China revives long-delayed Akhaura-Sylhet dual-gauge rail project with Tk 10,700cr loan

After more than a decade of uncertainty over financing, China has once again agreed to finance the long-delayed Akhaura-Sylhet Dual-Gauge Railway Project, breathing new life into one of Bangladesh's key railway infrastructure schemes.

The project had remained stalled due to financing complications and competing funding proposals from China and India. In the absence of confirmed funding, it was eventually dropped from the Annual Development Programme (ADP) for FY2024-25 following a review meeting chaired by the then railways minister on February 29, 2024.

China has now expressed its willingness to provide more than Tk 10,700 crore in loans for the project, paving the way for its inclusion in the FY2026-27 ADP.

According to official sources, the Cabinet gave policy approval on May 21 to implement the project under a government-to-government (G2G) arrangement with Chinese financing. The Cabinet also approved negotiations with the designated Chinese contractor. Following the decision, the Economic Relations Division (ERD) sent a formal request to the Chinese Embassy in Dhaka to expedite the financing process.

The Ministry of Railways said Bangladesh is prioritising rail-based regional connectivity and improving railway efficiency to support economic and social development. Upgrading the Akhaura-Sylhet railway from metre gauge to dual gauge is considered a key component of that strategy.

The project, titled “Conversion of Akhaura-Sylhet Metre Gauge Railway Line into Dual Gauge Railway Line,” carries an estimated cost of Tk 16,110.44 crore. Bangladesh has sought approximately Tk 10,700 crore ($1.27 billion) in Chinese loans.

The project will convert 239.14 kilometres of existing metre-gauge railway into dual gauge, including 176.24 kilometres of the main line and 62.90 kilometres of loop lines. The upgraded railway will have a design speed of 120 kilometres per hour.

The construction work will be carried out by China Railway Construction Company (CRCC).

The government has already instructed Bangladesh Railway to gradually convert the country's metre-gauge network into dual gauge. Once completed, the project will strengthen rail connectivity between Dhaka, Chattogram and Sylhet. It will also complement the ongoing Kulaura-Shahbazpur dual-gauge project, which forms part of the Trans-Asian Railway Network.

The project was first proposed in 2016, when China initially showed interest in financing it. Later, India entered the picture, offering financing through the Export-Import Bank of India if its state-owned IRCON International Limited was awarded the construction contract. However, the competing proposals failed to materialise, leaving the project in limbo.

Although the scheme was included in the FY2023-24 ADP, no financial progress was made because funding could not be secured.

Railways Ministry Additional Secretary (Planning) Sheikh Sakil Uddin Ahmed said the project had been excluded from the ADP solely because financing was unavailable.

“China has now assured financing, allowing the project to be re-included in the ADP,” he said, adding that the final loan amount and conditions would be confirmed after ECNEC approval and negotiations with the Chinese side.

Bangladesh Railway Additional Director General (Development) Mamunul Islam said the project was also discussed during Prime Minister Tarique Rahman's visit to China in June this year.

“The project was originally planned under Chinese G2G financing but was delayed for various reasons. It is encouraging that it is finally moving forward with Chinese support. The Akhaura-Sylhet corridor is strategically very important,” he said.

The Ministry of Railways has submitted the project's Preliminary Development Project Proposal (PDPP), feasibility study, Initial Environmental Examination (IEE), Environmental Impact Assessment (EIA) and other required documents to facilitate loan approval.

Despite the renewed progress, the project has faced criticism from the Planning Commission over its high estimated cost. The commission noted that expenditures for ballast, sleepers, rails and other materials were significantly higher than those of comparable railway projects.

The proposed construction cost stands at Tk 56.72 crore per kilometre, compared with Tk 24.80 crore for the ongoing Akhaura-Laksam dual-gauge double-line project. Costs are also substantially higher than those of other recently approved railway projects.

The commission also questioned the proposal to award the construction contract through direct procurement, recommending competitive participation by other qualified Chinese firms. It further argued that converting the line to dual gauge without constructing a double track might not significantly increase train frequency or maximise public benefits.