Economical Impacts of Dhaka Metro Rail Project in Bangladesh

Economics of Metro Rail

Metro Rail is basically a rapid transit system that is widely used in many major cities of the world. The ‘Dhaka Metro Rail’ is a government project funded by ‘JICA’ for public transport in the metropolitan area of ​​Dhaka. The project is being carried out by the state-owned Dhaka Mass Transit Company Limited (DMTCL). According to a BRAC Institute of Governance and Development study, the average speed of vehicles on Dhaka’s roads in 2004 was about 21 (21.2 km/h), but it dropped to 6 (6.8 km/h) in 2015. As a result, the bus ride from Uttara to Motijheel takes more than 3 to 4 hours. By Metrorail, it will take only 40 minutes to reach Motijheel from Uttara. It is anticipated that this form of transportation would play an important role in the country’s economic growth by transforming people’s lifestyles and improving their productive time.

The Overview of Metro Rail

Metro Rail is one of the most popular forms of public transport in many major cities around the world. The first rapid transit system was introduced in London in 1863, which is now a part of the ‘London Underground’. In 1868, the US introduced its first rapid transit rail system in NY, and in 1904, the New York City Subway was opened for the first time. Among Asian countries, Japan was the first country to build a subway system in 1927. India started constructing its metro system in Kolkata in 1972. After that, India constructed Metro Rail systems in other cities as well. Currently, there are 180 subway systems in operation in 178 cities of 56 countries in the world.

The planning of constructing Metro Rail in Bangladesh was first taken into account in 2005 when The Dhaka Transport Coordination Authority (DTCA) created a 20-year strategic transport plan (STP) to develop a modern transit system for Dhaka. Metro Rail in Bangladesh is part of this plan. In December 2012, the ‘Dhaka mass rapid transit development project’ or ‘Metro Rail’ project was approved by the Executive Committee of the National Economic Council (ECNEC). A total of 5 route lines have been proposed for the project, including MRT Lines 1, 2, 4, 5, and 6. Japan International Cooperation Agency (JICA) funded ‘The Dhaka Urban Transport Network Development Survey (DHUTS 1)’ to assess the project and select the first MRT route for Metro Rail called ‘MRT line-6’. The total cost of the project is estimated at $2.82 bn, of which JICA is providing approximately 75% or $2.13bn at a 0.01% interest rate. The government of Bangladesh will provide the remaining 25% fund. Prime Minister Sheikh Hasina initiated the construction work in June 2016. Initially, the length of ‘MRT line 6’ was proposed as 20.1km long, starting from Uttara to Motijheel, which was later extended to Kamlapur, adding 1.16km more to the route making it a total of 21.26KM. There will be a total of 17 stations on the route, and 24 train sets will run on the route. On 29 August 2021, the first trial run was conducted on Diya Bari to Uttara. Obaidul Quader, the minister of ‘Road Transport and Bridges’ said, the Metro Rail will start its commercial operation in December 2022 in Uttara – Agargaon route. Starting from 6 AM to 10 PM, nearly 60,000 passengers per hour or 960,000 people per day will be expected to travel by Dhaka Metro Rail once the project is complete.

The MRT Line 1 will be constructed on 2 different routes in Metro Rail project.

MRT line 1 is another important route under the Metro Rail project. The MRT line 1 will be constructed on 2 different routes. The first one known as ‘Airport Rail Link’ was initially planned to be constructed from Kamalapur to the airport, which was extended to Gazipur later on. The route will also be the first underground Metro Rail system with underground stations as well. The construction is expected to begin in March 2022. The underground line will carry about 800,000 passengers daily. The second route of MRT line 1 will be constructed on the Baridhara to Purbachal, known as Purbachal Route, which will be an elevated rail route. Both the two routes of MRT line 1 are expected to finish construction in 2026. 

Apart from that, MRT line 4 will be constructed on Kamalapur Railway Station to Narayonganj, which is expected to finish in 2030. Lastly, MRT line 2 will be operated on the ‘Gabtoli’ to ‘Chittagong Road’ route, which is expected to finish construction in 2030.

