ADB Scales Up Financing for Preparation of Subregional Transport Projects in Bangladesh

28 September 2015

The Asian Development Bank (ADB) has increased financing for a SASEC transport project that supports preparation of high-priority railway and road projects in Bangladesh. These transport projects will support greater connectivity in the subregion to boost trade by facilitating cross-border and domestic traffic in Bangladesh.

The $30 million additional financing for the ADB-supported Subregional Transport Project Preparatory Facility—approved on 28 September 2015, and with complementary funding of $6 million from the Government of Bangladesh—will be used to prepare 4 Bangladesh railway projects, spanning 295 kilometers (km), and 8 additional road projects, with a total length of 600 km, along the Trans-Asian Railway and the Asian Highway network. These projects will enhance cross-border traffic, expanding connectivity in the Bangladesh-Bhutan-India-Nepal (BBIN) subregion and forming links between South Asia and Southeast Asia, as well as improve Bangladesh's domestic transport. Through this technical assistance (TA) loan, greater efficiency is also expected in implementation of regional cooperation and integration (RCI) transport projects.

Bangladesh is well-placed to become a transport and transshipment hub for the subregion, with its proximity to Bhutan and Nepal, and strategic borders near India and Myanmar. A recent agreement between Bangladesh and India has cleared use of Chittagong and Mongla seaports for movement of India-bound goods through Bangladesh's road and rail networks. Talks are also underway to allow landlocked Bhutan and Nepal access to the two seaports.

The TA loan was originally approved on November 2010 with $23 million in financing from ADB. Focusing on major international trade corridors identified in the SAARC Regional Multimodal Study, and transport corridors linking BIMSTEC countries, it provided a facility to prepare a series of RCI projects, including the Bangladesh: SASEC Road Project approved in 2012 and the Bangladesh: SASEC Railway Connectivity: Akhaura-Laksam Double Track Project approved in 2014. Furthermore, this loan also helped generate financing interest for follow-on transport projects in the country by other development partners.

The volume of regional trade in South Asia is much smaller than other regions, where missing links and congestion in the main domestic corridors pose a limitation on international traffic and further trade. Addressing these limitations will enable Bangladesh to benefit from international trade and support the country's economic development.

The ADB-supported SASEC Program aims to create dynamic multimodal transport networks, and facilitate planning and implementation of regional and national SASEC transport projects that benefit all 6 member countries. It also supports the strategic priorities of SAARC at the inter-regional level.

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