Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: The People's Republic of Bangladesh
Project: Dhaka Urban Transport Development Project (I)Loan Agreement: February 20, 2013
Loan Amount: 10,477 million yen
Borrower: The Government of the People's Republic of Bangladesh
2.

Background and Necessity of the Project(1) Current State and Issues of the Urban Transport Sector in Bangladesh
Dhaka Metropolitan Area, which includes Dhaka, the capital city of the People'sRepublic of Bangladesh (hereinafter called Bangladesh), is one of the largest urban
areas in the world (the 9th largest, according to UN figures) with an estimatedpopulation of about 14.64 million as of the middle of 2010. Currently, passenger andcargo transport in the metropolitan area is heavily concentrated on roads. Transport
infrastructures are not well developed and the country is behind in development andimplementation of transport regulatory systems to control various transport modes onroads including public buses and auto rickshaws. Therefore, chronic traffic congestionis causing economic loss of an estimated amount of about 260 billion yen per year
(2010) and is seriously affecting businesses and people’s life. Moreover, such traffic
pollution as vehicle emission and noise has become a serious problem. Further
motorization and increase of traffic volume is expected in the Dhaka Metropolitan
Area, where the population is estimated to grow to about 20.9 million by 2025 withpopulation flowing from rural areas against a background of steady economic growthin addition to natural population growth. There is an urgent need to improve suchsituation through the introduction of a mass transport system.
(2) Development Policies for the Urban Transport Sector in Bangladesh and thePriority of the Project
The Sixth Five Year Plan (FY2011-2015), which is the latest state plan ofBangladesh, underlines the importance of the development of the urban transport
sector that will contribute to economic growth and poverty reduction, and mentions theintroduction of a mass rapid transit (MRT) system as a major action. The Strategic
Transport Plan (STP), established and approved by the government of Bangladesh in2005 as a basic policy for the urban transport sector in Dhaka, summarizes the20-year urban transport policies and puts priority on the establishment of anorganizational framework for urban transport and the development of a masstransport system. The Bangladesh Climate Change Strategy and Action Plan (2008)
provides an action guideline for infrastructure development to improve fuel efficiency
in the transport sector toward the realization of a low-carbon society. JICA conductedPreparatory Survey for the Dhaka Urban Transport Development (2009-2011,technical cooperation), the measures for transport network improvement in Dhaka
proposed in STP were reviewed, three candidate MRT routes were compared andstudied in terms of technology, economy and environment, and the appropriateness of
the implementation was confirmed. The Project is for the construction of Line 6, which
was selected as a top priority in the survey.
(3) Japan and JICA’s Policy and Operations in the Urban Transport Sector
One of the priority fields defined In the Country Assistance Policy for Bangladesh(June 2012) is acceleration of economic growth toward a middle-income country thatwill benefit all the people, and it stated that the inland distribution function should be
improved through collaboration of multiple means of transport (multimodal transport).
Based on the policy, in the Country Analytical Work, JICA considers “urbandevelopment” as a priority and the Project is in line with such policy. Major support
activities in the sector conducted in the past include the Chittagong City Outer Ring
Road Project (2009, Japanese ODA loan). Putting priority on measures for adoption toclimate change in Bangladesh, Japan has actively provided support through suchprojects as the Programme for Improvement of Solid Waste Management in Dhaka
City toward the Low Carbon Society (2009, Program Grant Aid for Environment andClimate Change).
(4) Other Donors’ Activity
In the urban transportation sector in Bangladesh, JICA and the World Bank haveprovided support as leading donors. In addition to the assistance for the establishmentof the above-mentioned STP, the World Bank has been supporting the Clean Air andSustainable Environment (CASE) Project since 2009, developing Route 3 of the bus
rapid transit (BRT). ADB has also been supporting the Greater Dhaka Sustainable
Urban Transport Corridor Project since 2010, to improve roads connecting to BRT
Route 3.
(5) Necessity of the Project
The Project is to contribute to the economic growth of Bangladesh by smoothing
passenger and cargo transport in the Dhaka Metropolitan Area through theconstruction of a high speed urban railway using MRT system running south to northin the capital city of Dhaka, where rapid urbanization and increase of traffic volume iscausing chronic traffic congestion and traffic pollution. The project is in line with thedevelopment policies of the Bangladesh government as well as the assistancepolicies of the Japanese government and JICA. Therefore, the necessity andrelevance of JICA’s support for the implementation of the Project is high.
3.

