Bangabandhu Bridge

Finance and Economics

Finance

The Jamuna Multipurpose Bridge Project is a major capital investment for Bangladesh. The forecast final cost of the project is currently in the order of US$ 950 million

The main cost components of the project are shown in the following table.

Project Item	Cost
Land	$17 m
Bridge	$370 m
River Training Works	$350 m
Approach Roads and Embankments	$85 m
Consultancies	$40 m
Resettlement	$40 m
Environment	$6 m
Emergency Reserve Fund	$10 m
Admin, Interest and Other	$32 m
Total Cost	$950 m

This expenditure is financed partly from loans ($600 m) and partly from the Government's development budget ($350 million) Loans, each equivalent to US$ 200 million, have been provided to the government of Bangladesh by:

The International Development Agency (IDA)
The Asian Development Bank (ADB)
The Japanese Overseas Economic Cooperation Fund (OECF).

The loans carry a low rate of interest (IDA 3/4% per annum, ADB and OECF 1% per annum) and are repayable over a period of 40 years with a 10 year grace period. They have been on-lent from the government to JMBA on similar terms and conditions.

Funding for the significant government contribution to project costs was provided through a surcharge and levy applied from 1986 to 1994 under the Jamuna Multipurpose Bridge (Surcharge and Levy) Ordinance 1985.

The surcharge was collected on rail and ferry charges, telephone bills, motor vehicle licences and registration documents for land and buildings. The levy was applied to share and stock dividends and interest on bank deposits, post office savings accounts, savings certificates and bonds.

Economics

Obtaining the finance to implement the project required justification of its economic viability. The project feasibility studies revealed that a multipurpose bridge could be justified on economic grounds, whereas separate road, rail and electricity crossings could not. Evaluation of the economic benefits versus costs produced an economic rate of return for the proposed development of around 14.5%. On re-evaluation of the economic data half-way through construction of the bridge in March 1997, this rate of return was confirmed, and, in fact, shown to be a little higher.

The economic analysis took account of the time saving through use of the bridge compared with the existing ferries and the additional traffic growth induced by the availability of the bridge.

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