The road transport and bridges ministry will sign a deal with a Chinese state-owned company on June 30 for the construction of a two-lane tunnel underneath the Karnaphuli River in Chittagong.

Secretary to the ministry MAN Siddique and Chairman of China Communication Construction Company Ltd (CCCCL)

Liu Qitao are due to ink the agreement at a simple ceremony in Beijing, Road Transport and Bridges Minister Obaidul Quader told The Daily Star today.

Quader, who is on the way to Beijing with an eight-member delegation of the government of Bangladesh for the reason, said he and the Chinese commerce minister would witness the signing.

He said the groundbreaking works of the tunnel would be started in October in presence of both the prime ministers of Bangladesh and China.

The structural construction would be kicked off in December and completed within a four-year timescale, he told The Daily Star from Singapore over phone on his way to Beijing.

Earlier last week, the cabinet committee on economic affairs approved the project, which will cost more than $1 billion. The tunnel will be constructed with soft loans from China.

The tunnel will significantly facilitate transit traffic, relieve the existing bridges of traffic pressure and promote regional economic growth, according to a government study. It will also provide convenient transport conditions for the planned deep sea port.

The tunnel, which is a first-of-its-kind in Bangladesh, will improve the Dhaka-Chittagong-Cox's Bazar highway network. It can later be linked to the planned Asian Highway Network, enabling road connections with Myanmar and India.

The tunnel would also attract downtown population in the east side and promote "One City and Two Towns" development model adopted by Shanghai, the largest city in China.

During the prime minister's visit to China in June last year, an agreement was signed between the two countries' communications ministries regarding the tunnel project.

About $300 million, to be required for land acquisition and rehabilitation for the tunnel, will be provided from the government's fund.