A Chinese state-owned company has proposed to implement Dhaka-Chattogram High Speed Railway Project by forming a company, where China will have an 80 percent share.

China Railway Design Corporation (CRDC), a subsidiary of state-owned China State Railway Group Co Ltd, proposed to implement the project following BOO (build-own-operate) model.

BOO is a project delivery mechanism in which a government entity sells to a private sector party the right to construct a project according to agreed design specifications and to operate the project for a specified time. Unlike the build-own-operate-transfer (BOOT), the private sector party owns the project and does not have to transfer it to the government entity at the end of the term, according to Thomson Reuters’s Practical Law Company.

As per CRDC, Bangladesh High Speed Railway Limited (BHSR), the proposed company, will be formed with funds from China and Bangladesh and will be responsible for investing and constructing the railway.

The company on November 12 sent the proposal to Railways Minister Nurul Islam Sujan. Railways Ministry recently asked Bangladesh Railway (BR) to give its opinion on the “unsolicited proposal” by December 20.

This is the third proposal extended by different Chinese companies to implement the Tk 93,350.93 crore ($1=Tk 84) project.

The Chinese proposals are coming at a time when prominent transport experts questioned the viability of such a huge-investment project. Some of them said BR lacks the capacity to complete such a “highly ambitious” project.

Dhirendra Nath Mazumder, the outgoing director general of BR, admitted receiving the proposal.

“We were asked to take ‘go slow’ policy regarding this project,” he told The Daily Star yesterday.

Last year, the Railways minister also told The Daily Star that the government would “go slow” with the project due to the massive cost involved.

If the project is implemented, an uninterrupted journey on the 224.64km route between Dhaka and Chattogram via Narayanganj-Cumilla-Feni will take 55 minutes. The journey will take 73 minutes with stopovers, according to the feasibility study.

THE LATEST PROPOSAL

CDRC, which was involved with the feasibility study and detailed design of the project, said the project will require $11.1 billion. It said private investment in the project is not feasible because of the huge investment, making the public-private partnership (PPP) model not applicable here.

However, previous proposals of Chinese companies were under the PPP model.

A transport PPP expert told The Daily Star on condition of anonymity that the authorities have to think a lot before taking the final decision.

Most of the PPP projects follow the design, build, finance, operate and transfer (DBFT) model. In this model, the private company transfer the infrastructure after a specific time, he said.

But in the BOO model, the company retains ownership of the infrastructure “in perpetuity” which is closer to privatisation, he added citing documents.

CDRC said Bangladesh and China governments can jointly fund BHSR with Bangladesh accounting for 20 percent and China accounting for 80 percent.

Bangladesh will provide $ .34 billion in capital and $1.35 billion in loans while China will provide 1.35 billion in capital and 5.42 billion in loans, reads the proposal.

According to it, the Bangladesh government will be responsible for land acquisition and other issues. Moreover, the proposal sought an exemption from taxation during the construction of the project.

It suggested that Prime Minister’s Office would set up a working group for the project to work with the Chinese government and relevant Chinese agencies.

Both parties will jointly establish BHSR to implement the project and then the joint venture company will sign a franchise agreement with the Bangladesh government.

According to the proposal, Chinese employees will manage the operations of the project for the first five years. The ratio of Chinese and Bangladeshi employees will be 50:50 in the next five years, and the ratio will change to 10:90 in the next five. Bangladeshi employees will be solely responsible for the operation management after that.

Earlier in April this year, Li Jiming, the Chinese ambassador to Bangladesh, wrote to the Railways minister, for carrying out the project under the government-to-government Public Private Partnership (PPP) framework and requested the minister for signing a memorandum of understanding between CREC and BR “as soon as possible”.

Last year, two other Chinese companies — China Railway Construction Corporation and China Civil Engineering Construction Corporation — expressed interest in forming a joint venture to construct, operate and manage funds for the high-speed rail project under a PPP model.

There is no visible progress over the proposals so far.
https://www.thedailystar.net/news/bangladesh/transport/news/dhaka-ctg-high-speed-railway-project-china-firm-seeks-build-own-operate-3191901