Project Description(1) Project Objective(s)The objectives of the Project are to respond to the increasing transport demand inthe Dhaka Metropolitan Area through the construction of a 20-kilometer high-speed
urban railway in the city of Dhaka using MRT system, and to contribute to theeconomic growth of the whole country of Bangladesh through the reduction of traffic
congestion. It will also contribute to air pollution control in the Dhaka Metropolitan
Area through the promotion of modal shift from automobiles to public transport.
(2) Project Site/Target Area: Dhaka, Bangladesh(3) Project Components (Including the Procurement Method)1) Construction of railway structures (about 20 km long) (including construction ofstation buildings and tracks) (international competitive bidding)2) Construction of a railway car base (including land preparation, construction of acar barn and construction of sidings) (international competitive bidding)3) Procurement of railway cars (international competitive bidding)4) Construction of electricity and signal systems (international competitive bidding)5) General consulting service (including detailed design, bidding assistance andconstruction supervision) (short-list method)6) Consulting service to support residents’ relocation (short-list method)7) Consulting service to support organizational development (short-list method)(4) Estimated Project Cost (Loan Amount)
Total project cost: 244,470 million yen
Loan amount: 10,477 million yen(6) Schedule
The project period (cooperation period) will be from February 2013 to August 2022
(a total of 115 months). The Project will be completed at the start of the use of all
sections (December 2021).
(6) Project Implementation Structure1) Borrower: The Government of the People’s Republic of Bangladesh
2) Executing Agency: Dhaka Mass Transit Company (DMTC)
3) Operation and Maintenance System: Same as 2)(7) Environmental and Social Consideration/Poverty Reduction/Social Development
1) Environmental and Social Consideration:① Category: A
Reason for Categorization: The Project falls into the railway sector (located in asensitive area and is likely to have significant adverse impact due to its
characteristic) under the JICA guidelines for environmental and social
considerations (April 2010).
② Environmental Permit: The Environment Impact Assessment (EIA) Report ofthe Project, prepared by the Dhaka Transport Coordination Board (DTCB), wasapproved by the Department of Environment, Ministry of Environment andForest of Bangladesh, on July 11, 2011.
③ Anti-Pollution Measures: Water will be periodically sprinkled to prevent dust

that is expected to be generated during construction. Sound absorbers andsound-insulating walls will be installed for construction equipment to reducenoise and vibration caused during construction. Wastewater discharged fromthe station and the train depot, when the facilities are in service, will beappropriately treated at wastewater treatment facilities.
④ Natural Environment: As the project site is not located in sensitive areas suchas a national park or its vicinity, but in located in a well-developed urban area,
there are no rare species. Trees will be planted underneath the elevated tracks
to compensate the plants removed for the construction of the elevatedstructure.
⑤ Social Environment: In the Project, most facilities will be constructed within thebound of existing roads. It is estimated that 35.6 ha of land will be acquired and1,040 people from 219 households will be affected. (Of them, 75 households
will have to be relocated.) The procedures of land acquisition and resettlement
will be carried out in accordance with the relevant domestic laws andprocedures, and the Resettlement Action Plan (RAP) developed by theexecuting agency. In the stages of scoping and EIA report preparation, there
have been constant discussions with local residents concerning the EIA reportand RAP. In the meetings with residents, explanation was given concerning
outline of the Project, planned routes, countermeasures to the points that may
have impacts on natural and social environments, outline of the draft RAP andcompensations.
⑥ Other/Monitoring: In the Project, the executing agency will monitor air quality,
noise and water quality during construction and after starting operations as wellas the progress of land acquisition and resettlement.
⑦ Conclusion: With environmental and social measures described above, it isunlikely that the Project will cause serious adverse impact. The implementation
status of following points will have to be checked through a progress report andthe others.
a) Implementation status of land acquisition and resettlementb) Environmental monitoring (during construction and after starting operation)2) Promotion of Poverty Reduction: None
3) Promotion of Social Development: As part of consulting services of the Project,training on HIV/AIDS prevention will be provided to construction workers during
the construction period. Barrier-free design for the handicapped will be adopted
for station buildings and facilities, including installation of elevators and tactile
tiles for the visually impaired.
(8) Collaboration with Other Schemes and Donors
Technical cooperation will be provided to prepare the rules/regulations system
for the urban transport including the Project and institutional capacity building of

