Metro-5 budget cut by Tk2,217cr, largely by excluding interest cost

Highlights:

• MRT Line-5 Southern Route cost cut by another Tk2,217.67 crore
• Revised project cost now stands at Tk45,503.77 crore
• Interest, land acquisition and administrative costs drove major savings
• Total cost has fallen Tk9,115.19 crore from original proposal
• ADB and South Korea loans will finance Tk30,306 crore
• Route could serve around 924,000 passengers daily by 2031

The proposed cost of the MRT Line-5 Southern Route has been cut by another Tk2,217.67 crore, mainly by excluding around Tk2,000 crore in payable interest from the project cost.

Revisions to land requirement and administrative costs have also helped bring the cost of the metro line, connecting Gabtoli and Daserkandi, down to Tk45,503.77 crore, officials said. 

Infograph: TBS

The latest reduction follows a review meeting held at the Physical Infrastructure Division of the Planning Commission on 16 July. Dhaka Mass Transit Company Limited (DMTCL) sent the revised Development Project Proforma (DPP) to the Planning Commission yesterday.

Md Abdul Wohab, project director, said the latest cut was mainly achieved by reducing administrative expenses and revising the interest calculation.

"Some administrative costs previously included in the project have been reduced. The interest payable after the loan moratorium ends has now been separated," he said.

"These changes have reduced the project cost by around Tk2,000 crore. The remaining amount was adjusted through small reductions in several other cost items," he added.

Wohab said the cost reduction would not affect the project. "The project can move into implementation once the revised DPP is approved. Necessary preparations, documents, and land acquisition plans have already been completed."

Cost down by Tk9,115.19cr from original proposal

During the Awami League government, DMTCL had proposed Tk54,618.96 crore for implementing the project. Following the government's fall, the project cost was reviewed and reduced to Tk47,721.44 crore during the interim government's tenure. The latest revision has brought the cost down by Tk9,115.19 crore from the original proposal.

The project has been awaiting approval for a long time. After the current government took office, the project was presented to the planning minister for approval. They instructed officials to bring the proposed cost down further and make it more reasonable.

Project director Wohab said the current government is interested in implementing the project quickly and has a positive stance on it. "The project, which had remained stalled, has now become active again, and necessary steps are being taken to start work soon."

Cost cuts in interest, land acquisition

Planning officials said the project cost was reduced across multiple components after reviewing each item to identify areas where modest cuts would not affect implementation.

The biggest reductions came from "Reserve for Commitment Charge on Loan" and "Interest on Foreign Debt", which together accounted for nearly Tk2,000 crore in savings.

"We decided that these costs didn't need to remain in the project budget for now. The Finance Division will make the payments through its regular procedures," one official said.

Project documents show reducing land requirement from 23.09 hectares to 9.104 hectares alone is expected to save around Tk100 crore in land acquisition costs. Spending on vehicle purchases, consultancy, honoraria and other administrative expenses has also been reduced.

Tk30,306cr loans from ADB, South Korea

Under the revised proposal, the ADB and South Korea have given initial consent to provide Tk30,306 crore in loans, down from the previously proposed Tk32,332.92 crore. The government's contribution has been reduced to Tk15,197.66 crore from Tk15,388.51 crore.

The 17.2km route will include 13.1km of underground track and 4.1km of elevated track. 

The route will run from Gabtoli to Daserkandi, via Technical, Kallyanpur, Shyamoli, College Gate, Asad Gate, Russell Square, Karwan Bazar, Hatirjheel, Tejgaon, Aftabnagar, Aftabnagar Centre, Aftabnagar East, and Nasirabad.

Why MRT Line-5 matters

According to DMTCL, a pre-feasibility study using primary survey data and a logit model found that 20.8% of metro passengers would shift from road-based transport.

Medium buses would account for 14.85% of passengers shifting to metro rail. Shifts from cars, motorcycles, and three-wheelers, would range from 0.02% to 2.71%.

The route alignment was finalised through an ADB-funded pre-feasibility study conducted by an international consulting firm. The study also reviewed existing MRT and BRT alignments, along with the Revised Strategic Transport Plan (RSTP) and other traffic studies.

The study estimates that around 9,24,000 passengers could use the route daily by 2031. The line is expected to meet growing east-west travel demand while helping create a more balanced and sustainable urban transport network for Dhaka.

Under the original RSTP, Line-5 was planned as Dhaka's first 35km east-west metro line. It was later divided into Northern and Southern routes. The Northern Route was assigned to Jica financing, while the Southern Route was taken up with ADB financing.