High bids, weak competition drive Metro Line-1 cost surge by 130%
The DMTCL and the Planning Commission attributed the proposed increase mainly to higher-than-estimated bids received during the tendering process.
The cost of Bangladesh's first underground metro rail project, MRT Line-1, which will connect the airport with Kamalapur, has been proposed to increase by 129.82% to Tk120,794.13 crore by the implementing agency, Dhaka Mass Transit Company Limited (DMTCL).
If approved, the project will become Bangladesh's second-largest project by cost, after the Tk1,38,685.76 crore Rooppur Nuclear Power Plant. Its revised cost would also be nearly four times that of the country's only operational metro rail line between Uttara and Motijheel.
The DMTCL and the Planning Commission attributed the proposed increase mainly to higher-than-estimated bids received during the tendering process. The depreciation of the taka against the US dollar has also contributed to the cost escalation.
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The proposed cost hike for the Japan-funded MRT Line-1 comes after another metro rail project, financed by the Asian Development Bank (ADB) and South Korea, saw its budget reduced to Tk45,503.77 crore from the original Tk54,618.96 crore through two revisions. The latest revision, approved earlier this week, cut the cost by Tk2,217.67 crore.
Cost almost 130% higher
Approved by the Executive Committee of the National Economic Council (Ecnec) on 15 October 2019, the 31.24-kilometre MRT Line-1 project initially had an estimated cost of Tk52,562 crore, with an implementation period from September 2019 to December 2026.
The DMTCL sent the first revised development project proposal to the Planning Commission through the Road Transport and Highways Division on Tuesday (11 August). It has also sought to extend the project deadline to December 2035.
Under the revised proposal, the Japanese loan component would increase by 116.82%, from Tk39,450.32 crore to Tk85,535.56 crore. The government's contribution would rise by 168.92%, from Tk13,111.11 crore to Tk35,258.57 crore.
The proposed increase is significantly higher than DMTCL's earlier estimate. In a letter sent to the Planning Commission's Physical Infrastructure Division on 28 January, 2026, the implementing agency had said the project cost could rise by 83% to around Tk96,500 crore.
How the cost jumped
The DMTCL said an analysis of the lowest bids submitted during the open tendering process, along with the estimated costs of other packages, showed that construction costs had increased substantially. High bids from international contractors and limited competition were cited as major reasons.
The project has been divided into 12 contract packages, CP-01 to CP-12, covering the airport-Kamalapur and Natun Bazar-Purbachal routes.
For example, the estimated cost in the original project proposal for CP-04, covering construction of the underground section from north of Rampura station to Natun Bazar station, was Tk5,330.20 crore. A Japanese consultant later estimated the package at Tk13,266.44 crore. When tenders were invited, Japan's Tokyu-MIL JV emerged as the lowest bidder with a bid of Tk14,988.07 crore.
Similarly, CP-06, covering the underground section from north of Nadda station to Airport station, had an original estimated cost of Tk4,604.80 crore. Japan's Nishimatsu-TODA JV submitted the lowest bid at Tk10,821.91 crore.
The original estimated cost of the 12 packages was Tk37,655.66 crore, while the latest projected cost stands at Tk80,099.79 crore.
In a letter sent to the Planning Commission, the Road Transport and Highways Division said the estimated project cost had increased substantially due to inflation in global and domestic markets and various prevailing circumstances.
The project feasibility study was conducted by the Japan International Cooperation Agency (Jica), and the original cost estimates were incorporated into the DPP based on that study. Japanese consultants later revised the estimates, increasing costs across several components, followed by higher bids from Japanese contractors.
Project Director Md Sarwar Uddin Khan declined to comment, saying the matter was under the direction of DMTCL's managing director. DMTCL Managing Director Md Shaugatul Alam could not be reached for comment.
A senior Planning Commission official, however, said the project cost had increased partly because the detailed design had not adequately reflected the actual requirements and costs.
Questions over limited competition
Stakeholders say Japanese-funded projects come with conditions requiring consultants to be appointed from Japan. These consultants prepare the tender documents, often in ways that effectively restrict participation to Japanese contractors.
Although the tenders are formally open, the same two or three companies frequently emerge as the top bidders. As a result, the process functions more like limited competition, leaving little room for new or alternative qualified contractors.
MRT Line-1 is Bangladesh's first underground metro rail project. Construction began on February 2, 2023.
The project has a total length of 31.241 kilometres. The Airport Route, extending from the airport to Kamalapur, will be entirely underground and cover 19.872 kilometres, with 12 underground stations.
The Purbachal Route will extend 11.369 kilometres from Natun Bazar to Pitalganj Depot. It will have seven elevated and two underground stations.
Efforts to control costs
During the interim government, tender processing for several packages was suspended amid concerns over high bids from Japanese contractors.
The Economic Relations Division (ERD), the DMTCL, and the Road Transport and Highways Division held several meetings with Jica and Japanese government agencies to bring the costs down to a more reasonable level. A delegation from Bangladesh also visited Japan during the interim government to discuss cost rationalisation.
After the current government took office, discussions with Japan continued. DMTCL has now submitted the revised cost proposal to the Planning Commission.
Of the 12 packages, work under CP-01, involving land development for the depot area, has already been completed. Procurement for the remaining 11 packages is at various stages.
Several recommendations have been made to increase competition and contain costs. These include relaxing special conditions for Japanese-funded projects to allow greater participation by international contractors, extending tax exemptions currently available to Japanese contractors and suppliers to other eligible participants, and adopting a one-stage, two-envelope procurement method without prequalification to allow more qualified contractors to participate.
Expert calls for parliamentary scrutiny
Buet Professor of Civil Engineering Shamsul Hoque said the proposed cost increase should be discussed openly, including in Parliament.
He said the basis for the metro rail project's cost estimates and repeated increases needs greater scrutiny. If costs are determined without adequate competition, questions over their justification could become more difficult to answer later.
He also questioned whether the current estimates are sufficiently robust and competitive, noting that they remain largely based on projections that could rise further. He said the costs should be benchmarked against international standards.
He said major projects of this scale require careful analysis of international cost benchmarks, project performance and future financial liabilities before implementation. Transparency and accountability are also essential because these projects are financed with public money.
He added that the reasons for cost escalation must be investigated, particularly if the same consultants responsible for the initial studies and designs are later involved in estimates that lead to substantial cost increases.
A review report prepared by the interim government in 2025, based on metro rail tender bids in different countries in 2024, highlighted the significant cost gap.
A metro rail project costs around $40.77 million per kilometre in Patna, compared with $166 million in Riyadh and $188 million in Dubai. In Dhaka, comparable projects cost between $226.74 million and $253.63 million per kilometre – around five times the cost in Patna and substantially higher than in Riyadh and Dubai.
