Two Chinese companies have expressed interest in forming a joint venture to construct, operate and manage funds for a proposed high-speed railway on the Dhaka-Chattogram route.

They proposed to be engaged in the multi-billion-dollar project on the basis of a public private partnership (PPP) under a government-to-government initiative

The companies -- China Railway Construction Corporation (CRCC) and China Civil Engineering Construction Corporation (CCECC) -- sent the proposal to the railways ministry through the Chinese embassy in Dhaka and the PPP Authority, railways sources said.

Bangladesh Railway yesterday held a meeting over the proposal with its Director General Dhirendra Nath Mazumder in the chair. It was decided in the meeting to seek the Economic Relations Division's (ERD's) opinion about the proposal, meeting sources said.

The feasibility study of the first high-speed rail, commissioned by Bangladesh Railway, has already been completed. The route has also been selected and a draft report on the detailed design of the "passenger-dedicated" railway project has already been submitted.

The estimated cost of the project would be about $11.4 billion, or Tk 96,752 crore.

The 227.3km Dhaka-Narayanganj-Cumilla-Feni-Chattogram route was approved by Prime Minister Sheikh Hasina.

Once constructed and the high-speed train begins operation, the journey from the capital to the commercial capital (Chattogram) will be slashed to just 73 minutes.

An uninterrupted journey between Dhaka and Chattogram will take only 55 minutes.

The trains, which will run at a top speed of 300km/hr, can carry approximately 50,000 passengers each way daily.

It will, however, not be cheap. With fares expected to be around the Tk 2,000 mark, more than three times the fare of an AC seat on existing Bangladeshi inter-city trains.

However, some transport experts termed the project "highly ambitious" and questioned the capacity of BR to operate the high-speed train, when it has not yet introduced the electric train.

THE PROPOSAL

As per their proposal, CRCC and CCECC will form one special purpose vehicle (SPV), a term for a dedicated company for the project, in Bangladesh pursuant to laws and regulations here.

The company will undertake the financing, construction and five-year operation (subject to negotiation) of the service, according to the proposal. After the agreed operation period, they would hand over the project to BR or the designated receiver.

BR shall pay the company the available payment semi-annually according to the agreed schedule and the repayment period would be 20 years.

The repayment should commence from the start of agreed operation period and the total repayment sum shall cover the capital and operating expenditure of the company.

CRCC and CCECC will source the project financing from different banks and financial institutions in the name of the SPV at a competitive interest rate to minimise the financing cost, they said.

The finance ministry will have to provide a sovereign guarantee to the financer for securing the loan, it added.

The SPV will implement the project with their parent companies CRCC and CCECC, reads the proposal.

"The railways ministry has asked us [BR] to give opinion over the proposal. But we are not the competent authority to give opinion on financing issues. We are the implementing authority," a high-level BR official, who took part in yesterday's meeting, said.

"So, we will write to the rail ministry to take opinion from ERD and PPPA over the proposal," he said, preferring anonymity.

He also said it has not yet been settled whether the project would be implemented under PPP or investment model.

Another participant of the meeting said there is an ambiguity in the proposal that needs to be clarified. So, they opined for seeking opinions from PPPA and ERD, he said wishing anonymity.

Contacted BR's DG Dhirendra Nath Mazumder said they got the proposal from the Chinese companies, but they thought that such proposal should come through the ERD.