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Written by: Staff

DHAKA, July 3 (Reuters) Bangladesh should operate its state-run railway like a corporation and the World Bank and other donors could help arrange up to $800 million to fund the process, World Bank country director Christine Wallich said on Monday.

Bangladesh Railway has long been an ailing state enterprise, losing 2.49 billion taka ($35.8 million) in the fiscal year to June, 2006. The railway employs 35,000 people.

''Once considered the backbone of communication in this region, today Bangladesh railway has a fringe role in the country's transport system,'' Wallich told a seminar in Dhaka.

The railway now carries only 10 per cent of the containers coming to the country's main port of Chittagong, she said.

For many years, the government's transport strategy had largely focused on the road sector -- with 85 per cent of the annual transport development budget allocated to roads.

As a corporate entity, the railway could remain under government control but would be able to make independent operational and commercial decisions, Wallich said.

Bangladesh has more than 20,000 kilometres of paved highway compared with only 2,800 km of railway network, which was inherited from the British Indian railways, Communication Minister Barrister Nazmul Huda told the seminar.

''With its resource constraints, the government cannot finance the increasing deficit,'' Huda said.

The Asian Development Bank, Japan Bank for International Cooperation and the World Bank would join efforts to support the government's railway reform programme, Wallich said.

''A multi-year, multi-donor programme of up to $800 million is possible,'' she assured the minister.

She stressed that the railway should be modernised and reformed into ''lines of business organisations'' to improve its commercial and customer focus.

With 6 to 7 percent economic growth and transport demand rising at up to 10 per cent annually, transport capacity must increase four-fold within the next 25 years, the World Bank said.

The World Bank supports expansion of the railway network in densely populated Bangladesh, home to 140 million people, as it is more environmentally friendly, safer and more economical.

''Eight to 10 persons die every day in road accidents, and traffic and road-related accidents are the tenth largest cause of disability and death in Bangladesh,'' Wallich said.

(US$1 = 69.655 taka) REUTERS SBA DS1445

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