Tk671cr transport fund aims to rollout 400 electric buses in Dhaka

Highlights:

• World Bank-backed fund to reform Dhaka public transport
• Tk427 crore fund deploys 400 electric buses
• Government controls fares; operators paid fixed fees
• Old diesel buses scrapped with compensation scheme
• AssetCo owns buses; depots, charging, ITS built
• Reform targets pollution, safety, disorder, governance gaps

Dhaka's troubled public transport system is heading for a structural overhaul as the government moves to set up a World Bank-backed Public Transport Fund (PTF) to finance electric buses and impose discipline on a sector long marked by disorder, pollution and unsafe services.

The fund, to be established by the Dhaka Transport Coordination Authority (DTCA) under the Bangladesh Clean Air Project Phase-1, will support the rollout of 400 electric buses in Dhaka and later other major cities, while shielding operators from financial volatility and enforcing minimum service standards.

Project documents show the Transport Fund will be capitalised with Tk427 crore, alongside Tk244 crore in seed capital to ensure long-term financial sustainability. The fund will pay operators fixed fees, while the government takes responsibility for fares, revenue collection and passenger demand risks.

Alongside this, the government will introduce a scrappage and compensation scheme, allocating Tk85.40 crore to phase out ageing diesel buses and compensate owners moving into the new system.

Infograph: TBS

A senior DTCA official, speaking on condition of anonymity, said the initiative aims to cut greenhouse gas emissions from urban transport and finally implement long-delayed bus sector reform in Dhaka.

"To build support, the DTCA and the World Bank have held several rounds of discussions with private bus operators and owners' associations," the official told The Business Standard.

He added, "The proposal was prepared with the consent of state-run operators, while private operators also want regulation and replacement of old buses with electric ones."

Md Hadiuzzaman, transportation expert and professor of civil engineering at Buet, said many transport initiatives have failed in the past because the sector remains disorderly and politically sensitive.

"Simply fixing compensation mechanisms or fare structures will not resolve the deeper problems," he said. "Public transport is a service sector, but in reality it is shaped by power and influence."

He added, "The success or failure of this initiative will depend largely on how positively influential private sector leaders in transport accept it and how sincerely they cooperate during implementation."

World Bank financing anchors reform model

According to project documents, the Dhaka Bus Modernisation Programme carries a total cost of Tk1,213.40 crore, with Tk1,183.40 crore coming from a World Bank loan and Tk30 crore from the government.

Under the broader transport reform package, the overall project cost stands at Tk2,481.97 crore, of which Tk2,135 crore will be financed by the World Bank.

Officials said the proposal has already been submitted to the Planning Commission for approval.

Under the programme, 400 electric buses will be deployed in line with the Bus Route Rationalisation Plan and operated by franchisees under gross cost contracts.

The DTCA and the Public Transport Fund will retain control over fares and revenue, a move intended to reduce commercial uncertainty and stabilise services.

A state-run asset company, AssetCo, will procure and own the buses and manage maintenance, battery replacement and warranties, separating asset ownership from operations to improve accountability.

Depots, charging, power infrastructure

The project includes three electric bus depots to be upgraded on government-owned land, with sites selected from Kanchpur, Gabtoli, Kalyanpur, Purbachal and Joar Shahara.

Depot development is estimated to cost Tk748.59 crore, largely financed through a World Bank loan.

Officials said feasibility studies have been completed, while detailed designs will be finalised during the implementation phase.

Intelligent systems and digital services

To support contract management and improve passenger experience, Intelligent Transport Systems will be introduced at a cost of Tk170.28 crore.

These systems will include vehicle tracking, automated fare collection, passenger information displays, an operations control centre, data centres and a mobile application.

The app will allow passengers to check schedules, buy tickets, track travel times, submit feedback and report incidents, including gender-based violence.

Capacity building and institutional reform

A Tk138 crore capacity-building programme, mostly funded by an IDA loan, has been earmarked to address institutional gaps and improve governance.

Management consultants will support DTCA staff in service planning, contract design and performance monitoring, while regulatory reforms will strengthen mandates and inter-agency coordination.

Drivers and conductors will receive training on road safety, fuel efficiency and preventing sexual harassment, with incentives planned to encourage more women to join operational roles.

Why Dhaka's transport needs reform

The project proposal highlights Dhaka's severe transport and air quality crisis, with PM2.5 levels hitting 85µg/m³ in 2020, far above global limits. Around 25% of pollution comes from ageing, poorly maintained fossil-fuel vehicles. Over 80% of vehicles emit harmful pollutants, while inefficient public transport worsens congestion, idling and the daily loss of 8.2 million working hours.

It said Dhaka's route-license bus system fuels disorder. Private operators under a net-cost model compete for passengers, encouraging reckless driving, poor maintenance and clustering of nearly 4,000 buses on profitable corridors, leaving many areas underserved.

Monitoring is weak: police-led committees issue licenses, while state-owned BRTC operates independently, limiting coordination. Subcontracting and daily-wage drivers prioritise cash over safety, leaving fleets overaged and poorly maintained.

These flaws, combined with pollution and congestion, make Dhaka one of the world's least liveable cities, with women and vulnerable groups facing heightened safety and accessibility challenges.