The Rampura-Demra Expressway project, undertaken by the government to ease traffic congestion in the eastern region of Dhaka, remains stalled over unsettlement of dollar price hike.
The Chinese company, the implementing agency, has said that they would not start the construction work unless the price of dollar is hiked in line with the existing currency exchange rate.
The company has reported losses due to delays and has informed the Roads and Highways Division that they might withdraw funding unless the exchange rate of US dollar is adjusted to its existing value.
Following the company’s demand, the government has asked the Asian Development Bank (ADB), which serves as the transaction adviser, to submit a report on the overall situation. Based on this report, both parties will enter negotiations.
The government has already spent approximately Tk 356 crore for. If the project is not completed, the government may suffer huge financial losses.
A report titled ‘Rampura-Demra Expressway: Procrastination Leaves Project in Limbo’ has been published in the Bangladesh Post recently.
In response, the Road Transport and Highways Division initiated communication with the Chinese investors. However, a source confirmed that the investors remain firm in their stance on the project.
The Road Transport and Highways Division initially planned the four-lane expressway to span from Rampura to Demra’s Shimrail, extending 13.5 kilometres and offering a solution to Dhaka’s eastern traffic issues.
The Rampura-Amulia-Demra Expressway, under the Public-Private Partnership (PPP) model, is one of the most expensive road infrastructure projects in the country to date. The cost per kilometer is estimated to be Tk 244 crore, which has already raised concerns about excessive expenses.
The supporting project for the expressway began on January 1, 2020, with the government contributing Tk 1,209 crore. However, the construction work on the main expressway, scheduled to start in 2022, has yet to commence. The project was initially expected to be completed by 2026.
The PPP Authority appointed ADB as the transaction adviser, and on July 26, 2023, the consortium of China Communications Construction Company Limited (CCCC) and China Road and Bridge Corporation (CRBC) was awarded the contract for implementation of the project. The two companies formed a joint venture named ‘Rampura-Amulia-Demra Elevated Expressway Company Limited’ to implement the project.
In January 2022, the Roads and Highways Division signed a contract with the Chinese consortium for the construction of the expressway, at cost of Tk 3,304 crore. Of this, Tk 2,094 crore is allocated for infrastructure development, while Tk 1,210 crore is set aside for land acquisition, which will be funded by the government. Infrastructure development will be financed by Chinese firms.
According to the contract, the construction work must be completed within four years, after which SPV will manage the expressway for 21 years. SPV will begin collecting toll six months after construction work is completed, and they are expected to receive payments in 42 installments, with each installment amounting to Tk 107 crore.
However, due to the rising exchange rate of the US dollar, the Chinese company has demanded an increase in the installment base. When the tender was floated in July 2019, the exchange rate was Tk 84 per dollar. The contract was based on this rate, but due to high inflation and dollar price hike, the company claims that they would suffer losses of 25-30 per cent if they proceed with original terms.
The SPV’s demand for revised payment terms has prompted the Roads and Highways Division to request a report from ADB, which is expected to take around one and a half months. Once the report is received, both parties will engage in discussions to resolve the issue, with the project stakeholders remaining optimistic about reaching an agreement to secure Chinese financing.
Officials involved in the project have expressed concern that if land is not handed over by December this year, the Chinese consortium may not extend the loan tenure. In the meantime, the consortium has set up a construction yard at the Amulia section and is continuing work.
However, without adjusting the installment base, the Chinese investors may withdraw from the project, forcing the government to seek new investors. Project cost may double due to delay in implementing the project.
When contacted, project director Md Enamul Haque confirmed that SPV has reported financial losses due to delay and is seeking a revision of the contract to readjust the exchange rate. Roads and Highways Division is waiting for the ADB report before proceeding with discussions.
He said that land acquisition for the project is ongoing, but uncertainty over financing is causing delay. If the issue is resolved, the project could begin in the first half of 2025. The government stands to gain about 43 per cent of toll revenue if the project proceeds as planned.
However, if the Chinese consortium pulls out of the project, the government may suffer heavy financial losses, he added.
