Australian firm offers $16bn loan for high-speed rail projects

[Black_cats]

Australian firm offers $16bn loan for high-speed rail projects

TRANSPORT
Omar Faruque
24 March, 2021, 10:25 pm
Last modified: 24 March, 2021, 10:36 pm

Australian firm offers $16bn loan for high-speed rail projects

The Australian investor will supply the fund through the bespoke portfolio – a process to raise money from the global money market, said officials at the Bangladesh Railway

www.tbsnews.net

The Australian investor will supply the fund through the bespoke portfolio – a process to raise money from the global money market, said officials at the Bangladesh Railway

Australia's Providus Investments has come up with an attractive lending offer for implementing Bangladesh's two megaprojects – the Dhaka-Chattogram high-speed train lines and the Bhanga-Payra rail link.

The multinational lender will provide $16 billion – the entire funding for the two projects – with a 30-year repayment period, according to the investment proposal sent to the Ministry of Railways.

Sources at the Bangladesh Railway have told The Business Standard that Providus has offered a lower interest for the loan than multiple foreign lenders, including Chinese corporations, have offered.

The Australian investor will supply the fund through the bespoke portfolio – a process to raise money from the global money market, said officials at the Bangladesh Railway.

On 7 October 2020, Providus wrote to the railways ministry, expressing its interest in providing the loan.

On 9 March 2021, the investor apprised Railways Minister Md Nurul Islam Sujan and ministry high-ups of its investment plan through a PowerPoint presentation.

Terming the investment proposal "more attractive" than those from other lenders, the railways ministry has already sent it to the finance ministry's Economic Relations Division (ERD) for assessment, sources said.

"It does not matter what we think about the proposal as the ERD will take the final decision," Railways Minister Nurul Islam Sujan told The Business Standard.

"We only informed the ERD about how much money we need for the projects, that is all," added the minister.

The government has taken up a number of mega-projects to make the state-run rail transport company, Bangladesh Railway, modern and profitable. The Dhaka-Chattogram high-speed train and the Bhanga-Payra rail link are two major initiatives among the projects.

Alongside land acquisition, the two projects will cost the government around $15.8 billion. The cost for the high-speed rail line has been estimated at $11.4 billion while the Bhanga-Payra rail link will require $4.4 billion.

According to Providus, it will not charge interest on the loans during the project implementation period and there will not be any hard conditions such as contractor appointment. Moreover, the projects will directly be handed over to the railway on completion.

In the meantime, a potential home-grown investor who is interested in joint financing with Providus in the two projects praised the nature of the Australian loan.

A high official of the local venture said, "The Providus loan proposal is easy to understand, more attractive and comes with lower interest than what the previous lenders offered."

Bangladesh Railway is currently implementing a project to run the feasibility study and to design the proposed high-speed train lines from Dhaka to Chattogram via Cumilla.

The 227.3km new route will have seven stops – Dhaka, Dhaka Depot, Narayanganj, Cumilla, Feni, Pahartali and Chattogram. Travel time between Dhaka and Chattogram will be 73 minutes for trains stopping at the intermediate stations, and 55 minutes for non-stop trains.

The trains, which will run at a top speed of 300km per hour, can carry approximately 50,000 passengers each way daily. The China Railway Design Corporation and local Majumder Enterprise will submit the design to the railway soon.

On the other hand, the Bhanga-Payra rail link project will be 213.3km long – 189.5km main line from Bhanga to Payra port and 23.8km from Payra to Kuakata. The project will have 19 stations, 22 major and 50 minor bridges and 434 underpasses and box culverts.

Railway sources said multiple foreign lenders previously proposed funding under the Public Private Partnership (PPP) and Build-Operate and Transfer (BOT) arrangements.

The Chinese contractors said they will arrange the funding for the project implementation, while Providus says it will implement the projects with the Engineering, Procurement and Construction (EPC) collaboration with the railways ministry.

Md Jahangir Hossain, general manager of Eastern Railway, said they have received a couple of investment proposals for the two mega-projects. "I think the most qualified firm will get the work," he added.

Providus has already provided about $70 billion in loan assistance to various countries, including Australia, the United States, and Tanzania. With Providus funding, the lender proposed the railways ministry to carry out the projects by reputed multinational constructors such as Webuild, Laing O'Rourke, Bechtel, Hyundai or Fluor.

Chinese corporations interested in high-speed train

Two Chinese corporations – the China Railway Construction Corporation (CRCC) and the China Civil Engineering Construction Corporation (CCECC) – have shown interests in constructing the Dhaka-Chittagong-Cox's Bazar high-speed railway lines.

