Metro Rail Project Costs in Dhaka Nearly Double: Government Reviewing JICA Proposal Amid Concerns

The estimated costs for two ongoing metro rail projects in Dhaka have more than doubled, reaching nearly BDT 2 trillion (200,000 crore) based on proposals from Japanese contractors. Initially, the government's cost estimate for both projects stood at approximately BDT 940 billion (94,000 crore).

Due to this sharp increase, the government is now reviewing the proposal submitted by JICA (Japan International Cooperation Agency), which is financing the projects. Authorities are also exploring alternative options to execute the projects through companies from other countries if a consensus cannot be reached with the Japanese side.

A delegation led by Dr. Salehuddin Ahmed, Economic Adviser to the Government, recently visited Japan to hold meetings with JICA and Japanese government officials. During the discussions, the Bangladeshi side urged the Japanese to revise the cost proposals and bring them to a more reasonable level.

The delegation also included Sheikh Moinuddin, Special Assistant to the Chief Adviser, Md. Shahriar Kader Siddiky, Secretary of the Economic Relations Division (ERD), Faruk Ahmed, MD of Dhaka Mass Transit Company Limited (DMTCL), and other officials from various ministries. Upon returning, the government formed a high-level committee to further scrutinize the financial proposals.

According to the original government estimates:

• MRT Line-1 (from Kamalapur to Airport and from Kuril to Purbachal) was projected to cost BDT 525.61 billion (52,561 crore).
• MRT Line-5 (from Hemayetpur to Vatara via Gabtoli, Mirpur, and Gulshan) was estimated at BDT 412.61 billion (41,261 crore).
• However, the latest proposals from Japanese contractors have increased the costs to:
• BDT 940 billion (94,000 crore) for Line-1,
• BDT 1 trillion (100,000 crore) for Line-5.

This translates to a construction cost of over BDT 3 billion (300 crore) per kilometer, which has raised serious concerns among policymakers and experts.

Multiple unnamed DMTCL officials revealed that even repaying the loan for the already operational MRT Line-6 (from Uttara to Kamalapur) is proving challenging. With the doubled costs for the new projects, the burden on the public could become unsustainable. They pointed out that similar JICA-funded metro rail projects in other countries have been completed at significantly lower costs.

Experts also criticized the lack of competitive bidding, which they believe has led to inflated costs. JICA’s loan terms only allow Japanese companies to participate in the tenders, enabling a few firms to form syndicates and submit overpriced bids.

Dr. Shamsul Haque, a transportation expert from BUET, stated, “Spending BDT 3 billion per kilometer for metro rail construction might set a world record. This is undoubtedly an overvalued development project.” He also argued that the so-called “soft loans” from JICA come with unreasonable conditions, which are detrimental to Bangladesh’s interests.

Dr. Salehuddin Ahmed, the government’s Economic Adviser, acknowledged that currency devaluation against the US dollar might justify a 40–50% increase in cost, but the proposed figures far exceed that margin. “We are negotiating with JICA to bring down the costs. If that fails, we will consider alternatives with companies from other countries,” he said.

According to government officials, excluding JICA support might result in some financial losses, but it is not feasible to proceed with such projects beyond the country’s economic capacity.

Muhammad Fauzul Kabir Khan, Adviser to the Ministry of Road Transport and Bridges, noted, “We have informed JICA that it’s not possible to build the metro rail at such a high cost. A review is underway, and future steps will be determined through ongoing discussions with Japan.”