MRT-5 cost soars 126pc to Tk93,191cr

The government will subject metro rail projects to strict financial scrutiny and seek cost-effective implementation as the proposed cost of MRT Line-5 Northern rises 125.98 per cent to Tk 93,190.96 crore, State Minister for Planning Zonayed Abdur Rahim Saki said on Thursday.

He made the remarks while responding to a question from National Citizen Party (NCP) lawmaker from Noakhali-6 Abdul Hannan Masud at the Jatiya Sangsad.

Saki said the government was evaluating the costs of the metro rail project and that approval would be given only after the Planning Commission carried out the highest level of scrutiny of the proposed expenditure.

Responding to the opposition lawmaker’s claim that expenditure allocations had been raised mainly for metro rail construction, the state minister said the present dollar rate was being calculated against the dollar price prevailing when the metro rail project was initiated.

He said Prime Minister Tarique Rahman had already directed the authorities to examine all aspects of the project, including expenditure, timeframe and technology transfer. The necessary assessment is now underway.

Despite the cost concerns, Saki said the importance of metro rail to Dhaka’s transport system was unquestionable.

He said the transport mode was important because it could operate through both the upper and underground parts of the city.

The proposed revision of MRT Line-5 Northern, which was approved in 2019, would raise its estimated cost from Tk 41,238.54 crore to Tk 93,190.96 crore.
The proposed increase of Tk 51,952.42 crore represents a 125.98 per cent rise in the project cost.

Under the revised proposal, the government-funded portion would double from Tk 12,121.50 crore to Tk 24,259.72 crore, an increase of 100 per cent.

The project assistance component is proposed to increase by 137 per cent, from Tk 29,117 crore to Tk 68,931.24 crore.

The original project was scheduled for completion in 2028. Under the revised proposal, the project period would extend until 2034, including a one-year defect liability period.

Saki also pointed to changes in financing costs for metro rail projects.

He said MRT Line-6 under the Dhaka Mass Rapid Transit Development Project was implemented with financing from JICA at an interest rate of 0.70 per cent for construction, 0.01 per cent for consultancy services, and a 0.2 per cent Front End Fee at a time.

The loan interest rate has now increased to 3 per cent for JICA or other financing agencies, he said.

The proposed increase in MRT-5 Northern’s cost comes after a similar proposal to raise the cost of another Japanese-funded metro project, MRT Line-1, by around 130 per cent.

Saki said the government was committed to ensuring that metro rail projects were implemented in a cost-effective manner and that excessive spending was avoided.

The Planning Commission is examining the proposed costs before any approval is given.