Bank of China contributes $65 million to a syndicated loan in 2023 for the Rampura-Amulia-Demra (RAD) Expressway Project

Bank of China contributes $65 million to $200 million syndicated loan for the Rampura-Amulia-Demra (RAD) Expressway Project in Bangladesh 2023 The Rampura-Amulia-Demra (RAD) Expressway Project was developed through a Public-Private Partnership (PPP) structure.

The project was screened by the Government of Bangladesh’s PPP Authority and granted the in-principle approval from the Cabinet Committee on Economic Affairs (CCEA) of the Government of Bangladesh.

The Roads and Highways Department (RHD), acting on behalf of the Ministry of Road Transport and Bridges of Bangladesh (MRTB), conducted an open competitive bidding process for the private partner, while Asian Development Bank (ADB) acted as the transaction advisor to RHD.

In July 2019, RHD shortlisted 4 teams – 3 Chinese companies and 1 Indian company – to submit their technical and financial proposals.

RHD's tender selection committee chose a consortium consisting of China Communications Construction Company Limited (CCCCL) and China Road and Bridge Corporation (CRBC), despite the fact that it was not the lowest bidder.

A review panel formed by the PPP Authority, under the Prime Minister's Office, determined that the procurement was flawed.

The review body subsequently held that a consortium consisting of China Railway Construction Corporation Investment Group, China Civil Engineering Construction Corporation, and MAX was the preferred bidder.

RHD ignored the panel's recommendation and chose the CCCCL-CRBC consortium as the preferred bidder and forwarded the proposal to the Cabinet Committee on Economic Affairs (CCEA) for approval. Yet, CCEA rejected the initial proposal, returning it to RHD. The Ministry of Law also disapproved. Ultimately, the executing agency resolved those issues and CCEA approved the proposal.

Then, in December 2021, CCCCL and CRRBC were appointed as the preferred awardees for the PPP.

Shortly thereafter, on January 9, 2022, CCCCL and CRBC signed a PPP contract with the Government of Bangladesh for the Rampura-Amulia-Demra (RAD) Expressway Project.

The PPP contract has a concession period of 25-years, including a 4-year construction period and a 21-year operation period.

On July 27, 2023, Dhaka RAD Elevated Expressway Company Limited — a special purpose vehicle and joint venture of CCCCL (51% equity stake) and CRBC (49% equity stake) — signed a $200 million syndicated loan agreement (with multiple tranches/facilities) with DBS Bank (the lead arranger), Bank of China, Infrastructure Development Company Limited (IDCOL), and Asian Infrastructure Investment Bank (AIIB) for the Rampura-Amulia-Demra (RAD) Expressway Project.

Bank of China contributed $65 million, while AIIB contributed $65 million, IDCOL contributed $20 million, and DBS Bank contributed $50 million.

The proceeds of the loan are to be used by the borrower to partially finance a $243 commercial contract with CCCCL and CRBC, which was signed on November 21, 2021.

The total cost of the PPP project is $261 million and it is being financed with according to a 75:25 debt-to-equity ratio.

The Government of Bangladesh is de-risking the project by: acquiring land for infrastructure; resettling affected people; providing consultancy services; and bearing expenses of the project implementation unit.

The Government of Bangladesh will pay the concessionaire Tk1.07 billion every 6 months in 42 installments or Tk44.94 billion during the next 21-years as per the PPP model.

The scope of the project is to design, build and operate a 12.5km four-lane access-controlled highway, including an 8.15km elevated section and a 4.35km at-grade section, by way of upgrading an existing two-lane undivided carriageway.

The project starts at the Chittagong Interchange with access to the National Highway N1, connects to the National Highway N2 at the Demra access point, and ends at Rampura Interchange, which is located in a densely populated area in Dhaka. The width of the proposed road will be around 18m in the elevated section and 32m in the at-grade section.

AIIB’s Environmental and Social Policy (ESP)— including the Environmental and Social Exclusion List (ESEL) and relevant Environmental and Social Standards (ESSs) — apply to this project.

It has been categorized as Category A and an Environmental Impact Assessment (EIA), Social Impact Assessment (SIA) and Resettlement Plan (RP) will be used as the Project’s E&S instruments.

The expressway will be constructed over the existing double lane road from Dhaka-Chattogram National Highway (N1) to Rampura Bridge. The key environmental impacts are expected to be the following. During construction, impacts due to increased noise and vibration, traffic and access restrictions are expected.

Construction related impacts such as dust, and movement of heavy machinery are also expected. Trees will be removed from the ROW as a result of the improvement works on the expressway.

Opportunities to improve pedestrian crossings and the general safety of the public have been included as positive impacts of the project.

Points along the expressway with potential for increased traffic congestion during construction have been identified and traffic management plans are to be implemented.

During the operation phase the risks and impacts are related to increased noise and road safety incidents, due to faster vehicle speeds. An EIA with an EMP has been prepared to assess and mitigate impacts of the Project.

The potential adverse impacts of the land acquisition include loss of land, loss of structures (residential and commercial), loss of trees, community property resources, and disproportionate effects on vulnerable groups.

Moreover, both titleholder and non-titleholder Project Affected People (PAP) are likely to be impacted permanently and temporarily as a result of land acquisition and project related civil works.

To mitigate the potential adverse impacts of land acquisition and other project-related activities, a resettlement plan (RP) inclusive of an entitlement matrix and livelihood restoration plan (LRP) has been prepared in consultation with the affected communities. Long-term rehabilitation measures have also been included in the LRP.

The project reportedly conducted culturally appropriate and meaningful consultations with women and vulnerable groups while preparing the EIA, SIA, and RP.

The consultation sessions aimed to capture and reflect vulnerable groups' and other PAP’s concerns and aspirations and inform the mitigation measures linked to land acquisition and construction-related activities.

In addition, Gender Action Plan (GAP) has been prepared to promote the gender-inclusive implementation of the project and mitigation measures.

The ES instruments including EIA, SIA, and RP will be disclosed by the project sponsors (CCCCL and CRBC) and RHD and in hard copies in the project areas. A three-tier Grievance Redress Mechanism (GRM) will be established by the Project.

This includes a project specific GRM which will be established to receive, acknowledge, evaluate and facilitate the resolution to the complaints relating to ES issues with corrective actions proposed in an inclusive and timebound manner.

The GRM process will be undertaken using understandable and transparent methods that are gender responsive, culturally appropriate, and readily accessible to all segments of the affected people.

The information of established GRM including AIIB’s Project-affected People’s Mechanism (PPM) both in English and Bangla will be disclosed to local communities and related stakeholders in a timely and an appropriate manner. The project team will be carrying out supervision missions every 6 months.

CRBC will report to the AIIB quarterly on the progress of RP and ESMP implementation including outcomes of the stakeholder engagement efforts. AIIB will conduct post-reviews of the selection and implementation of sub-projects as part of its regular supervision. CCCCL and CRBC are jointly responsible for implementation.

The project was originally expected to commence a 4-year construction period in the first quarter of 2024 and achieve its commercial operations date (COD) in 2028, but the project is still in development stages due to the lengthy land acquisition process.