Construction work on the long awaited Dhaka-Ashulia Elevated Expressway Project (DAEEP) is set to begin soon as the China Exim Bank has approved the loan for the project, officials say.
Although the project was scheduled to begin in 2017 and finish in 2022, uncertainty over the loan pushed back the construction of the expressway.
As the Chinese bank approved the loan in January, the construction firm now wants to begin work in early March.
“We have received a letter from the Chinese construction firm that they want to start the construction work in early March as the loan has been approved,” said Shahabuddin Khan, project director of DAEEP.
Although the loan has been sanctioned by China Exim Bank, it is mandatory for a deal to be signed between the Bangladesh and Chinese governments in order to disburse the fund.
The deal may not be signed before May due to various legal processes which could delay the construction work further.
However, the DAEEP project director said: “They [The construction company] could start construction work as the uncertainty regarding the loan is over.”
According to the Bridge Division, total project cost of the DAEEP is estimated at Tk16,901 crore where China Exim Bank will pay Tk10,950 crore and the government will pay Tk5,951 crore as loan.
The Bridge Division appointed the Chinese construction firm CMC at a cost of Tk12,500 crore in November 2017 to construct the expressway under a G2G (government to government) initiative but it did not start the work as the loan was yet to be sanctioned.
“We had a virtual meeting with the China Exim Bank recently to sign the deal quickly as the project is facing delay. Although the date is not fixed yet, we expect it to be done in April,” said Mohammed Belayet Hossain, secretary of the Bridge Division.
The DAEEP was approved by the Executive Committee of the National Economic Council (Ecnec) in 2017.
Following the approval of the Ecnec, the project authority almost completed land acquisition by disbursing more than Tk1,000 crore.
A dream project
The DAEEP is a dream project for many people as it will allow traffic between Northern and Southern districts to operate by avoiding overcrowded roads in the capital and its suburbs.
The expressway will begin from Dhaka EPZ and continue to Hazrat Shahjalal International Airport and will be 26km long.
Then another expressway, Dhaka Elevated Expressway will meet the Dhaka-Ashulia Elevated Expressway.
The Dhaka Elevated Expressway Project (DEEP) will be a 20km stretch from Hazrat Shahjalal International Airport to Kutubkhal point on the Chittagong road.
The two expressways comprising 46km in total will save commuters four to five hours during their journey through Dhaka or in some cases even more.
Officials said the internal rate of return (IRR) of the project has been estimated at 1.08. IRR is the annual rate of growth an investment is expected to generate.
Cost adjustment to take time
As the construction work is yet to begin, it is assumed by officials that the project cost will likely be readjusted.
Usually, a project cost sees a price increase of 7% to 10% every year, which suggests the DAEEP cost will go up.
Additionally, the project authority will ask for a revision of the Development Project Proposal (DPP) to set a new deadline, which will take more time.
However, Bridge Division Secretary Belayet Hossain said the project cost would not increase as price adjustments would hardly be needed for this G2G initiative.
“Usually such a project goes through various processes which always take time. So, the initial price also takes that into account which has also happened here,” he said.
“However, the DPP must be revised as the duration of the project will increase. So far it is projected to take four years to complete and that means the project will not be completed before 2024,” he added.
According to the DPP, per kilometre cost of the DAEEP is Tk704 crore, which is higher than the DEEP.
The main implementing cost of the DEEP is below Tk9,000 crores, whereas DAEEP will cost more than Tk12,000 crore.
“A 14km long four lane highway between Dour and Ashulia is also included in the DAEEP. So, the cost is higher than that of the Dhaka Elevated Expressway,” said Shahabuddin Khan.