DMTCL repaying debt with borrowed money

Although the country's first metro rail is partially operational, the operating expenses are now higher than the income and the expense of this project made with loan has started to create more financial burden.

As a result, the first instalment of the loan of this project is paid with the loan itself. Dhaka Mass Transit Company Limited (DMTCL) has to pay this due to delay in starting the project and not being able to complete the work on time.

Tk 55,29,76,060 of the first instalment of the loan taken for the construction of MRT line-6 as per SLA-69 agreement signed between Finance Division and DMTCL was paid on Thursday.

A B M Amin Ullah Nuri, Secretary, Road Transport and Highways Division, handed over the cheque to Fatima Yasmin, Senior Secretary of Finance Division, at the secretariat.

MAN Siddique, Managing Director of DMTCL, along with officials of the ministry was also present there.

The MRT line-6 project was approved by ECNEC in December 2012 to ease traffic congestion in Dhaka. In February 2013, a loan agreement was signed with the Japan International Cooperation Agency (JICA).

The project work, financed by Japan's soft loans, could not be started until 2016, even after four years. The government decided to launch it on the golden jubilee of the country’s independence in December 2021. But it was not possible for not being able to finish the work on time.

A DMTCL official said that there was a grace period for JICA loan from 2013 to 2022. It means that they have got time to start repayment after 2022. But DMTCL could not start earning income during that period as the construction work was yet to be completed.

Although Uttara-Agargaon section was partially commissioned in December last year, the expenditure is higher than the income. In this situation, the condition was to pay the first instalment of the loan from the current year. So, now DMTCL has to pay the loan instalments of this project from the loan amount it has already received as the expenditure is more than the income.

However, company officials are hopeful that if MRT line-6 is fully operational, it will be possible to repay the loan from its own income.

While talking with The Business Post, Ahsan H Mansur, executive director, Policy Research Institute (PRI), said that delay in the project implementation has become a common practice of the government. Almost every development project is missing deadline.

“This is creating problem as projects being implemented with foreign loan normally have grace period of repayment. We are failing to grab that opportunity,” he said, adding that piling up of due repayments is creating financial pressure.

He said that this particular project was hit by the Covid-19 pandemic and other problems. But when metro rail will be operational fully for the Dhaka residents, there will be no problem to earn enough to repay all the debts.

Japan had confirmed financial support to Bangladesh for constructing the MRT-6 project from Uttara to Motijheel involving Tk 219.15 billion in the first hand. The government later decided to extend the MRT-6 up to Kamalapur.

The Japanese loan will be provided at a 0.70 per cent interest rate for construction spending and 0.01 per cent for consultancy services. This loan will mature in 30 years with a grace period of 10 years.