The Asian Development Bank (ADB) will provide $150 million to Bangladesh to help improve capacity, efficiency and safety of the railway systems.

Iqbal Mahmood, senior secretary to the Economic Relations Division (ERD), and M Teresa Kho, country director of ADB's Bangladesh resident mission, signed a loan deal in Dhaka yesterday.

“The agreement is part of implementing the ADB's Bangladesh Railway Sector Improvement Project under Second Periodic Financing Request (PFR), where Bangladesh will receive the loan as Ordinary Capital Resources,” Mahmood said.

He spoke at a signing ceremony organised by the ERD at its conference room at Sher-e-Bangla Nagar in Dhaka.

With the funding, Bangladesh Railway will complete double-tracking of 64 kilometres of railway lines between Tongi and Bhairab Bazar, and improve signalling system of 11 stations in Darshana- Ishwardi section, said Mahmood.

The fund will also cover the cost of rehabilitating yards and extending loops in the Darshana- Ishwardi-Sirajganj Bazar section, and supervision of consultancy services, he said.

The interest rate of the loan is London Inter Bank Offered Rate (Libor) based with ADB terms and conditions, and the repayment period is 25 years with five years' grace period, he added.

Earlier in 2006, the government signed a framework financing agreement with the ADB under multi-tranche financing facilities worth $430 million to restructure the entire railways system.

Under the arrangement, the ADB has already provided $130 million for double-tracking the Tongi Bhairab Bazar section, and implementing reforms.

“The reforms and infrastructural development to be accomplished will help increase container transportation by 10 percent, and raise number of daily trains in the Tongi-Bhairab Bazaar section by 25 percent until 2020,” said the ADB country director.

“The improvement will result in low operating costs for users, increasing the competitiveness of Bangladesh for investment,” she added.

Upgrading the railway network will directly reduce transport costs for Bangladesh's major exports, especially readymade 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. AKM Dinarul Islam, deputy secretary to the ERD, was also present.

News: Daily Star/Bangladesh/28-Aug-12