The two corporations said they will jointly form a company to implement the project. The proposed company will arrange the loans for the project, and hand over the rail lines to the Bangladesh Railway after operating for five years.

On 9 October last year, a proposal in this regard was sent to the railways ministry through the Embassy of the People's Republic of China in Dhaka and the Public-Private Partnership Authority Bangladesh.

According to the proposal, the loan that the proposed company will arrange will cover the implementation cost plus interest, spending for maintenance and operation of trains and the profit of the company.

The CRCC and the CCECC will also arrange bank loans with a 20-year repayment period. The Bangladesh Railway will have to repay the loans in 40 installments – two installments per year.

The finance ministry will be the guarantor of the loans.

UK firm interested in Bhanga-Payra rail investment

In 2019, London-based IM Power Plc proposed implementing the "Integrated Rail and Energy Project" in Bangladesh.

In the proposal submitted to the Bangladesh Investment Development Authority (Bida), IM Power expressed interest in constructing a double-track electric rail line from Payra Port to Dhaka via Bhanga in the first phase for transporting containers and other items.

The engineering consultant proposed $11.7 billion investment in the project in three phases.

The engineering consultant hinted at implementing the project on the PPP basis through a contract group or consortium.

IM Power proposed the construction in the design-build-operate-and-maintain model with a 50-year tenure.

 

[fallstuff]

They need to be careful with so much borrowing. HSR is nice to have but not a need of the moment.

 

[Yongpeng Sun-Tastaufen]

In China they build high speed rail practically for free. That's why China has world's most extensive high speed rail.

 

[Bilal9]

They need to be careful with so much borrowing. HSR is nice to have but not a need of the moment.

Theoretically no single standard applies worldwide, but new lines in excess of 250 kilometers per hour (160 mph) and existing lines in excess of 200 kilometers per hour (120 mph) are widely considered to be the standard for High Speed Rail.

I personally would simply be happy to see the slums removed from the tracks around Dhaka and existing lines upgraded (with robust 100 pound rail and concrete ties) to support speeds around 160 KPH (100 MPH) which existing newer coaches and engines (recent batch) are easily capable of. The rolling stock cannot attain those speeds because senior managers in Bangladesh Railways are a bunch of H*r*mi thieves and always steal money by downgrading trackage quality and standards.

If trains could run at 100 MPH nonstop then it would take less than an hour and a half from DAC to reach CTG (distance is only 150 miles or so). Even with slowdown underway for bad trackage, it should not take longer than 2.5 hrs.

Currently it takes 5.5 hrs. That is the next challenge, HSR is not.

If you put in weak 70 pound rail meant for branch lines in a heavy-use mainline railway corridor (which needs 100 pound rail) then you get curly wavy track that needs maintenance every few months. That will support neither container freight nor any speeds for passenger trains above 70 MPH.

Here is the link trackage currently. HSR will need new trackage linking to Comilla (built above pylons) bypassing Ghorasal, Bhairab, Narsingdi etc.

Dhaka to Ctg in one hour!

How long does it take to get from Dhaka to Chittagong by train? Around six hours, one would say. You could add an extra couple of hours, if a delay arises.

www.thedailystar.net

 

[UKBengali]

They need to be careful with so much borrowing. HSR is nice to have but not a need of the moment.

It will take till 2030 for the high-speed line to be completed.
BD will definitely need and benefit from under an hour rail link from Dhaka to Chittagong by then.

This looks like a very good offer and BD should grab it with both hands as the economic, let alone the social benefits, will more than outweigh the costs. It will in essence cost BD more not to build the high-speed rail link.

 

[bluesky]

It will take till 2030 for the high-speed line to be completed.
BD will definitely need and benefit from under an hour rail link from Dhaka to Chittagong by then.

This looks like a very good offer and BD should grab it with both hands as the economic, let alone the social benefits, will more than outweigh the costs. It will in essence cost BD more not to build the high-speed rail link.

Pray, tell us how you are going to pay back the principal and interest? Say, it is 32 years of payment with 2% interest per anum on the $16, 000 million credit. My calculations say, the GoB will have to pay $820 million per year to the Jewish (I suspect) lender group. $500 for the repayment of the principal and $320 million for interest payment.

I am not talking here about the salaries of the railway staff, electric bills, and maintenance and misc. cost, but only the principal + 2% interest. It is $820 million per year.

I may have done some mistakes. So, people, please correct them.

Divide it by 365 days. It is about Tk19.0 crore payment every day. To earn this money you will need 19,000 passengers every day even if the one-way train fare is set at Tk 10,000.

