Written by The Banking Post
Bangladesh is set to receive a $164.57 million loan from the Asian Infrastructure Investment Bank (AIIB) to procure 30 metre-gauge diesel-electric locomotives, as part of efforts to strengthen railway capacity.
Officials said the financing will support the Railway Capacity Expansion (RACE) project, aimed at addressing a long-standing shortage of locomotives that has constrained operations despite significant infrastructure upgrades in recent years.
The Ministry of Railways has already submitted a preliminary development proposal, estimating the total project cost at over Tk 22.45 billion. Of this, around Tk 15.45 billion—nearly 69 per cent—will be financed by the AIIB, while the government will provide the remaining Tk 7.0 billion.
According to project documents, Bangladesh plans to procure a total of 60 metre-gauge locomotives to meet rising demand. The AIIB will finance half of them, while the rest will be procured under a separate project backed by the Asian Development Bank.
Officials say the initiative is critical to bridging the gap between expanded rail infrastructure and limited rolling stock.
“To address the critical shortage of serviceable locomotives, the government plans to procure 60 new units,” according to a project summary.
The shortage has prevented Bangladesh Railway from fully utilising newly built lines, leaving both passenger and freight demand partly unmet.
Once implemented, the project is expected to allow the introduction of additional train services on high-demand routes, particularly intercity and freight corridors, improving operational efficiency and boosting revenue.
The project also includes procurement of spare parts, commissioning support, and capacity-building measures such as training and technical assistance.
Beyond operational gains, replacing ageing engines with modern, fuel-efficient locomotives is expected to improve energy efficiency and reduce emissions, supporting the country’s climate goals.
Analysts say the move highlights the importance of aligning infrastructure expansion with rolling stock investment to ensure better returns from large-scale railway development.
