Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: The People’s Republic of Bangladesh
Project: Dhaka Mass Rapid Transit Development Project (III)Loan Agreement: June 14, 2018
2. Background and Necessity of the Project(1) Current State and Issues of the Urban Development Sector and Priority of theProject in Bangladesh
The population of Dhaka increased from 6.62 million to 16.98 million between
1990 and 2014 (United Nations Population Division, 2014). This population
increase has caused a rapid increase in transportation demand, which in turn has
led to chronic traffic congestion and air pollution.
As a result, the average vehicle travel speed in Dhaka is 6.4 km/hour, lessthan half that in central Tokyo (14.7 km/hour; Ministry of Land, Infrastructure,
Transport and Tourism, 2015). In terms of air pollution, the annual average PM10
concentration is reported to be 158 µg/m3 (World Health Organization [WHO],2016). This exceeds the WHO environmental standard of 20 to 70 µg/m3. The
economic loss due to traffic congestion is 3.868 billion US dollars per year
(Bangladesh Water Development Board, etc., 2013), which is degrading theinvestment environment greatly and hindering the economic and social
development of Bangladesh.
To solve this problem, the Government of Bangladesh established the Strategic
Transportation Plan (STP) in 2005 as a long-term comprehensive transportation
plan that will continue for 20 years. In the STP, three Mass Rapid Transit (MRT)
routes and three Bus Rapid Transit (BRT) routes were selected as high-priority
projects. Additionally, following the establishment of the STP, the Dhaka Urban
Transport Project Formation Survey was conducted in 2008 with the support ofJICA. This survey confirmed the potential of introducing an MRT system, and MRTLine 6 was selected as the top priority line because it had the highest demand atthat time, was relatively inexpensive, and had the highest cost-effectiveness.
Furthermore, the Government of Bangladesh also identified the promotion ofeconomic growth and poverty reduction as a major goal in the 7th Five-Year Plan(FY2016/17–FY2020/21) and highlighted in its Traffic and Communication
Development Strategy the importance of reducing road traffic congestion in themetropolitan area with appropriate investment. Based on this plan, the governmentrevised the STP with aid from JICA in August 2016. In the revised STP, five MRTroutes and two BRT routes were reclassified as high-priority lines. MRT Line 6 wasalso identified as one of the high-priority lines in the revised STP.

The Dhaka Mass Rapid Transit Development Project (III) (hereinafter referred toas the “Project”) is intended to develop MRT Line 6, which will connect thenorthern part of the Dhaka Metropolitan Area and the central area of Dhaka city for19.8 km, in order to ease traffic congestion and air pollution in the Dhaka
Metropolitan Area.
(2) Japan and JICA’s Cooperation Policy and Operations in the Urban Development
Sector
The JICA Country Analysis Paper for Bangladesh (May 2014) identifies urban
development as a priority area. Additionally, Japan’s Country Assistance Programfor Bangladesh (February 2018) sets the Acceleration of Economic Growth that
Benefits All People as a priority area and aims to develop high-qualitytransportation and traffic infrastructure and promote the efficient transportation ofpassengers and goods. The Project is, therefore, consistent with these policies
and the analysis.
To support the development of a legal system for urban railways, JICA also
dispatched experts, such those provided under the following projects: “Consultantsto Help Strengthen the Implementation System of the Dhaka City High-Speed Railin Bangladesh (Specialist Loan Assistance)” (Technical Assistance Related to ODALoan) (FY2010–2011) and “Legal Technical Assistance for Dhaka UrbanTransport” (Technical Assistance Related to ODA Loan; FY2013–2015). JICA has
also provided support for the revision of the STP through the Project for theRevision and Updating of the Strategic Transportation Plan for Dhaka (TechnicalAssistance Related to ODA Loan; FY2014–2016).
The Project promotes a modal shift from automobile transportation to railway
transportation and provides access to safe, affordable, accessible and sustainabletransport systems. As this project also aims to reduce greenhouse gas (GHG)
emissions by improving traffic congestion, it contributes to targets 11.2 1 and 11.6 2of the Sustainable Development Goals (SDGs).
(3) Other Donors’ Activity
The World Bank assisted in the formulation of the STP and implemented theClean Air and Sustainable Environment Project, followed by a support for thedetailed design of BRT Line 3 (between the airport and Jhilmil) from 2009 to 2016.
The Asian Development Bank has been implementing the Greater Dhaka
Sustainable Urban Transport Corridor Project to develop BRT Line 3 (betweenGazipur and the airport) since 2010 with the aim of opening the route by the end of1

SDG 11.2: By 2030, provide access to safe, affordable, accessible and sustainable transportsystems for all, improving road safety, notably by expanding public transport, with special attention
to the needs of those in vulnerable situations, women, children, persons with disabilities and olderpersons.
2 SDG 11.6: By 2030, reduce the adverse per capita environmental impact of cities, including by
paying special attention to air quality and municipal and other waste management.