Even you or your great friend Billu Mia, who drinks Tk300 a cup of tea, cannot afford it. So, it is better you learn math before you two fools jump to a conclusion.

BD should vie for continuous industrialization for at least the next one hundred years before it can dream of Bullet Trains. It may take loans and if it does not pay, the Jews will buy up this land's sovereignty.

 

[UKBengali]

Pray, tell us how you are going to pay back the principal and interest? Say, it is 32 years of payment with 2% interest per anum on the $16, 000 million credit. My calculations say, the GoB will have to pay $820 million per year to the Jewish (I suspect) lender group. $500 for the repayment of the principal and $320 million for interest payment.

I am not talking here about the salaries of the railway staff, electric bills, and maintenance and misc. cost, but only the principal + 2% interest. It is $820 million per year.

I may have done some mistakes. So, people, please correct them.

Divide it by 365 days. It is about Tk19.0 crore payment every day. To earn this money you will need 19,000 passengers every day even if the one-way train fare is set at Tk 10,000.

Even you or your great friend Billu Mia, who drinks Tk300 a cup of tea, cannot afford it. So, it is better you learn math before you two fools jump to a conclusion.

BD should vie for continuous industrialization for at least the next one hundred years before it can dream of Bullet Trains. It may take loans and if it does not pay, the Jews will buy up this land's sovereignty.

Again, do you not read properly and think before you reply?

What is the extra economic activities that will be generated by linking 2 of the largest cities in BD with a population of 20-25 million in under a hour?

Why are you talking about the operational costs of the railway as that will be recouped by the fares the passengers are charged when using the railway? The only thing relevant is paying back the loan and the interest but we do not know what that is and so your speculation of 2% is pointless.

Once you can answer that question, then talk about the cost of the project and whether it will be affordable.
Like I say if the deal is a "good" one, then. BD should go for it.

 

[bluesky]

Again, do you not read properly and think before you reply?

What is the extra economic activities that will be generated by linking 2 of the largest cities in BD with a population of 20-25 million in under a hour?

Why are you talking about the operational costs of the railway as that will be recouped by the fares the passengers are charged when using the railway? The only thing relevant is paying back the loan and the interest but we do not know what that is and so your speculation of 2% is pointless.

Once you can answer that question, then talk about the cost of the project and whether it will be affordable.
Like I say if the deal is a "good" one, then. BD should go for it.

Idiot, how there will be extraordinary economic activities without the process of industrialization? Do you think there will be 20,000 passengers every day of the year at 10, 000 Taka for a single trip just like your wish?

No wonder, BD is infested with your kind of talented bureaucrats and the country has so far failed to industrialize. Do not put carts before the horses. This is what BD is doing now.

Build industries that will produce wealth and build any damn thing you want with the wealth produced in the industries. You guys want BD to eat cake when even Panta Bhat is scarce!!

 

[UKBengali]

Idiot, how there will be extraordinary economic activities without the process of industrialization? Do you think there will be 20,000 passengers every day of the year at 10, 000 Taka for a single trip just like your wish?

No wonder, BD is infested with your kind of talented bureaucrats and the country has so far failed to industrialize. Do not put carts before the horses. This is what BD is doing now.

Build industries that will produce wealth and build any damn thing you want with the wealth produced in the industries. You guys want BD to eat cake when even Panta Bhat is scarce!!

Dude, I used to put you on regular ignore due to your emotional outbursts and thought you have matured in the past year but obviously not it seems.

As an example, that railway can be used at night to transport industrial goods from Dhaka at night to Chittagong port to be exported all over the world. This would bring major savings from the way things are done now.

The BD of 2030 and 2040 will be a little different in terms of purchasing power to the one of 2021. Successful countries plan ahead using reasonable assumptions like what AL seems to be doing. Since a railway likes this takes 10 years to build you cannot wait for the demand to be present and then start building.

If BD was proposing the same link from Dhaka to my home city of Sylhet, then I would agree that it is premature as the demand and economic activities generated will not be enough to pay for the cost of construction or even the operational costs afterwards of a poor country like BD.

While I do not like BAL foreign policy and domestic thuggery at home they are doing very well economically and they would not be seriously considering this rail link if it did not make economic sense for BD. They seem to have very competent economic thinkers with policy influence over the government.

You seem to know a lot about civil engineering from your posts but seem to be totally clueless about economics. Please leave economics to those of us who are more competent at the subject and enlighten us about civil engineering topics when the need arises.

