China Eximbank pledges to provide a loan for the Akhura-Sylhet Dual Guage Line Project

Project narrative

During President Xi Jinping's 2016 state visit to Bangladesh from October 14-15, a Memorandum of Understanding (MOU) was signed to finance the reconstruction of a railway track from Akhura to Sylhet. Then, on December 27, 2017, China Railway Construction Bridge Engineering Bureau signed a commercial contract with the Bangladeshi government worth USD 1.545 billion. The contract specifies that the project will be implemented according to the EPC model (Engineering-Procurement-Construction). The project has a total length of 176 kilometers. It includes roadbed, bridge and culvert, station yard, station building, and track construction. The construction period is estimated to be 4 and a half years. Press releases by the implementing agency and Chinese government website suggest that the signing of the commercial contract signifies that the project will start implementation soon. As of June 2019, press releases indicate that the project will be financed by China Eximbank either with a Government Concessional Loan (GCL) and/or a Preferential Buyer’s Credit (PBC). The exact amount and terms of financing offered by China Eximbank are not mentioned. According to an October 2016 article from Asia News Network, the total estimated project cost was $1.87 billion, of which China Eximbank would provide $1.76 billion through a soft loan. The remainder of the funding would be provided by the Government of Bangladesh. According to IJGlobal, China Eximbank has pledged to provide a $1.75 billion concession loan for the project, and the Government of Bangladesh has pledged to provide $120 million of equity investment for the project. As of June 2019, it appears the China Eximbank had still not made any official commitments in support of this project. Negotiations halted between the two countries in 2020 following a request to lower costs. However, by mid-July 2022, negotiations were revived as the Chinese expressed renewed interest in financing the project. However, as of January 2023, it appears Bangladesh has found new financiers to fund the project and there is no evidence of Chinese involvement.