Bangladesh Defense
- Jan 24, 2024
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Govt pushes for 2025 launch of Ctg Bay Terminal project
The project involves multiple supporting projects. The proposal for a key side project to construct a seven-km navigational access channel and a six-km breakwater will be finalised and approved by 25 December
Infographics: TBS
Infographics: TBS
The government is planning to start the construction of the Bay Terminal at Chattogram Port next year, a landmark project anticipated to boost the capacity of the country's main trade gateway by up to sixfold.
The project involves multiple supporting projects. The proposal for a key side project to construct a seven-km navigational access channel and a six-km breakwater will be finalised and approved by 25 December. Other proposals are also in the making, according to a decision made during a special meeting chaired by Finance Adviser Dr Salehuddin Ahmed yesterday (12 December).
Sources present in the meeting told TBS that the access channel proposal will be presented for final approval at the Executive Committee of the National Economic Council (Ecnec) meeting in the first half of January 2025.
A breakwater is a coastal structure designed to protect a port from waves and storms and a navigational access channel is a dredged path that allows ships to safely approach and leave a port. This supporting project will pave the way for the construction of three terminals under the main project.
In June this year, the World Bank approved a $650 million loan to fund this side project and the government is eager to prepare the DPP quickly to sign the loan agreement.
Adviser to the Ministry of Road Transport and Bridges and the Ministry of Railways Fouzul Kabir Khan, Adviser to the Ministry of Shipping Brig Gen (Retd) M Sakhawat Hossain and key officials from relevant ministries were present in the meeting held at the Finance Division.
Fauzul Kabir Khan told TBS that the World Bank board has already approved a loan for the side project. The government had intended to sign the loan agreement by December, but this has been delayed. Plans are now in place to finalise the agreement as soon as possible.
Further steps have also been taken to accelerate the Public-Private Partnership (PPP) activities related to the main project. The Roads and Railways ministries have been instructed to speed up their respective side projects for the terminal, he said.
With the ECNEC approval expected in January, project implementation will also begin next year, Fouzul Kabir added.
A senior official from the Economic Relations Division (ERD), speaking anonymously, told TBS, "The government is quickly preparing the proposal to secure the World Bank loan on time. The global lender has been urging for the agreement signing and is highly interested in the project. It even offered to finance Terminal 3 which the Chittagong Port Authority plans to construct with its own funding."
Terminals 1 and 2 will be constructed under the PPP modality.
"There is considerable interest from various other foreign companies looking to be involved in this project," he added.
In 2013, the previous Awami League government decided to expand Chattogram Port's capacity by constructing the bay terminal. That same year, a pre-feasibility study was conducted by the German firm Hamburg Port Consulting.
In 2017, a decision was made to carry out a detailed feasibility study and master plan. Following this, in 2021, a Korean company Kunhwa was awarded a work order to conduct the feasibility study and master plan. The final feasibility study was submitted to the Chittagong Port Authority.
Based on the feasibility study, the Port Authority estimated the total cost of constructing the entire bay terminal, which includes three terminals, access channels, and breakwaters, at $2.8 billion.
Of this amount, $609.44 million is allocated for each of Terminal 1 and Terminal 2, while the construction of Terminal 3 is expected to cost $755.11 million. Additionally, $831 million will be spent on other works, including the side project for the navigational access channel and breakwater.
Terminal 3 will be implemented by the Chittagong Port Authority with its own funding, while the remaining two terminals will be developed under the PPP models.
According to finance ministry sources, PSA Singapore has shown interest in implementing one of the terminals, though a final decision on their involvement has not yet been made. PSA is one of the largest port operators globally, with terminals in 26 countries, including deep-sea, rail, and inland facilities.
The government has also decided in principle to appoint DP World, a UAE-based company, to develop another terminal. Established in 2005 through the merger of Dubai Port Authority and Dubai Ports International, DP World now operates 77 marine and inland terminals across 40 countries.
A Chittagong Port Authority official said, "The decision to appoint DP World and PSA Singapore is in a preliminary stage. Further negotiations are planned, with Ernst & Young, a UK-based company, appointed as the transaction advisor for the negotiation."
The Bay Terminal project also includes two key supporting projects: the construction of a 7 km access road and a 6.71 km rail track.
The Road Transport and Highways Division is responsible for the road construction, having already prepared and submitted the project's proposal to the Planning Commission. The Asian Development Bank will provide funding for this portion of the project.
Meanwhile, the proposal for the railway construction has not yet been finalised.
Project Overview
The CPA developed the Strategic Master Plan in 2013, funded by ADB and prepared by Hamburg Port Consulting, which recommended the immediate initiation of the Bay Terminal project. A preliminary feasibility study was also conducted by the same company in 2017.
The project was approved as a Public-Private Partnership (PPP) by the Cabinet Committee on Economic Affairs (CCEA) on 4 August 2019.
According to projections, Bangladesh's container handling capacity will need to increase to 6.3 million TEUs by 2030, 8.6 million TEUs by 2035, and 11.5 million TEUs by 2040.
The CPA expects to handle approximately 12.9 million tonnes of cargo by 2027, with this number rising to 17.08 million tonnes by 2040.
Currently, the CPA operates as a river-based feeder port with limitations on vessel length, draft, and tide conditions, handling ships up to 190 meters in length, 9.5 meters in draft, and 2400 TEU capacity.
Ships often experience a three-day waiting time, which incurs an additional cost of $45,000. In contrast, the Bay Terminal will accommodate vessels of 300 meters in length, 11.5 meters in draft, and 4800 TEUs, operating 24/7, unaffected by tide conditions, thus reducing costs and increasing efficiency.
A game changer
The Bay Terminal is critical for accommodating future demand and supporting foreign direct investments (FDIs), export/import activities, and national development.
The total investment required for the Bay Terminal is estimated at nearly $3 billion, with $2.4 billion provided by global International Terminal Operators (ITOs) such as PSA, DP World, and AD Ports. The World Bank and all ITOs have expressed strong interest in investing in the project, which will also encourage future FDI.
The project will create approximately 13,500 jobs, which is highly needed in the current economic climate. Additionally, the Bay Terminal will be strategically located to improve logistics efficiency, connecting the Dhaka-Chattogram highway, inland water transport, and railways.
By 2040, as the lifespans of Chittagong Container Terminal (CCT) and New Mooring Container Terminal (NCT) end, the Bay Terminal will meet the growing demands of Chattogram.
Furthermore, it will be Bangladesh's first Green Port, with 30% of the area dedicated to forestation, far exceeding the 51 acres planned by the Department of Forest.
Overall, the Bay Terminal is poised to be a game changer for Bangladesh, boosting exports and providing modern, cost-effective terminal facilities that enhance speed and efficiency.
