China Eximbank provides $1.126 billion preferential buyer’s credit for Dhaka-Ashulia Expressway Project (Linked to Record ID#52763 and ID#92382)

Project narrative

On July 20, 2011, the Government of Bangladesh's Executive Committee of the National Economic Council (ECNEC) provided in-principle approval for the Dhaka-Ashulia Expressway Project. Bangladesh University of Engineering and Technology (BUET) conducted a pre-feasibility study in 2012 and estimated the possible project cost at around Tk 70 to 80 billion. Then, in January 2015, the Government of Bangladesh's Bridges Division signed a memorandum of understanding (MOU) with China National Machinery Import and Export Corporation (CMC) to implement the project. It was assumed at the time that the cost of the project would rise by 8 percent due to an increase in labor and material prices. Later, a consortium, led by an Australian firm, conducted the final project feasibility test in 2016 and estimated the total project cost to be around Tk 100 billion. The Government of Bangladesh provided final approval for the project in 2017 with an estimated cost of Tk 169 billion. Then, on October 26, 2021, China Eximbank and the Government of Bangladesh signed a $1,126,986,000 preferential buyer’s credit (PBC) agreement for the Dhaka-Ashulia Expressway Project. The PBC carries the following borrowing terms: a 20-year maturity, a 5-year grace period, and a 2% interest rate. The proceeds of the PBC are to be used by the borrower to finance 85% of the cost of a $1.359 billion commercial (EPC) contract between Bangladesh Bridge Authority (BBA) and CMC, which was signed on November 29, 2017. As of the June 30, 2023, the China Eximbank loan (PBC) had achieved a 15.1% disbursement rate ($170,597,000 out of $1,126,986,000). This project involves the construction of a 24 km expressway that will connect Hazrat Shahjahal International Airport with Abdullahpur, Ashulia, Baipail and Dhaka Export Processing Zone (DEPZ) on the Nabinagar-Chandra highway. The main objective of the project is to minimize the traffic congestion in and around Dhaka-Ashulia areas; the Dhaka-Ashulia Expressway will be connected to the Dhaka Elevated Expressway and is located within the alignment of the Asian Highway. Upon completion, the project is expected to greatly reduce traffic congestion in the Abdullahpur-Ashulia-Bypail-Chandra corridor connecting Dhaka with 30 districts. Vehicles will have to pay tolls to use the expressway and the thoroughfare is expected to boost the country's gross domestic product by 0.21 percent. CMC, Jiangsu Provincial Construction Group, and Fifth Major Bridge Engineering Co Limited (MBEC-5) are the contractors responsible for implementation. A groundbreaking ceremony took place on November 22, 2022. The project was originally expected to commence in September 2017 and conclude in June 2022. However, due to financing delays, the project's expected completion date was later pushed out to June 2026.