2019.
3. Project Description(1) Project Objective(s)The objective of the Project is to alleviate the traffic congestion and mitigate the air
pollution in Dhaka by constructing a mass rapid transit railway system (MRT Line 6) inDhaka, thereby contributing to economic development throughout all of Bangladesh.
The Project is also intended to promote a modal shift from automobile transportation
to public transportation and contribute to reduce air pollution in the Dhaka
Metropolitan Area.
(2) Project Site / Target Area
Dhaka City(3) Project Component(s)1) Construction of railway structures (total length of 19.8 km; construction ofelevated railways, stations, tracks, etc.)
2) Construction of a depot (land development, construction of depot buildings,railway sidings, etc.)
3) Procurement of rolling stock (144 cars: 6 cars × 24 sets)
4) Installation of electric and signal systems
5) General consulting services (F/S review, detailed design, tender assistance,construction supervision, training for operation and maintenance, etc.)
6) Consulting services for resident resettlement support
7) Consulting services for institutional development support(4) Estimated Project Cost (Loan Amount)
Project Cost: 349,432 million Yen (Loan Amount: 242,796 million Yen)
Loan Amount in This Phase: 79,271 million Yen(5) ScheduleDecember 2012 – June 2024 (138 months in total). The Project will be completed
upon the opening of all sections (June 2022).
(6) Project Implementation Structure1) Borrower: The Government of the People's Republic of Bangladesh
2) Guarantor: N/A
3) Executing Agency: Dhaka Mass Transit Company Limited (DMTC)
4) Operation and Maintenance System: DMTC
(7) Cooperation and Sharing of Roles with Other Donors
1) Japan’s Activity
The Project for the Revision and Updating of the Strategic Transportation Plan forDhaka (Technical Assistance Related to ODA Loan; 2014–2016) was implementedand development plans (including the Project) for five MRT lines and two BRT lines
were formulated. Additionally, a technical cooperation project called the Project forthe Establishment of a Clearing House for Integrating Transport Ticketing Systems
in the Dhaka City Area (2014–2018) supports the establishment of a system for IC
card payments, and phase II of the project is being formulated with the goal ofdeveloping a permanent implementation structure to promote the use of IC cards,
which is expected to start from FY2018. Furthermore, the Project for Training andEducation on Mass Transit System Operation and Maintenance Management,
which is mainly intended to develop trainers, is also being prepared with the aim ofestablishing an operation and maintenance system for MRT Line 6. Additionally,
with regard to MRT Line 1, an E/S loan is being implemented as a Japanese ODA
loan project for FY2017.
2) Other Donors’ Activity
As described in 2 (3).
(8) Environmental and Social Consideration / Poverty Reduction / Social Development
1) Environmental and Social Consideration① Category: A② Reason for Categorization: The Project falls into the railway sector (located in asensitive area and likely to have a significantly adverse impact due to itscharacteristics) under the JICA Guidelines for Environmental and Social
Considerations (published in April 2010).
③ Environmental Permit: An Environmental Impact Assessment (EIA) Report for
the Project was prepared by the Dhaka Transport Coordination Authority(DTCA) and approved by the Department of Environment on July 11, 2011. The
Environment Clearance Certificate (ECC) was updated July 2017.
④ Anti-Pollution Measures:Water will be sprinkled periodically to suppress the dust that is expected to begenerated during the construction work. Sound absorbers and sound-insulting
walls will be installed to reduce noise and vibrations during the construction work.
Wastewater that is discharged from the station and the train depot when thefacilities are in service will be appropriately treated at wastewater treatment
facilities.
⑤ Natural Environment: As the Project site is not located in or around national parksor other vulnerable areas, any undesirable impact on the natural environment islikely to be minimal. To compensate for the plants that will be removed for theconstruction of elevated railway tracks, trees will be planted under the tracks.
⑥ Social Environment: In the Project, most facilities will be constructed within thebounds of existing roads. It is estimated that 47.0 ha of land will be acquired,
and the number of affected local residents is estimated to be 1,469 (of which,
60 live near the depot and 1,409 live alongside the railway tracks). According
to the revised Resettlement Action Plan (RAP), which is based on the detailed
design, all of the project sites will be acquired from public domain land, and all

