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Fund crisis stalls locomotive project for 11 years

Ashif Islam Shaon
27 Jul 2022 00:01:05 | Update: 27 Jul 2022 00:05:49
Fund crisis stalls locomotive project for 11 years

A Tk 2,659.33 crore Bangladesh Railway project to procure 70 diesel electric metre-gauge locomotives has not made any progress in 11 years due to a fund crisis.

Bangladesh Railway is now thinking of either managing funds by bringing down the number of locomotives or scrapping the project undertaken in August 2011 altogether, sources said.

The locomotives were supposed to be added to the railway fleet by June 2017. But the project’s cumulative physical progress so far is less than 1 per cent after spending Tk 5.22 crore. 

The decision on the fate of the project would be made as soon as possible after consulting with the finance and planning ministries, sources said.

The project aims to strengthen rail services across the country. It had faced many difficulties since the beginning.

After failing to manage funds, Bangladesh Railway finally sought suggestions from the Implementation Monitoring and Evaluation Division (IMED) this year for the project’s implementation. 

But the IMED on July 18 said Bangladesh Railway should decide the matter on its own.

Ahamed Mahbub Chowdhury, the project’s procurement director, recently told The Business Post they would try to manage funds from the government or borrow from lending agencies as a last resort.

But the planning ministry would finally decide whether the project would be scrapped or not, he said.

“If we get funds, the project will get going. Bangladesh Railway will take the matter to the railways ministry as soon as possible.”

Seven years after undertaking the project, Bangladesh Railway selected South Korean Hyundai Rotem to supply the locomotives during the third bidding as the first two drew no response. 

The railways ministry failed to obtain $280 million in non-concessional loans from two foreign banks – Standard Chartered Bank and Sumitomo Mitsui Banking Corporation – for the project.

It then asked Hyundai Rotem to arrange soft loans. But the company said it would not do that and also cancelled the contract last year.

Bangladesh Railway then requested the Asian Development Bank (ADB) to transfer $111 million to the project’s fund. The money had remained unspent after the completion of two projects by the ADB this year.

But the ADB said it was not interested in financing the project.

According to Bangladesh Railway, only 56 of the 262 functional locomotives have not yet expired and the rest are run through heavy maintenance.

On average, about 25 per cent of broad-gauge locomotives and 15 per cent of metre-gauge locomotives are repaired or await repair daily.

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