Govt forming separate company for building Dhaka subways

Highlights

•  The management contract is simple from the private sector's point of view
•  The private party is responsible for operating the project.
•  Government is responsible for all investment.
•  Government will get the ticket revenues.
•  Government can collect revenues from other sources like

1. General taxation,
2. Pollution charge
3. parking charge.

• It will be easy to borrow high technical and operational standards from experienced foreign operators.
• Local staff will develop skills for next phase implementation.

The government is going to form a separate company to build the Dhaka subways as the consultancy firm Typsa believes that building the project in this model, which is widely used around the world, will attract the private companies.

The Bangladesh Bridge Authority also thinks that it is difficult to implement such a project without forming a separate company.

Spain-based consultancy firm Typsa, who is preparing the feasibility study of the Dhaka Subway Project, submitted an interim institutional management report to the Bridge Authority under the study recently.

According to the consultant firm, the management contract is relatively simple from the private sector's point of view in this model. The private party will be responsible for operating the subway and getting paid based on the achievement of promised performance targets.

On the other hand, the government will be responsible for all the investment and get access to ticket revenues. If the ticket revenues alone are not enough for the payments of the management fees, the government can pool other revenue sources, such as general taxation, pollution or congestion charge, and parking fees.

Quazi Muhammad Ferdous, chief engineer of Bangladesh Bridge Authority, told The Business Standard, "Implementation of this kind of project is not possible without forming a separate company.

"The process of forming a company is going on. We are working on forming the company by enacting a separate act in the parliament," he said. 

Currently, the Metro Rail and Bus Rapid Transit routes are being built by forming the Dhaka Mass Transit Company Limited and Dhaka Bus Rapid Transit Company Limited respectively. Currently one bus rapid transit and one metro rail line are under construction.

Although Typsa suggested creating a separate company aiming to attract the private companies for the subway project, Moazzem Hossain, a professor in Bangladesh University of Engineering and Technology's civil engineering department, does not think that foreign companies will be interested in it.

He said, "Projects like subways must be done by forming separate companies. But, such projects are not profitable anywhere in the world. These projects are implemented for the purpose of public service and private companies do not seem to be interested in the operation that way."

"So, ultimately the government has to operate the subway project. However, in that case, their aim should be to manage the project with as little subsidy as possible," Professor Moazzem added.

Supporting the idea of forming a separate company, Typsa mentioned in the interim report that there is a well-functioning private sector participation model in the Bangkok subway. The contract between the government and the private party is clear and legally binding.

They also said it will be possible to borrow high technical and operational standards from experienced foreign operators for a limited time period of 5-15 years.

It is also possible to foster technical and operational skills of local staff during the same period so that local partners will be able to implement the next phase of the project.

The subway routes

The feasibility study for constructing the subways is in its final stage. According to the study, it is feasible to build nine subway routes in total to establish an underground communication network between Dhaka city and the surrounding areas within the next 30 years.

One of these routes is a 32 km subway from Gabtali to Bholabo Union Road. The second route from Bhawal in Keraniganj to Thulthulia in East Khilgaon is 16 km long.

The proposed third subway (17.31 km) will be from Bashundhara River View to South Gabtali.  Another 29.40 km route will be from Hazaribagh to Purbachal North.

There will be a 29 km subway from Jhilmil to Tongi Junction and a 23 km subway will be from Shahkabir Mazar Road to Sadarghat.

In addition to these, the consultant firm has proposed the construction of subways from Keraniganj to Sonapur (19.5 km), from Jahangirnagar University to Narayanganj (47.54 km), from Teghariya Bazar to Narayanganj (13.83 km), from Tongi Junction to Nabari (16.99 km), and from Gabttali to Jahangirnagar University (15.52 km).