Desk Report
Oniket Desk
Kallol Mustafa’s recent opinion piece in The Daily Star (May 04, 2026) raises a legitimate and important concern: the abnormally high per-kilometre construction costs of Dhaka’s metro rail projects financed by the Japan International Cooperation Agency (JICA). The core argument, that restrictive procurement conditions effectively create a captive market for Japanese contractors, is empirically grounded and warrants serious policy attention. However, the analysis suffers from notable methodological gaps, selective framing, and an absence of institutional self-reflection that limits its utility as a basis for policy action.
The article correctly identifies the structural conflict of interest inherent in tied-aid financing, where the lender’s consultants design the project, write the tender conditions, and contractors from the same country subsequently win the bids. The cost data cited is striking: the projected cost for MRT-1 and MRT-5 (North) stands at Tk 3,618 crore per kilometre, more than double the Tk 1,574 crore per kilometre of MRT-6 and far above comparable projects in Turkey (Tk 672 crore), Bangkok (Tk 740 crore), and Seoul (Tk 784 crore). The contrast with Patna’s JICA-financed underground metro at Tk 450 crore per kilometre, built by Indian contractors under more competitive conditions, is particularly telling and effectively undermines JICA’s ‘quality premium’ defence.
Gap One: Methodologically Flawed Cost Comparisons
The article’s most significant analytical weakness is its failure to ensure like-for-like comparisons in its cost benchmarking. It cites India’s elevated metro at Tk 150 crore per kilometre as a comparator, yet MRT-1 is predominantly an underground line, a construction typology that is intrinsically two to four times more expensive than elevated structures due to tunnelling costs, geological complexity, and urban disruption management. Presenting these figures alongside each other without qualification misleads the reader and weakens the credibility of an otherwise valid argument. A rigorous analysis would have compared MRT-1 exclusively against underground metro costs in peer economies, adjusting for purchasing power parity and local labour cost differentials.
Gap Two: Absence of Revenue and Financial Sustainability Analysis
The article focuses narrowly on construction cost inflation but does not examine whether MRT-6, already operational, is generating sufficient revenue to service its debt. This is a critical omission. Between 2026 and 2031, Bangladesh is required to repay over Tk 3,700 crore in total for the MRT-6 loan, averaging approximately Tk 740 crore per year, while fare revenues fall well short of this obligation. This financial gap would have substantially reinforced the article’s case against inflated construction costs: when infrastructure is over-priced at construction, the debt burden ensures that fares must remain high or subsidies must persist indefinitely, creating a structural fiscal trap. Including this dimension would have elevated the piece from a procurement critique to a systemic financial warning.
Gap Three: Omission of Bangladesh’s Own Institutional Failures
By attributing the problem almost exclusively to JICA’s structural bias and Japanese contractors’ pricing power, the article lets Bangladesh’s own institutions off the hook. The interim government’s Planning Adviser, Wahiduddin Mahmud, acknowledged openly in August 2025 that the contracts were signed by the previous government and that “since the contracts are already in place, our position is weak.” This admission points to a prior failure of institutional due diligence, a failure of Bangladesh’s own ministries, procurement agencies, and technical bodies to scrutinise tender conditions, commission independent cost audits, or resist commercially unfavourable terms before agreements were signed. The OECD documents that tied aid typically raises procurement costs by 15 to 30 percent on average; yet Bangladesh’s metro costs exceed comparable global benchmarks by 200 to 400 percent. The gap between the tied-aid premium and actual cost inflation demands explanation that goes beyond JICA’s procurement framework alone and implicates Bangladesh’s domestic governance architecture.
Gap Four: No Alternative Financing Framework Proposed
The article’s concluding call for ‘open tendering and fair competition’ is correct in principle but incomplete in practice. It does not address the most consequential question for policymakers: if Bangladesh insists on competitive procurement for future metro lines, where will it source the financing? Sovereign lending for large infrastructure projects at concessional rates, even with tied procurement, is not easily replaceable. Multilateral alternatives such as the World Bank, Asian Development Bank, or Asian Infrastructure Investment Bank each have distinct procurement frameworks and could serve as co-financiers or alternatives, but the article does not explore this dimension, leaving the policy recommendation without an implementable pathway.
Practical Policy Recommendations
For projects still in the pre-contract stage, the government should engage multilateral lenders as mandatory co-financiers, the World Bank and ADB’s procurement rules require genuinely open international competition, which would introduce an institutional check against specification-rigging. For MRT-1 and MRT-5 (North) where contracts are already executed, the government should commission independent value engineering reviews to identify component-level cost reductions within the existing contractual framework, as the Planning Adviser has indicated is already being pursued.
In parallel, a fundamental reform is needed: Bangladesh must establish an independent Infrastructure Cost Review Authority, staffed with domestic and internationally recruited technical experts, with a legislative mandate to audit project design and tender conditions before any foreign loan agreement is signed. Finally, to address the immediate financial sustainability of MRT-6, the government should prioritise integration with feeder bus networks and park-and-ride facilities to maximise ridership and fare revenue, reducing the gap between debt service obligations and operational income without imposing politically untenable fare increases.
Mustafa’s piece raises the right alarm but narrows the diagnosis too sharply onto a single actor. The problem of inflated infrastructure costs in Bangladesh is a product of tied-aid dynamics, yes but equally of institutional incapacity, weak pre-contract governance, and a historical absence of independent technical oversight. A more complete analysis would have acknowledged this complexity and offered financing alternatives alongside the call for open tendering. Without that, the article risks reinforcing a narrative of victimhood that, while not entirely unwarranted, obscures the domestic reforms that are both more urgent and more within Bangladesh’s own power to implement.
