After a long meeting with the firm's Managing Director Masud Reza on Tuesday, Communications Minister Nazmul Huda gave the approval as he got satisfactory answers on some important questions about the construction method of the underground line, sources said.

"We have sent the proposal of Contech to PICOM and after their approval the company would get letter of intent (LOI) for starting work on the project," Communications Secretary Shafiqul Islam yesterday said.

As per the rules, the principal secretary of the Prime Minister's Office chairs the PICOM meeting and gives approval of a development project by a private company after a ministry forwards it.

The company was selected as it was the lowest bidder in the pre-qualification tender and the government would not go for calling tender again, the communications secretary said.

He, however, observed that the company would have to pass some more stages before going for physical construction.

The selection was given on the basis of an international tender called by Bangladesh Railway in 2002 seeking application for establishing a metro rail system in the capital, sources said.

Only two firms had participated in the bid and local firm Contech Limited was the lowest bidder as it proposed to construct the 52-kilometre underground railway at a cost of Tk 5,200 crore.

The company would construct the metro rail on build, own, operate and transfer (BOOT) basis. As per BOOT guidelines, after getting LOI the private company would prepare terms and conditions and other requirements for a formal agreement with the authorities concerned.

After signing the agreement, the authority would issue work order for implementing the project. All this formalities would have to be completed within three months after issuing LOI, says the guideline.

Earlier, the Ministry of Communications decided to go for a feasibility study and sent a proposal to the Planning Commission seeking Tk 7 crore for the study. As the Planning Commission did not respond to the proposal, the ministry later abandoned the idea.

Consequently, the communications ministry asked the local firm to submit details of its legal status, technical, management and financial capabilities for project implementation and experience and status of ownership in the proposed project.

The company submitted all the required documents and informed the ministry that MTRC of Hong Kong will work as the constructor, Sena Kalyan Sangstha, Bangladesh as financier and project manager, the Bangladesh University of Engineering and Technology (BUET) as the leading consultant.

Hitachi of Japan will supply the equipment and JBIC will provide suppliers credit and syndicated bank loan for the project. The firm also provided authorised letters from the company concerned and some of the officials of those partner organisations met high officials of the communications ministry confirming their involvement.

If his firm finally gets the approval of PICOM the metro line would be established within a period of three years, Masud Reza said, adding that the line would be established through cut and cover method which is much less costly than the tunnel boring method.

He expects to start construction work from this winter after finishing all the formalities.

The company proposed to build six routes with double line beginning from Syedabad to Gabtoli via Mohakhali. The fare in the metro rail will be almost the same as in intra-city bus services in Dhaka.

The company sought 30 years concession time for recovering its investment.