DESCRIPTION

The Government of Bangladesh has requested additional financing from the Asian Development Bank (ADB) to scale up the Subregional Transport Project Preparatory Facility, which is funded by an ADB technical assistance (TA) loan approved in 2010. The additional financing will provide further support in preparing high-priority transport projects that will enhance subregional trade. The new loan will be used to prepare railway and road projects in Bangladesh that are part of the Trans-Asia Railway network and the Asian Highway network. It will also support the executing agencies during initial project implementation. The additional financing is being processed based on the government's request, as it is not included in ADB's country operations business plan for Bangladesh, 2015 2017.

The impact will be increased subregional connectivity and trade, aligned with the Sixth Five-Year Plan (2011 2015). The outcome will be improved efficiency in implementing regional cooperation and integration (RCI) transport projects and facilitating cross-border traffic in Bangladesh.

The outputs will be (i) feasibility studies and detailed design of RCI transport projects; and (ii) implementation support for RCI transport projects to facilitate government approvals, safeguard implementation, and procurement.

The additional financing will enhance capacity to prepare RCI transport projects and improve project readiness through the provision of feasibility studies, detailed designs, and implementation support for regional transport projects. The focus will be on priority transport corridors identified in the SRMTS, Asian Highway network, Trans-Asia Railway network, and those projects linking South Asia with Southeast Asia. At a meeting in Kathmandu, Nepal on 4 November 2014, the SASEC Transport and Trade Facilitation Working Group endorsed the preparation of these priority subregional transport projects. A list of the transport projects to be prepared under this loan is in attachment B of the project administration manual (PAM). Any additional transport projects to be financed under additional financing will be selected based on the criteria described in attachment B of the PAM.

PROJECT RATIONALE AND LINKAGE TO COUNTRY/REGIONAL STRATEGY

Bangladesh has the potential to become a transport and transshipment center for the subregion. It borders India and Myanmar, and is close to the landlocked countries of Bhutan and Nepal. Bangladesh has taken many steps to strengthen its regional and international transport connectivity. With the Bhangabandhu Bridge over River Jamuna (the Jamuna Multipurpose Bridge) and the provision of access to Mongla and Chittagong ports for Bhutan, India, and Nepal, the main transport corridors in Bangladesh, such as the Dhaka Chittagong corridor, can facilitate trade between Bangladesh and the northeastern states of India, the Indian state of West Bengal, Bhutan, and Nepal. This increases the potential to attract more foreign and domestic investments. Bangladesh is located on major international trade corridors, as identified in the South Asia Association for Regional Cooperation (SAARC) Regional Multimodal Transport Study (SRMTS) and those projects linking South Asia with Southeast Asian countries, the Asia Highway network, and the Trans-Asian Railway network. However, the amount of regional trade within South Asia is much smaller than in other similar regions. One of the main reasons for the limited cross-border traffic are missing links and congestion in main domestic corridors, which do not allow operating additional domestic and international traffic. Addressing the capacity deficiencies in the domestic transport network and constructing missing links will enable Bangladesh to benefit more from international trade and will support the country's economic development.

The current TA loan was approved on 3 November 2010 and became effective on 21 July 2011. It has demonstrated that the project readiness of follow-on road and railway projects in Bangladesh has improved. The preparation of projects under the current TA loan has also helped to attract financing for follow-on transport projects by other development partners. The current TA loan has been used to prepare design for two loans approved by ADB in 2012 and 2014. The design prepared under the current TA Loan has generated interest from the governments of the People's Republic of China and Japan to finance two railway projects in Bangladesh.

The rating of the current TA loan is on-track ; despite initial delays, it is rated on-track since the second quarter of 2013. As of 15 June 2015, contracts for $21.8 million equivalent or 99% of the loan amount of $22.1 million equivalent had been awarded and the cumulative disbursement was $16.6 million equivalent (75%). The original loan closing date of 31 December 2013 was extended to 31 December 2015 to allow for the completion of the design and to provide sufficient time to support the executing agencies during initial project implementation, especially during procurement for follow-on transport projects and safeguards implementation. Loan covenants and safeguard requirements are being complied with.

Under the current TA loan, one of the follow-on railway projects will require continued procurement support in 2015. Therefore, the loan closing date for the current TA loan needs to be extended until 30 June 2016.

The proposed additional financing will support change in project scope by scaling up the current project and also extending the closing date of the current TA loan (para. 6). The additional financing will help prepare domestic transport projects with high impact on regional trade ready for investment. It will also support the government during initial project implementation.

The implementation of the current TA loan is considered highly successful, and the government has requested ADB to provide additional financing to increase the benefits and prepare for the implementation of additional high-priority transport projects with subregional impact. The implementation of these projects is expected to be financed under (i) the multitranche financing facility for the South Asia Subregional Economic Cooperation (SASEC) Railway Connectivity Investment Program, scheduled for approval in 2016; and (ii) the SASEC Road and Trade Facilitation Investment Program, scheduled for approval on a standby basis in 2017. Both investment programs are included in ADB's country operations business plan for Bangladesh (footnote 3).

The additional financing supports key thematic drivers of ADB's country partnership strategy for Bangladesh, 2011 2015: (i) good governance and capacity development, (ii) regional cooperation, (iii) environmental sustainability and climate resilience, and (iv) partnerships. Investments in key domestic corridors with high regional impact were identified as priorities for the transport sector and are in line with the government's strategies for the transport sector development.

IMPACT

Current project: Increased subregional trade

Overall project: Increased subregional connectivity and trade (Sixth Five-Year Plan: 2011 2015)

CONSULTING SERVICES

International consulting firms and/or national consultants will be recruited in accordance with ADB's Guidelines on the Use of Consultants (March 2013, as amended from time to time). Advance contracting and retroactive financing are proposed to be undertaken to enhance project readiness. All consulting services will be recruited using quality- and cost-based selection, with a quality cost ratio of 90:10 taking into account the complexity of the large-scale design works. To avoid start-up delays, the government has requested that ADB select consultants on its behalf. The government will negotiate and enter into agreements while ADB will play an active facilitation role.

For sections where consultants recruited under the current loan have already carried out feasibility studies or design works and additional design inputs have become necessary, it is proposed that these additional consulting works be contracted by method of contract variations to scale up the ongoing contracts.

PROCUREMENT

N/A

Loan 3295-BAN: Subregional Transport Project Preparatory Facility - Additional Financing
Asian Development Fund US$ 30.00 million

ACCOUNTABILITY MECHANISM OF ADB

The Accountability Mechanism is an independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an Asian Development Bank-financed project. If you submit a complaint to the Accountability Mechanism, they may investigate to assess whether the Asian Development Bank is following its own policies and procedures for preventing harm to people or the environment. You can learn more about the Accountability Mechanism and how to file a complaint at: http://www.adb.org/site/accountability-mechanism/main

CONTACTS

Responsible ADB Officer Markus Roesner
Responsible ADB Department South Asia Department
Responsible ADB Division Transport and Communications Division, SARD
Executing Agencies
Roads and Highways Department
Block A, Room 122, Sarak Bhaban
Ramna, Dhaka
Bangladesh
Bangladesh Railway (BR)
JBRLPCON@CITECHCO.NET
Railway Div., Ministry of Communication
Rail Bhavan, Abdul Gani Road
Dhaka, Bangladesh