DMTC.
(9) Other Important Issues
The Project will contribute to the mitigation of climate change as reduction of
global-warming emissions is expected through modal shift to mass high-speed transitsystem and reduction of traffic congestion. The effect of climate change mitigation
through the Project (estimated GHG reduction) will be about 180,000 tons of CO2 peryear (estimation for 2025). Japanese companies may be selected as contractors
because STRASYA (Japanese railway technologies and knowhow) is used in allcomponents of construction of railway structures, construction of a train depot,procurement of trains, construction of electricity and signal systems, and consultingservices.
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicator)
Target (2023)

Indicator(unit)

Baseline(Actual Value in 2009)

Number of passengers(1,000 passenger kilometersper day)

NA

4,193

Distance of train operation(kilometers per day)

NA

6,528

Travel time (min)*

110.4

46.2

Car operating ratio (no. oftrain services)

NA80【Expected value 2 years
after project completion】*Travel time from Uttara in the north to Saidabad in the south2) Internal Rate of Return
Based on the conditions indicated below, the economic internal rate of return(EIRR) of the Project will be 25.4% and the financial internal rate of return (FIRR)
will be 1.7%.
【EIRR】
Cost: Project cost (excluding tax), operation and maintenance cost Benefit:
Reduction of operation cost, reduction of travel time, and the others.
Project Life: 40 years【FIRR】
Cost: Project cost, operation and maintenance cost
Benefit: Fare revenue
Project Life: 40 years

(2) Qualitative Effects
The qualitative effects of the Project include facilitation of smooth passenger andcargo transport, reduction of air pollution, mitigation of climate change throughpromotion of modal shift to public transportation in the Dhaka Metropolitan Area.
5. External Factors and Risk Control
Delay in civil engineering works caused by natural disasters such as floods, andlack of fare setting necessary enough to secure financial health of the executingagency
6. Evaluation Results and Lessons Learned from Past Projects(1) Results of Evaluation of Similar Past Projects
From the result of ex-post evaluation of the Metro Manila Strategic Mass RailTransit Development Project, etc., we have learned lessons that it is difficult tooperate urban transport business with fare revenue only and that funding andsubsidies from the government are needed because it requires large initial investment,
and that a detailed financial plan and an action plan of the government support should
be developed in the phase of project planning so that the financial health of theexecuting agency will be ensured.
(2) Lessons for the Project
As the Project requires large initial investment and therefore financial health needs
to be secured, based on the lessons above, appropriate fare setting will be conducted,
and part of the Japanese ODA loan will not be subleased but will be funded by thegovernment of Bangladesh. Moreover, as part of the consulting service to support
organizational development, support will be provided to DMTC for the development
and implementation of a financial plan.
7. Plan for Future Evaluation(1) Indicators to be Used
1) Number of passengers (1,000 passenger kilometers per day), distance of train
operation (kilometers per day), travel time (minutes) and car operating ratio(number of train services)2) Economic Internal Rate of Return (EIRR) (%), and Financial Internal Rate ofReturn (FIRR) (%)(2) Timing of Next Evaluation: 2 years after the completion of the ProjectEND