World Bank offers conditional lending to railway sector in Bangladesh

January 1, 2009

Staff Correspondent, NewAge, January 1, 2008

The World Bank will finance a proposed investment project for modernisation of the Bangladesh Railway if the government carries out reform in the ailing state-owned entity making it a corporate body.

A negotiation team of the lending agency recently held discussion with the government officials concerned and discussed the progress in reforms in order to improve the operational efficiency of the organisation and thus turn it into a leading mode of transport in Bangladesh, said a World Bank information note.

The reform includes a proposed structure along the lines of business for Bangladesh Railway with a detailed organogram to give it a new lease of life.

The bank has hinted that the next government will need to decide on the most appropriate legal status of the railway, including initiation of a bill to transform the state entity accordingly, to ensure that the objectives of the reform are achieved.

The WB team reviewed the preparation of the proposed Railway Modernisation (investment) Project and offered the loan conditional to ‘satisfactory progress’ in reforms of the Bangladesh Railway.

The total disbursement of the $40-million support for the ‘Bangladesh Railway Reform Programmatic Development Policy Credit’ had been completed in January 2007.

‘The second phase (amounting to $60 million) of the Development Policy Credit from the World Bank will depend on the progress of these reforms,’ said the information note issued on December 31.

The investment project would focus on double-tracking of the Akhaura-Laksam section on the Dhaka-Chittagong railway, the country’s most important and active commercial route.

A steering committee, jointly chaired by the communications and finance ministries, in charge of reviewing the progress made so far, will play a key role in moving ahead with the railway reforms.

The Bangladesh Railway system is believed to have the potential to meet growing transport demand in the country in a more environmentally and socially sustainable way, if it is properly managed and modernised.

The Asian Development Bank and the Japan Bank for International Cooperation, in close coordination with the World Bank, will support the Bangladesh Railway in carrying forward the reforms and investment programme.