Bangladesh Railways: Will billions spent on rail tracks pay the intended dividends?

The Bangladesh Railways is currently executing an ambitious investment plan exceeding Tk70,000 crore for five significant projects that have been partially or fully operational in the past year. 

These transformative initiatives include the Padma Bridge Rail Link Project, Dohazari-Cox's Bazar rail line, and the Mongla Port Rail Link Project.

Bangladesh Railway generates revenue from activities such as passenger and freight transportation, which barely covers half of its operational expenses. Hence,  questions regarding the return of the huge government investments have become increasingly prevalent in recent times.

The Annual Development Program (ADP) of the current fiscal year encompasses a total of 34 projects with an estimated cost of Tk1.46 lakh crore. Furthermore, there are 32 pending projects awaiting approval, with a combined cost of Tk1.39 lakh crore. 

The challenge arises in determining how the financial returns from these projects will materialise, especially when the revenue generated by Bangladesh Railways falls short of covering operational expenses.

Since independence, the railway system has faced negligence, evident in aspects such as reduced investment, workforce downsizing, closure of branch lines, and a decline in operational stations. 

Nevertheless, following the establishment of a dedicated Ministry of Railways in December 2011, the sector has experienced a significant surge in investment rather than continued disregard.

In the last fiscal year, development expenditure reached Tk11,395 crore, marking a 6.11-fold increase compared to the ADP expenditure of Tk1,863.47 crore in the 2011-12 fiscal year.

Over the past 12 years, an impressive sum of Tk77,504 crore has been spent on infrastructure development, boasting an average annual growth rate of 18%. However, during the same period, operational costs absorbed Tk30,270 crore, while revenue generation amounted to Tk13,691 crore. This has resulted in a cumulative loss of Tk16,579 crore over the past 12 years, excluding development expenditure.

The railways developed 873.19 km rail lines during the three terms of the current government, while 59.89 km of metre gauge railways have been upgraded to dual gauge, according to the annual report of the Ministry of Railways for the fiscal year 2022-23. 

Another 1,391 km of rail line has been rehabilitated. 

Bangladesh Railways also constructed over 1,000 new railway bridges as well as reconstructing 794 more. 

In the last few years, 109 locomotives have been procured as well as 530 passenger carriages, 277 freight wagons. However, there was a major deficiency in coordination and prioritisation.

Bangladesh Railways introduced 20 sets of Diesel Electric Multiple Unit (DEMU) between 2011 and 2015 to start commuter services for short distance journeys. An investment of Tk599 crore to buy DEMUs turned out to be a waste within a few years, as no such trains are in operation currently.

A look at the railway investments reveals many such inconsistencies. Only one train is running on the 79-km line from Ishwardi via Pabna to Dhallachar, built at a cost of Tk1,714 crore. Only three trains make stops at the hi-tech city railway station, built at a cost of around Tk35 crore, despite two dozen trains passing through the station. Around 150 new passenger trains have been introduced during the tenure of the current government, but the number of locomotives has increased by only 22. Some 13 non-operational ones have exacerbated the crisis, and each locomotive is now required to handle more than two-and-a-half trains a day.

Despite the increase in passenger trains, the number of railway passengers has not increased, but instead decreased since 2012.

The number reduced to about 5 crore in the last fiscal year from 6.5 crore in the fiscal year 2011-12. Rail ridership has fallen by a quarter in a decade. 

However, during this period, the volume of goods transported by rail increased by about a third. The revenue of freight has increased by 67.12% in a decade due to increased transportation of goods. And despite the decrease in passenger traffic, the increase in fares has increased the passenger revenue by 42.05%.

Looking at the recently inaugurated Khulna Mongla Port Rail Line project, we see that around Tk4,226 crore is being spent on the construction of this line. 

The proposal to complete the project at the approval level was Tk1,721 crore. The government faced a cost hike worth Tk2,504 crore due to delay in implementation.

The initial cost for constructing a dual gauge railway from Dohazari to Cox's Bazar via Ramu was Tk1,852 crore, but the cost of the project surged to Tk18,034 crore. The government has to pay additional Tk16,182 crore as the charge of delay of the project.

Moreover, the cost of the Padma Bridge rail link project and construction of the 3rd and 4th line of Dhaka-Tongi section and double line in Tongi-Joydebpur section surged by additional Tk4,258 crore and Tk2,494 crore, respectively, due to delays.

A total of Tk64,850 crore is being spent on these four projects following the delays, but proper implementation could have saved at least 40% of the amount.

The newly constructed Dohazari-Cox's Bazar line was supposed to accommodate 22 pairs of passenger trains daily from Dhaka to Cox's Bazar along with six pairs of freight trains.

Apart from this, several trains were committed to operate from Chattogram, Sylhet, Comilla, and Noakhali. The railway is currently operating only two pairs of trains a day on the line.

If only three to four trains run through the multibillion Padma Bridge rail link, there will be no scope for finding conspiracy in defaming behind any question regarding rationality of the project.

When asked why railways are not making profits, or at least reducing losses, despite so much investment, railway policy makers and implementers often say that railways are not a business entity.

Policymakers claim that railways are working for providing service instead of for profit. 

But the fact is that the quality of railway services has not improved much in the last few years. 

Despite claims by the railways that only 10% of trains are running behind schedule, hour-long waits for many trains have become a regular phenomenon for train passengers. Locomotives including coaches and wagons are often derailed.

Despite claiming to be service organisations, the number of local, mail and commuter services known as trains for relatively low-income people is being reduced on the pretext of losses. 

Even the sale of intercity train tickets over the counter has been almost stopped, reducing the access to rail services for the poor, illiterate and people who are out of bank and mobile financial services.

Documents of each project initiated by the Bangladesh Railways shows the specific project as profitable. A large number of passenger and goods traffic is projected in the project feasibility study. 

Just as it is absurd to count losses after implementing a project that was profitable on paper, it is a crime to avoid responsibility by marking the organisation as service after losses.

As the financial capacity of the government is limited, the best value for money should be ensured in the implementation of the budget in the railway sector as well as in all other sectors.

Bangladesh Railway has kept as one of its missions "Ensure optimum utilisation of development budget and revenue Budget of Bangladesh Railway".

Apart from inefficiency in service management, shortage of manpower, shortage of all types of rolling stock including locomotives, coaches and old rolling stock are blamed for the non-increase in revenue and service quality as expected.

Almost half of the over 47,000 posts in the railways are now vacant. The number of closed stations due to the manpower crisis is around hundred. In the meantime, about 3,500 manpower is needed to operate the new three lines.

At one time, mass layoffs were made in the railways on the pretext of excess manpower. Now this organisation is unable to provide adequate services due to manpower crunch.

Hundreds of kilometres of railways remain underutilised due to shortage of manpower and rolling stock.

The government introduced a remarkable number of initiatives in the last decade to buy locomotives, coaches, wagons and other rolling stocks. Most of such initiatives remained incomplete due to inefficiency and negligence of the concerned officials.

Jahidul Islam is a senior staff correspondent at The Business Standard.