Railway needs more fund to fastrack Padma rail link

The Ministry of Railways has sought an additional allocation of Tk1,801 crore for the Padma Rail Link project in the second half of the current fiscal year to speed up its implementation so that the route can be opened on the day Padma Bridge is inaugurated.

The ministry has recently sent a letter to the Planning Commission for the money to pay the contractor, consulting firm, land acquisition and to speed up the implementation process.

According to the railway authorities, the rail link project has gained "a substantial pace" in the current year.

In the letter, the railway ministry said, "It is not possible to pay the contractor now since 93% of the public fund for construction has been spent already, prompting a budget crunch."

According to the railway progress report, project spending stood at 15.71% in the first three months of the 2020-21 fiscal year amid the pandemic crisis, while the rate surged to 60.24% at the end of the first five months.

With Chinese support, the rail link project is being implemented to connect Dhaka to Jashore via Bhanga and Narail across the River Padma. The Chinese contractor China Railway Group Limited (CREC) is working on the project as the government plans to open the rail route on the very day of the Padma Bridge inauguration. 

The railway authorities said they cannot pay the contractor now since the ministry has already spent 93% of the fiscal construction allocation. If the government does not disburse the additional allocation, foreign loans will also remain unused.  

Under the loan agreement with China's Exim Bank, the bank will pay 85% while the government will meet the remaining 15% of each bill of the contractor. The government will also pay the tax, vat, customs duty and other fees levied on the 85% bill payment by the bank.

Previously, the Ministry of Railways returned allocation for the project several times after failing to spend the entire amount. The railway, however, said it would not return funds as in previous years as the rail link construction gained momentum in the current FY.

According to the railway, construction materials have already reached the project area and more construction materials will arrive soon. 

Bangladesh Railway proposed to increase allocation in rail track installation from Tk3,257.36 crore to Tk 4,773 crore. The railway said an additional Tk5,00 crore is also required for land acquisition.

If the railway gets the additional allocation, government funding in the project will reach Tk2,386 crore from Tk1,184.64 crore in the current FY. In the meantime, the funding of the development partner will stand at Tk3,100 crore from Tk2,500 crore.

In the letter sent to the planning commission, the railway said it has reduced Tk14 crore revenue expenditure by readjusting resettlement, allowances, administrative and other spending.    

Due to the Covid-19 pandemic and flooding, the rail link work was suspended in the March-June period in the last FY.  

Construction materials, including rails, fittings, points, crossing, and bridge girders for the priority Mawa-Bhanga route were supposed to arrive in the country from China by June 2020. But shipping suspension due to the pandemic delayed the arrival of the materials to the construction site.

Besides, as China's Exim Bank did not approve the supplementary agreement-2, the project authority could not pay the contractor's bill in the last FY. Subsequently, the railway surrendered Tk546 crore government allocation and the Tk2000 crore project assistance in that FY.     

The allocation for the Padma Rail Link Project in fiscal 2020-21 was Tk3684.64 crore -- Tk1,184.64 crore from government funds and Tk2500 crore from the foreign loan.

Md Sayduzzaman, joint chief of the Programming Division at the Planning Commission, said the Padma rail link is a government priority project. It has been put on the fast track list for quick implementation. If there is a demand for additional allocation, the commission will approve it.

The total cost of the project has been estimated Tk39,246.80 crore --where Tk14,671crorehas been utilized so far, with a total of 31% of physical progress. The project spent Tk2,220 crore till November alone in this FY.