There are two types of transportation systems in the Dhaka Metropolitan area. One is affordable means of transportation, including public buses, Lagunas, and rickshaws. However, people struggle while using this type of transportation for a variety of factors, including excessive traffic congestion and overcrowding. On the other hand, CNG and taxi cab services are also available as public transportation, but they are pricey. Aside from that, many people use private vehicles for transportation, yet this is not an accessible option for everyone. Metrorail will provide a convenient transportation service for those who cannot afford the expensive public transit and are continually suffering due to the lack of affordable transportation.

MRT Line 5 will be constructed from Hemayetpur to Vatara

Metro Rail in Commercial Perspective

Every megaproject of the government has a commercial aspect to earn profit. However, unlike other commercial projects, profit-making is not the primary purpose of a government-initiated project. In most cases, the government incurs losses and usually provides a huge subsidy so that people can be benefited from affordable service. Despite the fact that the initiative resulted in financial losses, the country’s economy benefited in other areas. 

To determine whether the Metrorail project will be commercially profitable or not, we must first determine its fare. However, the final fare for Metro Rail hasn’t been set yet. A ‘fare fixing committee’ was formed in September 2020 to fix the fare for MRT line 6. In January 2021, the committee held its first meeting to fix the fare. The agenda of the meeting included investment, operational cost, and capacity of people. According to the Dhaka Tribune, the committee proposed a 2.4 BDT per kilometer and the total fare of the 21.26 KM route will be 51 BDT. According to the latest fare rate of BRTA in Feb 2021, The bus fare is BDT 2.2 per kilometer, which is less than the fare of Metro Rail. However, the buses hardly charge the official fare. They charge more than that. 

But the government will further work on fixing the fare. According to an anonymous official, about BDT 2.33 crore will be needed to operate Metro Rail every day, which can be earned if 483,000 people use Metro Rail for travel every day. But, all the numbers are proposals from many non-credible sources. The actual cost of traveling by Metro Rail hasn’t been fixed yet.

According to the daily industry news, the fare will not be sufficient to cover all the costs of MRT including electricity bills, salary, maintenance, foreign debt, and government investment return. That’s why Dhaka Mass Transit Company Limited (DMTCL) is planning to generate at least 30% revenue from non-fare sources. According to ‘M.A.N. Siddique’, the managing director of DMTCL, Transit-Oriented Development (TOD), station plazas and other commercial facilities will be constructed on every station. Station Plazas will be built adjacent to Uttara North station, Agargaon, and Motijheel stations. Besides, Farmgate station might also get a station plaza.

According to UNB, authorities are planning to construct several TOD hubs near the stations which will include a world-class amusement park, hotel, daily commodity market, and shopping mall. The first TOD hub will be constructed in Uttara. That’s why 28.617 acres of land have been bought in Uttara from RAJUK to develop the TOD hub and station plaza.

Although fares have not been finalized yet, it is safe to say that the time spent on Metror Rail will be saved. The time required to travel by bus on the same route is much less than that on the metro. According to an insight from the financial express, a bus trip from Uttara to Motijheel takes 3 hours and in rush hour, it takes 4 to 5 hours. With Metro Rail, the time will be reduced to 40 minutes.

Impact of Metro Rail

The massive metro rail project may be able to relieve the city’s traffic woes for almost 15 million people.

Escape from Traffic Congestion

The traffic jam causes massive economic loss in Bangladesh. According to a study of BUET conducted in 2018, the traffic congestion of Dhaka city costs $4.4 Bn annually, which is more than 10% of the national budget. According to a World Bank report of 2017, 3.8 million working hours are being wasted every day for traffic jams in Dhaka. If the value of wasted working hours is being taken into account, the loss becomes huge which creates a negative impact on the national economy. According to Moazzem Hossain, a director of the Accident research institute, Bangladesh can save $2.6 Bn if we can reduce 60% traffic congestion in Dhaka. Besides, according to the daily star, the Metro Rail project will save $2.4 Bn each year which is equal to 1.5% of the national GDP. Apart from that, Metro Rail will ease the transportation for more than 15 million people of Dhaka and speed up daily life, which will create a bigger positive impact on the economy.


