Four trains are currently stranded at both ends of the Bangabandhu Bridge
Japan International Cooperation Agency (JICA), which is supporting the project, said it would increase the capacity of the Karnaphuli water treatment plant.
At least 500 km of water supply pipelines would be restored under this endeavour.
Once implemented, JICA says, the Chittagong water supply authority would be able to expand its drinking water network to the poor.
JICA, Bangladesh’s biggest bilateral donor, has been assisting the Chittagong WASA since 2006, pumping in 12,224 million Japanese yen ($ 120 million) for the Karnaphuli water supply project.
It is expected to be completed in 2015.