Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: The People’s Republic of Bangladesh
Project: Hazrat Shahjalal International Airport Expansion Project (I)Loan Agreement: June 29, 2017
Loan Amount: 76,825 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 Aviation Sector in Bangladesh
The People’s Republic of Bangladesh has achieved economic growth at an average pace ofover 6% per annum for more than 10 years. Against this backdrop, demand for air services
has rapidly expanded as evidenced by the fact that the number of air passengers at theinternational airport in Dhaka, increased at an average pace of around 8% per annum between
2006 and 2015. Hazrat Shahjalal International Airport (hereinafter “Dhaka InternationalAirport”) is used by about 75% of domestic and international passengers departing from andarriving in Bangladesh, and plays an important role as the core infrastructure that supports therapid growth of the socioeconomic activities in the country.
According to the Master Plan for Hazrat Shahjalal International Airport Expansion Project(2015) prepared by the Government of Bangladesh, the number of international passengers
using Dhaka International Airport in 2018 is projected to exceed eight million per annum,
which is the maximum capacity of the existing international terminals T1 and T2, and to reach
22 million by 2035. Apart from the expansion of Dhaka International Airport, the Governmentof Bangladesh has also launched a plan to construct Bangabandhu Sheikh Mujib International
Airport (hereinafter “the new airport”), which will be the second international airport serving
Dhaka. While the new airport is expected to enter into service in 2030, the expansion ofDhaka International Airport is becoming an urgent issue based on the current demand forecast
for air passengers.
As for air cargo, the volume of air cargo imports and exports at Dhaka International Airport
increased by 9% and 14%, respectively, between 2011 and 2015. However, Dhaka
International Airport was unable to handle the rapidly increasing cargo volumes due toinsufficient staff capacity, inefficient operations, and the absence of cargo management
systems and so on. Some import cargos are not stored inside the existing cargo building andare left in the unroofed airside area, which results in damages to cargo by rainfall and dust.
Furthermore, the airport has suspended cargo flights to the United Kingdom and Germany
since March 2016 due to a flaw in the safety and security systems including inspection of aircargo. This has affected the entire country’s economic activities because cargo transport must
be done via a third county. It has, thus, become an urgent need to improve the safety andsecurity systems of Dhaka International Airport. In addition, the Government of Bangladeshhas indicated the implementation of a policy to strengthen security at all airports inBangladesh, including Dhaka International Airport, since the terrorist attack on July 1, 2016.
(2) Development Policies for the Aviation Sector in Bangladesh and the Priority of the Project
In Vision 2021 (2009), which reflects the current administration’s manifesto, the income
generated by airports is expected to grow with increasing in-service flights, indirect flights
and transit passengers, while utilizing the country’s geographical advantage to make Dhaka
International Airport a hub airport.
The National Integrated Multimodal Transportation System Policy (2013) identifies areas that
require improvement, which include access to/from Dhaka International Airport, air cargoservices, staff competence, and immigration procedures by introducing the latest equipment.
In the Master Plan for Hazrat Shahjalal International Airport Expansion Project (2015), there
are plans to construct an international terminal T3 at Dhaka International Airport, expand thecargo terminal, build a new multilevel car park, improve the surrounding infrastructures
including access roads to national highways, upgrade the safety and security facilities andequipment at Dhaka International Airport, etc.
The Project is to expand the airport capacity to cope with a rapid increase in demand for airservices (i.e. to increase “capacity for passengers per annum” and “capacity for air cargo perannum”) by building another international terminal T3 at Dhaka International Airport andexpanding the cargo terminal and the airport functions including maintaining other related
facilities. It also aims to improve the access to/from the airport, the convenience of passenger
terminals and the safety including enhancing airport security functions. Furthermore, the 7thFive-Year Plan (FY2016/17–FY2020/21) identifies important projects, including expanding
the apron close to the existing cargo terminal, which will be implemented with thegovernment’s budget, and improving the control tower radar system, in addition to building
an international terminal T3 at Dhaka International Airport and expanding the cargo terminal.
These projects are also regarded as urgent, as part of the goal of creating an investment
environment.
(3) Japan and JICA’s Policy and Operations in the Aviation Sector
The Country Assistance Policy for Bangladesh (June 2012) sets the acceleration of economic
growth as a priority area and aims to contribute to the development of transport and traffic
infrastructure for promoting the efficient transport of passengers and goods and for mitigating
regional disparities. In addition, the JICA Country Analysis Paper for Bangladesh (April2013) identifies the necessity of resolving bottlenecks in domestic traffic and facilitating themovement of people and goods in order to strengthen the country’s foundation for economicgrowth. This paper identifies the improvement of the safety of air network in the aviation
sector as one of the priority issues under the “development of the domestic transport andtraffic network,” along with the road and bridge sector and the railway sector. The Project is,therefore, in line with these policies and the analysis.

