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Background

Dhaka and Chattogram (formerly Chittagong) are the two major metropolitan areas of Bangladesh. The Dhaka–Chattogram corridor is central to the country’s economy as it generates almost 50% of the national gross domestic product and handles about 80% of international maritime trade. The 250-kilometer (km), two-lane National Highway N1 is the only major road that connects Dhaka to Chattogram. But road traffic along N1 had long been hampered by lack of capacity and bridge load restrictions. The journey between Chattogram and Dhaka can take up to 10 hours because of road congestion. To alleviate pressure on the N1 highway, the government planned a new Dhaka–Chattogram access-controlled expressway that would provide additional capacity and improve safety along the corridor while also accommodating future traffic growth.

To support the plan, the Asian Development Bank (ADB), under an earlier project, produced a feasibility study and conceptual design to finance an “access-controlled Dhaka-Chittagong Expressway” under a public–private partnership (PPP) scheme.  The study selected a road alignment that was technically, economically, and financially viable based on 2008 assumptions, costs, and revenue streams. However, the government failed to attract private investment for the proposed design, and instead began to consider an entirely new route alignment. The cost and revenue stream subsequently changed, and an understanding was reached that detailed project preparation would be required to design the Dhaka–Chittagong Expressway Project—the first large-scale PPP project planned for Bangladesh’s transport sector.

At the request of the Ministry of Communications, now the Ministry of Road Transport and Bridges (MORTB), ADB approved in March 2012 a technical assistance (TA) loan of $10 million for the Dhaka–Chittagong Expressway Public–Private Partnership Design Project. The project’s expected impact is Dhaka–Chittagong Expressway efficiently constructed, operated, and managed by 2020 under a PPP arrangement.  Its planned outcome is an agreed-upon design of the Dhaka–Chittagong Expressway implemented under a PPP.  Its intended outputs were (i) a feasibility study with an assessment of different route alignment options; (ii) economic and financial analysis of the ensuing Dhaka–Chittagong Expressway Project, establishment of the financial model, and recommendation on the PPP structure of the project; (iii) capacity development for PPP project implementation; (iv) detailed engineering design and finalization of all safeguard documents; (v) transaction advisory services; and (vi) support for safeguard implementation in the ensuing project.

At completion, the project was able to fully deliver the first 4 of its foregoing planned outputs, partially delivered the fifth, and did not progress on the sixth. But the delivery of the completed outputs was not timely because the contracts for the two consulting services, the engineering design consultant and transaction advisory consultant, were delayed.  The transaction advisory consulting services were not completed because of the delayed approval by the Ministry of Finance (MOF) of the viability gap funding (VGF) requested by the Roads and Highways Department (RHD), to ensure the feasibility of the PPP project.  The MOF delayed the VGF approval due to an argument between the RHD and the Bangladesh Bridge Authority about the executing authority of the PPP project.  Safeguard implementation support was dropped because the government decided in 2016 that this should be done during the implementation of the PPP project.

However, a decision from the highest level of government led to the cancellation of the project in October 2019. This was despite continuing efforts by the RHD to launch the PPP project after the loan closed in March 2018.  Such efforts culminated in the registration of interest in market sounding and consultation activities by 29 entities, including prospective developers, concessionaires, investors, and financiers, from all over the world.  Instead of the PPP project, the government has requested ADB to finance the Dhaka–Chattogram National Highway Project, which will involve widening the existing N1 highway instead of constructing an entirely new one.

The MORTB was the project executing agency.  It formed a project implementation unit, composed of five officers, all from the RHD, to take charge of the project on a day-to-day basis.

Project Information
Project Name: 
Dhaka–Chittagong Expressway Public–Private Partnership Design Project
Report Date: 
June, 2020
Main Sector: 
Country: 
Project Number: 
Report Type: 
Project/Modality: 
TA loan
SDG: 
9
Loan Number: 
2856
Source of Funding: 
COL/ADF
Date Approved: 
30 March 2012
Report Rating: 
Less than successful

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