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The government of Japan may provide the Bangladesh Railway (BR) with grant assistance worth US $ 100 million for modernisation of some of its existing infrastructures and for laying of new railway lines.
"We are expecting the grant from Japan to undertake the modernisation process of the state-owned entity," said a senior BR official on condition of anonymity.
A Japanese team is now studying various BR development projects and proposals. The study is expected to be completed by July when the projects will be selected, the official added.
The intention of the Japanese government is to help the BR in its modernisation process, following the recently-concluded negotiations between communications ministry and the donor agencies on the restructuring of the BR.
The Asian Development Bank (ADB) and the World Bank have assured the concerned ministry of financial assistance worth up to $ 500 million under the agreement for restructuring of the BR which is scheduled to begin from 2008.
The BR is mainly concerned with four projects and one of its key aims is to get Japan, single largest donor for the country, involved in those projects, the BR official said.
The projects are: installation of double-way railway track between Laksam and Chinkaastana, near Mirersharai, under Chittagong, supply of wagons, rehabilitation of railway mechanical workshop and remodelling of the railway station at Chittagong.
The implementation of the projects is necessary as those will strengthen the BR operation and increase its profit in the western zone. The BR operates through two countrywide zones--eastern and western--with the eastern zone proving to be more profitable than the other zone.
Due to the funding crisis, the BR has been unable to carry out the much-needed modernisation works in the western zone that has the potential to be a good revenue earning source.
According to the latest ADB quarterly update, the container service is the most profitable BR service that is being operated in the western zone and accounts for 22 per cent of its freight revenue.
The Chittagong Port receives about 600,000 twenty feet equivalent (TEU) containers annually and the volume growth is about 15 per cent a year. About 75 per cent or about 450,000 TEUs of such container cargo are Dhaka-bound.
But the BR is able to carry only about 43,100 TEUs or about 10 per cent of the total cargo.
The rest are being carried by the lorries, which according to the donor agency, is wasteful in terms of resources as each container is loaded onto three-four lorries. This also defeats the economic benefits of containerisation, it noted.
The BR's low market share of this profitable market segment is mainly because of its inability to offer any more container service for reasons of infrastructure constraints.
Containers have to wait up to 10 days to be able to secure a place on the BR services, it added.
The other profitable BR operation is the InterCity (IC) train service that is also basically operational in the western zone. The BR runs four IC train between Dhaka and Chittagong daily. They operate at full capacity, having a very pronounced demand growth.
However, due to lack of track capacity and low throughput on the corridor, more IC trains cannot be introduced to satisfy the latent demand, the donor agency noted.
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