 

[SpaceMan18]

Dude, I used to put you on regular ignore due to your emotional outbursts and thought you have matured in the past year but obviously not it seems.

As an example, that railway can be used at night to transport industrial goods from Dhaka at night to Chittagong port to be exported all over the world. This would bring major savings from the way things are done now.

The BD of 2030 and 2040 will be a little different in terms of purchasing power to the one of 2021. Successful countries plan ahead using reasonable assumptions like what AL seems to be doing. Since a railway likes this takes 10 years to build you cannot wait for the demand to be present and then start building.

If BD was proposing the same link from Dhaka to my home city of Sylhet, then I would agree that it is premature as the demand and economic activities generated will not be enough to pay for the cost of instruction or even the operational costs afterwards of a poor country like BD.

While I do not like BAL foreign policy and domestic thuggery at home they are doing very well economically and they would not be seriously considering this rail link if it did not make economic sense for BD. They seem to have very competent economic thinkers with policy influence over the government.

You seem to know a lot about civil engineering from your posts but seem to be totally clueless about economics. Please leave economics to those of us who are more competent at the subject and enlighten us about civil engineering topics when the need arises.

Yeah I guess , also the economy will grow exponentially by 2030 when it will be operational so the cost isn't too bad lol , plus it will help our economy grow even more however yes we do have to industrialize otherwise we will still be very backward nation.

Bangladesh has to industrialize quick , we need to start making our own $hit from BEV vehicles to smartphones to fricking radars etc

This railway will help us a lot

 

[Shorisrip]

BTW we are indeed industrializing at a rapid pace. The 100 economic zones will all be at full capacity by 2030, which will employ about 10 million people directly, many more indirectly. Not only are those zones attracting things like textiles-garments from overseas markets, and existing light industries, but also major heavy industries that'll greatly diversify exports. Idk how else the government can play a part in industrializing besides providing tax-positive economic zones, security for utilities like energy and water, economic diplomacy and greater infrastructure development and connectivity from ports, railways, expressways to bridges.

 

[SpaceMan18]

BTW we are indeed industrializing at a rapid pace. The 100 economic zones will all be at full capacity by 2030, which will employ about 10 million people directly, many more indirectly. Not only are those zones attracting things like textiles-garments from overseas markets, and existing light industries, but also major heavy industries that'll greatly diversify exports. Idk how else the government can play a part in industrializing besides providing tax-positive economic zones, security for utilities like energy and water, economic diplomacy and greater infrastructure development and connectivity from ports, railways, expressways to bridges.

I agree fam , we don't even know if Hasina will live for that long lol but anyways we better start working cause we are heading towards a very busy and really difficult future so industrializing is a must and we need start making our own infrastructure and on time.

I don't want to be another UAE where the foreign companies make infrastructure for us , and also wayyy better education/healthcare so we can stop sending our people to India for medical care and also stop the brain drain and get our youth to be educated for better jobs.

Also government should support small start ups and businesses

 

[Michael Corleone]

They need to be careful with so much borrowing. HSR is nice to have but not a need of the moment.

Was discussing this with dalalermanodi but he disagreed. He thought it’s beneficial and I thought such exorbitant sum could be used to expand regular railway network and locomotive fleet. We could reduce truck usage and use railway to transport output to Chittagong port directly but he disagreed saying there’s no land to build rail from Dhaka to Chittagong port directly.
I thinkbullet trains for bd is useless we need to move people at volume not fast... there’s air transport for that

Even you or your great friend Billu Mia, who drinks Tk300 a cup of tea, cannot afford it. So, it is better you learn math before you two fools jump to a conclusion.

Outdated information. Last I checked 1k for tea at 5 star hotels in bd now

 

[nautilaceae]

Upgrade existing trains instead of having one flashy HSR line. A waste of money.

 

[fallstuff]

It will take till 2030 for the high-speed line to be completed.
BD will definitely need and benefit from under an hour rail link from Dhaka to Chittagong by then.

This looks like a very good offer and BD should grab it with both hands as the economic, let alone the social benefits, will more than outweigh the costs. It will in essence cost BD more not to build the high-speed rail link.

It takes an hour to go from Gulshan to Dhanmondi by car (a distance of about 6-7 miles ) on a good day, can be as much as 2-3 hours on a bad day. I don't know how much the traffic is going to improve in next 5 years, but as of now Dhaka traffic just might eat up all the advantages of HSR.

I personally think Bangladesh is an ideal case for HSR as it is densely populated country, but i am not sure if Govt can take on the project at this time because of other pressing needs.
However, I am ok with private build, operate, and transfer kind of deal.