Dhaka Metro costs 5 times India's: Jica review sought to cut millions
A recent analysis of the Dhaka Mass Transit Company Limited (DMTCL) finds metrorail projects in Bangladesh are among the highest in Asia.
Highlights:
- Dhaka's metro projects cost five times more per km than India
- DMTCL asked Jica to review and reduce excessive project costs
- Japanese contractors dominate tenders, limiting competition and inflating expenses
- New unified tendering standards aim to boost transparency and competition
- DMTCL plans design, financing, and local content reforms to cut costs
- Experts blame weak oversight and donor dominance for inflated project prices
A metrorail project costs just $40.77 million per kilometre in Patna city, which is $166 million in Riyadh and $188 million in Dubai. In Dhaka, the cost of similar projects ranges between $226.74 million and $253.63 million per kilometre – five times the cost in India and much higher than in Saudi Arabia and UAE.
A recent analysis of the Dhaka Mass Transit Company Limited (DMTCL) finds metrorail projects in Bangladesh are among the highest in Asia. The state-owned company, which operates the country's lone metrorail in Dhaka and envisages several other routes, is now examining why similar project costs are so high in Bangladesh and how to reduce it.
As part of its initiative, the company has sought a cost review from the Japan International Cooperation Agency (Jica), key financier of Bangladesh's metrorail ventures.
During a visit to Japan in August, DMTCL Managing Director Faruque Ahmed and Economic Relations Division Secretary Shahriar Kader Siddiky formally requested Jica to reassess Bangladesh's cost structure.
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Officials said they are trying to negotiate overall project expenditures to set benchmark cost per kilometre for future reference.
Road Transport and Bridges Adviser Muhammad Fouzul Kabir Khan confirmed that DMTCL is now comparing construction costs with other countries.
"During the previous administration, such reviews were never done. We've told Jica that Bangladesh's metro costs must be sustainable – fares should be enough to repay loans," he told The Business Standard last week.
DMTCL sources said that in several recently tendered packages of the MRT Line-1 (Airport-Kamlapur) and Line-5 (Northern route from Gabtoli to Dasherkandi) projects expected to be funded by Jica, contractors submitted bids significantly higher than initial estimates.
As a result, some packages had to be re-tendered, they said. Although Jica-funded projects are formally supposed to follow an open tender process, in practice Japanese firms secure most contracts, limiting competition and driving up costs.
In response, DMTCL is working to establish a unified standard for metro rail tendering. The authority expects the new procurement standard to be finalised by January.
The same standard is planned for MRT Line-5 (Southern), which is awaiting approval under funding from the ADB and South Korea. DMTCL said that this standard will be applied to all future metro rail projects.
Three mega projects under Jica
The country's first metrorail with Jica fund –- 21.26km MRT Line-6, stretching from Uttara to Kamalapur, is nearing completion. The Diabari-Motijheel section is already operational, while the remaining 1.16km Motijheel-Kamalapur stretch is in its final phase.
The project costs Tk33,472 crore, averaging Tk1,574 crore per kilometre. With construction nearly complete, there is no scope for cost revision.
Two more metrorail projects – fully underground MRT Line-1 (projected at Tk53,977 crore) and MRT Line-5 (Northern Route, estimated at Tk41,238 crore) are now in the tendering phase. Jica is expected to finance these projects.
"These costs are more than double that of India," DMTCL Managing Director Faruque Ahmed told The Business Standard. "Cities like Bengaluru rely on local expertise and materials, but even accounting for that, our cost shouldn't be twice as high. Whether it's 50% or 100% more can be debated – but it's clearly excessive."
He added that underground construction drives up expenses – for example, MRT Line-5's southern route includes 13.1km of tunnels and only 4.1km of elevated track.
Since 2019, the estimated cost of MRT Line-1 has risen from $6.39 billion to $8 billion. In contrast, India's Jica-funded Patna, Pune, and Indore metros all finished 14–24% below their original budgets, and even the advanced Delhi Metro's Golden Line tunnel cost just $29.29 million per kilometre.
Faruque warned that such inflated costs could make fares unsustainable. "A ride from Uttara to Motijheel now costs Tk100 on MRT-6. At this rate, the same trip on MRT-1 could cost Tk300," he said. "This is the first time we've raised cost optimization directly with Jica, and we hope to see progress by year-end."
Cutting costs through design and finance reforms
DMTCL officials said all metro projects are debt-financed, leaving future generations with a heavy repayment burden. The company now wants to attract foreign equity investment and private participation to reduce that pressure.
Two key strategies are being pursued: revising financing models and optimising design. Reducing the number of depots from six to four could save hundreds of crores, while alternatives such as curtain-covered tunnels and integrated viaduct designs are under review.
Drawing lessons from India, DMTCL plans to adopt shared infrastructure — such as using common pillars for expressways and metro lines — to cut duplication. Officials said applying lessons from MRT Line-6 to Lines 1 and 5 is now a top priority.
They also aim to boost local content and employment, reduce dependence on foreign currency, and strengthen domestic institutions from the design stage onward.
Why Jica projects cost more
DMTCL sources said that although Jica formally mandates international competitive bidding, its loan-funded projects are almost exclusively awarded to Japanese contractors.
Japanese consultants often design tender documents and cost estimates in ways that favour their firms through highly specific technical standards, which other bidders struggle to meet. As a result, tenders attract only a few Japanese or joint-venture firms, limiting competition and inflating bids.
A DMTCL official acknowledged these constraints: "Certain contractual clauses give Japanese companies an advantage, restricting competition and creating a monopoly. We want a competitive environment where both local and international firms can participate, which will automatically reduce costs."
He added that DMTCL is engaging with the World Bank and Asian Development Bank to co-finance future projects under more open bidding processes. "We've already begun discussions with Jica to standardise the tender procedure, which we hope to finalise by January."
Experts link costs to weak capacity
Buet civil engineering professor Shamsul Hoque attributed inflated costs to weak competition and institutional fragility.
"In Jica projects, the donor often acts as both consultant and contractor. Without competition, costs inevitably rise," he said. "It's the same pattern we've seen in the Jamuna Railway Bridge, Cox's Bazar–Matarbari road, and the airport's third terminal."
He noted that metro systems in Lahore, Karachi, and Kolkata — all Jica-funded — cost about half as much as Dhaka's. "Jica can't overprice everywhere. The difference here stems from limited local oversight and entrenched interests," he said.
However, he praised DMTCL's recent success in cutting Tk170 crore from electrification and signalling costs between Kamalapur and Shapla Chattar, calling it a sign of growing negotiation capacity under the current government.
