Bangladesh signs $2.6bn deal with Japan for underground train, Matarbari power plant

Bangladesh has signed a deal with Japan for $2.665 billion credit line to build an underground railway network in Dhaka under the Mass Rapid Transit Line 1 project and a power plant at Matarbari in Cox’s Bazar.

The funds will come with a 0.6 percent interest the 42nd loan package from Japan, Bangladesh’s biggest development partner. They also include emergency budget assistance to tackle the COVID-19 pandemic.

Bangladesh will repay the debt in 30 years, with a 10-year grace period, according to the deal signed at National Economic Council in Dhaka on Monday.

Hayakawa Yuho, the chief representative of Japan International Cooperation Agency in Bangladesh, and Economic Relations Secretary Fatima Yasmin put pen to paper.

Japanese Ambassador Ito Naoki was also present while Finance Minister AHM Mustafa Kamal joined the event via video call.

Officials said $1.2 billion of the fund will be used in the Matarbari Ultra Super Critical Coal-Fired Power project, under which the authorities are also constructing a deep seaport.

Launched in 2014, the project was supposed to end in June 2023, but only half the work has been done so far. A proposal to raise the cost of the project will be placed at a meeting of the Executive Committee of the National Economic Council on Tuesday. 

The MRT Line-1 project will get $1.1 billion from the funds. Underground railway services linking Shahajalal International Airport and Kamalapur, and on the Natun Bazar-Pitolganj route will be launched under the project.

Approved in 2019 with an aim to complete in 2026, the feasibility study, survey, and main design have been completed.     

To tackle the economic challenges created by the pandemic, Bangladesh will use $365 million from the funds.