Metro Rail operation and maintenance will require a lot of manpower, which will create many job opportunities in Bangladesh. According to UNB, every Metro Rail station will have an operating room, ticket counters, lounges, waste management plant, prayer place, fire extinguishing system, escalators, lifts, and so on. The authority is already publishing circulars to recruit new employees. Apart from that, the commercial hubs around the stations will require a bunch of workforces to operate the business. All those employment will increase financial activity and ultimately contribute to the national economy.

Businesses Around the Stations

Due to the Metro Rail, the transit system will increase, and numerous privately-held businesses will spring up around the stations. Furthermore, because of the enhanced transportation infrastructure, new firms will have the opportunity to flourish, while current businesses will benefit. Overall, these businesses placed near stations and routes will contribute considerably to the country’s GDP.

A total of 5 route lines have been proposed for the project, including MRT Lines 1, 2, 4, 5, and 6.

Convenience and Safety

The people of Dhaka city suffered greatly due to the non-availability of buses during peak hours, overcrowding, short intervals, misbehavior of bus employees, and so on. Taxis and CNGs were only available alternatives to buses. But the excessive fares, tendency to not use ‘meter fare’, declining of commuting requests and misbehaving of drivers create limitless suffering for the people. 

Metro Rail will be a convenient medium of transportation for the people of Dhaka. Because it will provide an air-conditioned transportation facility with abundant passenger capacity, it will carry around 60,000 passengers per hour, and every 4 minutes, a train will be available at each station. Besides that, women often face hurdles in using existing public transport. This includes long waiting hours during peak times, physical or verbal harassment, shortage of seats, safely getting on or off the bus, and finding suitable transport. These are some reasons why women are becoming more reluctant to use existing public transportation systems. Thus, they will be more interested in traveling via Metro Rail. As a result, women’s participation in the workplace will increase.

Technological Advancement

Metro Rail will infuse the population of our country into a new era of technological advancement. In foreign countries, the Metro Rail and other public transportation mediums merged to create an advanced route system for people to travel to their destination with just one payment card. In Bangladesh, the system has already been developed in Metro Rail. The system can be gradually extended to all types of public transportation. This will help bring digitization to the country’s transportation system as well as gradually move towards a cashless economy.

Decentralization of Urban Population

The density of the population can be reduced from Dhaka city once the Metro Rail comes into operation. People can stay outside the city by spending much less on house rent and come to Dhaka easily for office and other purposes. For example, people living in Gazipur or Narayanganj areas can travel to the main city within less than an hour once all the routes are complete. Every Metro Rail route has scope for expansion in the future. So, the whole transit system can be expanded to nearby towns. People currently living in these areas can also join the workforce of the main city without living there.

Apart from that, many commercial developments will take place, and the facility’s rent around the route will rise. Secondly, the residential buildings will be repurposed to commercial facilities. As a result, people living in those areas will be forced to move into low-rent places, and ultimately people will decentralize from the central city.

Impact on the Environment

All vehicles running on Dhaka’s streets rely on fossil fuels, which contribute significantly to environmental pollution. In addition, substantial development initiatives are underway in Dhaka and its surroundings. As a result, Dhaka has consistently topped the list of the world’s most polluted cities in recent years. Metro Rail will positively impact the environment of the capital city. Air pollution of Dhaka is much more intense than in many other megacities. Since Metrorail is ‘electricity powered’ and can carry more passengers per hour, the propensity to travel in Dhaka by bus and other modes of transportation would decline. This would lower the number of vehicles on the road, which will be beneficial to the environment. Besides that, Mass Spring System [MSS] technology will be used in Metro Rail to reduce sound, shock, and vibration. Concrete side walls will also be made to prevent noise pollution. This technology will reduce the impact of Metrorail on the environment.

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