billion, with the Exim Bank providing 85 per cent of the funding.
With no response from the Chinese side, Bangladesh Railway has shared its concerns with the project’s steering committee and the Ministry of Railways.
“If the project deadline is not extended,” a project official said, “the government will have to bear the cost of completing the remaining works, which include station buildings and the signalling system.”
As a contingency measure, the project office has already begun revising the project proposal for the third time.
The revised plan suggests extending the project period from June to December 2024 and the defect liability period to December 2025.
It was learned that both the steering committee and the railway ministry had urged the Bangladesh Railway to lower the project cost to minimise the government’s financial burden.
However, Mohammad AfzalHossain, project director, expressed optimism that the final cost might be lower.
He anticipates unused funds from land acquisition, resettlement and contingency sectors amounting to around Tk 1 billion, with an additional $100 million remaining unspent from the Chinese loan.
According to the project office, progress on the Mawa-Bhanga section is nearly complete at 98 per cent, followed by the Dhaka-Mawa section at 87 per cent and Bhanga-Jessore at 85.42 per cent.
Station building works, however, have recorded 70 per cent progress on average. The Dhaka-Gandaria section and the signalling system installation are the furthest behind schedule.
Officials said that once all infrastructure is in place, the signalling system installation will begin. Subsequently, telecommunication systems and interlocking with all stations will be carried out.