of the affected local residents are people who are engaged in commercial
activities, etc., within this land. Involuntary resettlements will not occur. The siteacquisitions, etc., will proceed pursuant to domestic laws and the RAP, which
was created according to JICA Environmental and Social Consideration
Guidelines. In meetings with local residents, explanations about the Project
were given, including the project description, planned routes, measures tomitigate the potential impact on the natural and social environment, an
overview of the RAP plan, and compensation. No particular objections wereraised.
⑦ Other / Monitoring: During the construction phase, the contractor is in charge ofmonitoring air quality, noise, vibration, water quality, land acquisition, and theresettlement status under the supervision of the executive agency. After the start ofoperations, the executive agency will conduct the monitoring itself. Additionally, anexternal monitoring agency hired by the construction supervisory consultant will
monitor social considerations.
2) Cross-Cutting Issues: The Project is intended to reduce air pollution and mitigate
climate change through the promotion of public transportation, thereby contributing toreduced GHG emissions. The Project’s mitigation effect on climate change(estimated GHG emissions) is expected to be approximately 0.18 million tons ofCO2/year (estimate for 2025).
3) Gender Category: [Gender Project] GI (S) (Gender Activities Integration Project)
Activity Components/Reason for Categorization:
In Bangladesh’s public transportation, the lack of sufficient safety measures forwomen, such as the prevention of sexual harassment, is proving an obstacle towomen’s use of public transport. Therefore, gender action plans, including theoperation of women-only cars at peak times and the installation of surveillancecameras in stations, will be implemented to promote a deeper understanding ofwomen’s safety and gender issues.
Consequently, this is categorized as a Gender Activities Integration Project.
(9) Other Important Issues: In the development of the MRT system, Japaneseadvanced technologies (e.g., countermeasures for soft soil, construction technologies
for narrow areas, and automatic fare collection systems) have been introduced.
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)

Indicator

Baseline(Actual Value in 2009)

Target (2024)(Expected value 2 years after
project completion)

Passengers carried (1,000passengers-km/day)―

8,629.5

Travel distance (km/day)

―

6,528

Travel time (min.)*

110.4

46.2

Operational rate (no. of trainservices/day)―

80

Note: The travel times indicated above are for the section between Uttara North
Station and Motijheel Station.
As a reference value, air pollutant density (density of NO2 and total suspended
particulates [PM2.5/PM10] along the railway line) will be monitored.
(2) Qualitative Effects
Response to transportation demand in the Dhaka Metropolitan Area, reduction in air
pollution through the promotion of public transportation, and mitigation of climate change
through the reduction of GHG emissions.
(3) Internal Rate of ReturnAccording to the following preconditions, the Project’s Economic Internal Rate ofReturn (EIRR) will be 23.61%. The Financial Internal Rate of Return (FIRR) will be
3.45%.
[EIRR]
Cost: Project costs (excluding tax) and operation/maintenance costs
Benefit: Reduction in vehicle operation costs, travel time, etc.
Project Life: 40 years[FIRR]
Cost: Project costs and operation/maintenance costs
Benefit: Fare revenues
Project Life: 40 years
5. Preconditions / External Conditions(1) Preconditions: N/A(2) External Conditions: N/A
6. Lessons Learned from Past Projects
The results of the ex-post evaluation of the Philippines’ Metro Manila Strategic Mass
Rail Transit Development Project revealed that it is difficult to operate an urban
transport business using fare revenues only, that funding and subsidies from thegovernment are needed because a large initial investment is required, and that adetailed financial plan and an action plan for government support should bedeveloped in the project planning phase in order to ensure the financial health of theexecuting agency.
In addition, the results of the ex-post evaluation of India’s past urban railway
projects, including the Delhi High-Speed Transit System Construction Project (I)-(VI),indicated that it is necessary to ensure that the preconditions for profitability aresatisfied and that, if they are not fulfilled, it is necessary to push for the satisfaction ofthese preconditions.
As the Project requires a large initial investment and, therefore, its financial
soundness needs to be secured, appropriate fare setting will be conducted based on
the lessons described above, and government funding (grants) and sub-loan from thegovernment under concessional conditions will be used. Additionally, the DMTC’s
financial plans have already been developed as part of the consulting services forinstitutional development.
Furthermore, in order to secure non-rail revenues in addition to fare revenues, thedevelopment and implementation of business plans—including those for generating
revenues from public transportation-oriented development, retail tenants in stations,advertising, etc.—will be supported through general consulting services.
7. Evaluation Results
The Project is consistent with Bangladesh’s development issues and policies andwith the assistance policies and the analysis of the Government of Japan and JICA.
The Project is intended to respond to transportation demand in the Dhaka
Metropolitan Area through the construction of a mass rapid transit system (MRT Line6), thereby contributing to the achievement of SDG 11 (“Make cities and humansettlements inclusive, safe, resilient and sustainable”). Thus, the necessity for JICA tosupport the Project is substantial.
8. Plan for Future Evaluation(1) Indicators to be Used
As described in (1)-(3) of Section 4.
(2) Timing
Ex-post evaluation: Two years after the project completion