JICA strived to accommodate the increased demand for passengers and cargo and improvesafety by maintaining and expanding Chittagong Airport through the Chittagong Airport
Development Project, which was completed in 2003. JICA has also strived to ensure safety
when guiding aircrafts to land at the airport and to formulate measures for dealing withaircraft accidents and terrorism at Dhaka International Airport by maintaining its safety andsecurity systems through the Project for Improvement of Airport Safety and Security Systems(2014).
(4) Other Donors’ Activity
In the late 1990s, the Government of France provided the Aeronautical Institute ofBangladesh with training equipment. In 2013, the Danish International Development Agency(DANIDA) supported the improvement of basic facilities, as well as the safety and security
systems, of Dhaka International Airport. From 2016, the Government of the United Kingdom
has supported the Civil Aviation Authority of Bangladesh (CAAB) in enhancing the airport
safety and security through advisory services by a private security firm. The Government ofthe United Kingdom, in cooperation with the Government of the United States, also provides
the Airport Armed Police with technical support in enhancing security.
(5) Necessity of the Project
The Project is in line with Bangladesh’s development challenges and policies, as well as withthe assistance policies and analysis of the Government of Japan and JICA. It contributes, notonly to the economic growth of Bangladesh through the expansion of the capacity and theimprovement of convenience and safety of Dhaka International Airport, but also to the ninth
goal of the Sustainable Development Goals (SDGs). Furthermore, the Project helps to deepen
the relationship between Japan and Bangladesh as seen when the two countries’ leadersconfirm the cooperative policies. Therefore, the necessity for JICA to support the Project issubstantial.
3. Project Description(1) Project Objective
The objective of the Project is to meet future demand of air transportation and to improve
airport capacity, convenience and safety, by constructing international passenger terminal 3,
cargo terminal and other infrastructure and facilities at the Hazrat Shahjalal International
Airport in Dhaka, thereby contributing to further economic growth in Bangladesh.
(2) Project Site / Target Area
Dhaka
(3) Project Components
1) Construction of New Passenger Terminal Building (Terminal 3), New Cargo Complex,Multi-Level Car Parking with Tunnel, VVIP Complex, Parking Apron (Terminal 3 Area),Taxiways, Landside Service Road including Connecting Road between Terminal 3 andDEE, Water Supply System, Sewage Treatment Plant, Intake Power Plant with Distribution
System, Hydrant Fuel Supply System, Procurement of Communication System, Rescue andFire Fighting Facilities, Security and Terminal Equipment, and Improvement of Drainage
System2) Consulting Service（Review and Preparation of Tender Documents, Tender Assistance,Construction Supervision, Facilitation of Implementation of Environmental Managementand Monitoring Plan (EMMP), Safety Management for the Job Site, Technology Transfer,
Dispute Board (DB) Assistance, etc.）(4) Estimated Project Cost (Loan Amount)
191,971 million Yen (Loan Amount: 76,825 million Yen(5) ScheduleJune 2017 – July 2022 (62 months in total).The Project will be completed when the facilities
are put in place (July 2021).
(6) Project Implementation Structure1) Borrower: The Government of the People’s Republic of Bangladesh
2) Executing Agency: Civil Aviation Authority, Bangladesh, Ministry of Civil Aviation andTourism (CAAB)
3) Operation and Maintenance System: The operation and maintenance of the Project isprovided by CAAB.
(7) Environmental and Social Consideration / Poverty Reduction / Social Development
1) Environmental and Social Consideration① Category: B② Reason for Categorization: The Project is not located in a sensitive area, nor has it
sensitive characteristics, nor falls it into sensitive sectors under the Guidelines, and its
potential adverse impacts on the environment are not likely to be significant.
③ Environmental Permit:
The Environmental Impact Assessment (EIA) Report for the Project was approved by
the Department of Environment in June 2017.
④ Anti-Pollution Measures:
Although the construction is assumed to affect air quality and noise only within theairport, the impacts will be mitigated by taking measures such as water sprinkling,equipment maintenance, and the use of low noise type equipment. Waste andwastewater produced by the construction will be disposed in accordance with thenational legal system in order to avoid the impact on health and environment. Afterthe commencement of services, exhaust emissions and noise caused by aircrafts andground-operating vehicles are projected to increase as air traffic grows. CAAB will
periodically monitor and take corrective actions as needed such as recommending theuse of low noise type aircrafts, which is launched by the International Civil Aviation
Organization (ICAO), vehicle maintenance, and passing restriction. In addition, it isassumed that the volume of wastewater will increase as the number of aircrafts andpassengers rises; however, wastewater will be purified by a new wastewater treatment
facility, which is expected to satisfy the national standard for wastewater disposal.
⑤ Natural Environment:
The target area does not apply to a vulnerable area, such as national park, or its
surrounding, and the expected influence on the local natural environment is minimum.
⑥ Social Environment:
Since this project is implemented in a restricted area within the existing premises, noland acquisition or resettlement will occur. Regarding the structure owned by acompany in the scheduled construction site of international terminal T3, the leaseagreement for the land between the company and CAAB has expired, and the land isexpected to be vacated under the country’s laws and regulations.
⑦ Other / Monitoring:
In this project, the monitoring of air quality, noise, etc., during construction will bedone by the contractor, and the monitoring of air quality, water quality, noise, etc.,
after the commencement of service will be done by the executing agency.
2) Promotion of Poverty Reduction: None
3) Promotion of Social Development: The concept of “Universal Design” which enhances
the accessibility for handicapped users will be introduced into the Terminal 3. Also, thedesign of the Terminal 3 will be considered the convenience of female users.
(8) Collaboration with Other Donors: None
(9) Other Important Issues: None4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)

