Govt inks deal worth over $800m with Korea Eximbank for railway project

The government has signed two loan deals worth $815 million with South Korea to build a rail-cum-road bridge over the River Karnaphuli at Kalurghat in Chattogram.

According to the agreement, the Export-Import Bank of Korea, also known as the Korea Eximbank, will provide $724.73 million from the Economic Development Cooperation Fund (EDCF) and $90.18 million from the Economic Development Promotion Facility (EDPF).

Md Shahriar Kader Siddiky, secretary of the Economic Relations Division (ERD), and YOON Hee Sung, chairman and CFO of Korea Eximbank, signed two loan agreements today (27 June) on behalf of their governments.

The signing ceremony was attended by Finance Minister Abul Hassan Mahmood Ali, Railways Minister Md Zillul Hakim, State Minister for Finance Waseqa Ayesha Khan, and Korean Ambassador to Bangladesh Park Young-sik.

Bangladesh Railway, under the Ministry of Railways, will execute this project.

Under the loan agreements, the EDCF loan carries a simple interest rate of 0.01% with a repayment period of 40.5 years (including a 15.5-year grace period), while the EDPF loan bears a simple interest rate of 1% with a repayment period of 30 years (including a seven-year grace period).

The rail project aims to address traffic congestion in the proposed Chattogram-Cox's Bazar corridor and enhance seamless railway transport by constructing a new rail and road bridge over the Karnaphuli River at Kalurghat.

It is part of the Trans-Asian Railway connectivity initiative, aiming to improve the quality of life for local residents and facilitate inter-regional exchanges to promote sustainable economic and social development in Bangladesh.

The bridge, originally constructed in 1931 as a 700-meter steel structure to connect the railway with South Chattogram, was upgraded to a rail-cum-road bridge in 1962. As the sole bridge spanning the Karnaphuli River, it suffered damage from heavy traffic during that period and has since been maintained for continued use.

At the signing ceremony, Finance Minister Abul Hassan Mahmood Ali highlighted the importance of the relationship between Bangladesh and South Korea, emphasising the wide range of cooperation in trade, investment, education, human resources development, and cultural exchanges. 

He mentioned that the Korean EXIM Bank has been investing in numerous development projects and programmes and will continue to support it with $6 billion until 2027. 

He expressed confidence that the bilateral relationship with the Korean government will further strengthen.

The minister announced plans to present the project for approval at the Executive Committee of the National Economic Council (Ecnec) in July, with construction scheduled to commence next year.

YOON Hee Sung, chairman and CFO of Korea Eximbank, said that Korea is currently funding several new infrastructure projects in Bangladesh and remains committed to supporting additional initiatives in the future.