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WORLD BANK APPROVES US$40 MILLION TO SUPPORT RAILWAY SECTOR IN BANGLADESH

Jasmin Mehovic for SARID, October 21, 2006

The World Bank has approved a US$40 million credit to support the Government’s plans to transform Bangladesh Railway into a well-managed, customer-focused organization, as well as to improve financial and human resource management of this state run company, says a World Bank press release issued on Friday.  

The Bangladesh Railway Reform Programmatic Development Policy Credit, which will help meet the transport needs of Bangladesh’s growing economy, is the first major World Bank operation in the country’s railway sector. It is part of a long-term strategic partnership between the Bank, the Government, Asian Development Bank (ADB) and the Japan Bank for International Cooperation (JBIC). The credit has 40 years to maturity with a 10-year grace period.

Christine Wallich, World Bank Country Director for Bangladesh, praised the initiative, noting that the credit will “play a catalytic role for ensuring the success of the reform program by coordinating with all donors and the wider government ministries and agencies.” 

The World Banks warns that in a rapidly growing economy, with projected 6-7% annually growth, there is a need for an efficient and effective transport system. Although power may be the binding constraint at this point, the officials note, it is the transport that could become a bottleneck.

“The Bangladesh Railway Reform Program will help create an environment conducive for expanded investment in the railway sector by the government and donors, improve railway operations, and increase the use of the railway system,” said Binyam Reja, World Bank Senior Transport Economist and project team leader.

The project will be followed by another proposed development policy credit of US$60 million for the Railway Reform Program in 2009. The same year, Bangladesh will receive an additional US$200 million credit to improve infrastructure and network expansion of railways.

Bangladesh Railway has a total of 2,768 km of railroads. Out of that, 946 km are broad gauge tracks, while the remaining 1,822 km are narrow gauge tracks. This principle transportation organization employees nearly 35,000 regular employees and handles approximately 10 percent of the national passenger and freight traffic.