The loan agreement for the much-hyped Padma Rail Link Project has been signed between Bangladesh and China.
The deal, which was signed on Friday in Beijing, will pave the way to construct 172-kilometer rail line from the capital to the country’s south-western districts via the Padma Bridge.
“If the project is implemented, the country’s communication system and the economy as a whole will be benefitted greatly,” Railway minister MujIbul Haque said while talking to Bangladesh Post.
“Following the prime minister’s directive, the government has started working to implement the mega project. The construction work will begin soon as we have signed a deal with China in this regard.”
“Prime Minister Sheikh Hasina will lay the foundation stone of the rail project,” he added.
The agreement worth 2.67 billion dollars was signed in Beijing, a senior railway official has confirmed.
“The ERD on Friday signed the much-awaited loan agreement on the country’s mega infrastructure project—Padma Rail Link with the Chinese Exim Bank. The signing ceremony was held at the head office of the Exim Bank at around 10.30am Chinese local time,” he also said.
On October 14, 2016, Bangladesh and China signed a memorandum of understanding during the visit of Chinese President Xi Jinping to Bangladesh under government-to-government for constructing this mega infrastructure development project in the country.
ERD additional secretary Md Zahidul Islam and Chinese Exim Bank vice president Sun Ping signed the agreement on behalf of the two sides, the official added.
A six-member delegation including additional director general of the Railways ministry of Bangladesh went to China for signing the loan agreement.
In the first phase of the project, a rail route from Gandaria to Mawa will be constructed.
Experts believe, once the rail link project is complete, it will connect 21 south-western districts with the capital and boost industrial expansion in the region.
The route will be established through four sections—Dhaka-Gandaria, Gandaria-Mawa, Mawa-Bhanga junction via Padma Bridge and Bhanga-Jessore Bridge.
“We are so happy for the loan agreement of Padma Rail Link Project. After the implementation, communication between Dhaka and southern districts will be easier,” Director General of Bangladesh Railway Md Amzad Hossain told Bangladesh Post.
He said “Travel from Dhaka to Khulna will take only three hours instead of 10 hours as the distance will be reduced,” he pointed out.
“We hope to start construction work of the project within next month. We want to run the train service for the commuters from the first day of inauguration of the Padma Bridge,” he added.
The construction work of the rail link project has been delayed for two years, whereas 50 percent of the Padma Bridge construction has been completed.
The project would be implemented with joint financing of Bangladesh government and Exim Bank of China where China will bear the 85 percent of the total cost under Preferential Buyer’s Credit.
Earlier, Chinese State Council gave the green light to the 3.13 billion-dollar loan for the Padma rail link project. Of the 26 projects committed by China during their premier’s visit to Dhaka in 2016, the rail link received the highest priority with the highest loan amount.
In November 2016, a railway ministry letter sent to the Prime Minister’s Office said, the rail Link project must be rolled out in January 2017 for launch in 2019 along with the Padma Bridge.
Economists forecast that the country’s GDP (gross domestic product) growth would accelerate by 1.2 percent and the regional GDP in the southwest zone by 3.5 percent once the project is complete.
Bangladesh has to count 2 percent interest and 0.25 percent service charge during the 20 years of repayment, including five years grace period.
But the deal was delayed for around one year as China pushed Bangladesh to take a commercial loan which would trigger the interest rate up to 3.5 percent and finally cause a sharp rise in total cost of the project.
Railways ministry, PMO and finance minister earlier wrote separate letters to Chinese President Xi Jinping and Commerce Minister requesting immediate steps for funding the project.
This project is also associated with eight mega projects of developing the transnational railway connectivity among South Asian countries.
The bridge lies on the Dhaka-Kolkata link and will form an integral part of the Asian Highway and Euro-Asian Railway network systems.