Indicator

Baseline(Actual Value in2015)

Target（2023）【Expected value 2years after projectcompletion】

Number of international air passengers of HSIA (millionpassengers per annum)

5.6

10.6

Amount of international air cargo of HSIA (thousand tonper annum)

259.9

527.92) Internal Rate of ReturnAccording to the following preconditions, this project’s Economic Internal Rate ofReturn (EIRR) will be 22.5%. The Financial Internal Rate of Return (FIRR) will be6.2%.
【EIRR】
Cost: Investment cost for the Project, Operation and Maintenance Cost, Equipment
Replacement Cost
Benefit: Consumer surplus of all passengers, Saved time for Bangladesh passenger,
Foreign exchange earnings by foreign tourists
Project life: 25 years【FIRR】
Cost: Investment cost for the Project, Operation and Maintenance Cost, Equipment
Replacement Cost
Benefit: Aeronautical Charges (Landing charges and Aerobridge Charges),
Non-Aeronautical Charges (Landing charges and Aerobridge Charges)
Project life: 25 years(2) Qualitative Effects
Enhance convenience of HSIA for air passengers through improvement of congestion interminal building and airport access
Ensure international standard of safety, security and facilitation of HSIA
Increase foreign direct investment to Bangladesh

5. External Factors and Risk Control
The construction period shall not be affected by major natural disasters and other factors.
6. Lessons Learned from Past Projects(1) Lessons Learned from Past Projects
The ex-post evaluation of the Second Bangkok International Airport Development Project inThailand shows that doing an expansion project while continuing operations at the existing
airport requires complex process planning and design. Therefore, it is necessary to carefully
determine the period for designing details and to ensure the safe operation of aircrafts and theconvenience of passengers.
(2) Application of Lessons Learned to the ProjectIn the Project, construction will be done while the existing passenger terminals are inoperation. For this reason, coordination with relevant organizations like CAAB, Bangladesh
Petroleum Corporation and Padma Oil Company Limited to build additional pipes in theexisting hydrant refueling system, etc., will be done at an early stage of the plan, along withdetermining the period for designing details. There are also plans to include the provision ofsupport by coordinating with CAAB and its related organizations as part of the supervision ofthe implementation.
7. Plan for Future Evaluation(1) Indicators to be Useda) Number of international air passengers of HSIA (passengers per annum)b) Amount of international air cargo of HSIA (ton per annum)(2) Timing: Two years after the project completion