World Bank approves US$650M for Bangladesh Bay terminal development

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World Bank, Bangladesh, Bay Terminal

The World Bank has approved a significant financial injection of $650 million to support the development of the Bay Terminal in Chittagong (Chattogram), marking the largest expansion project in the port’s history. This development is set to transform Bangladesh’s trade capabilities, improving efficiency and significantly boosting the country’s global trade competitiveness.

The approval of this loan by the World Bank’s board of executive directors is a pivotal moment for the Bay Terminal project. The funds will be used primarily for dredging the access channel and constructing a climate-resilient breakwater. Once completed, the Bay Terminal will have the capacity to handle around 5 million TEUs (twenty-foot equivalent units) of containers annually, compared to the 3.2 million TEUs managed by the existing port facilities in recent years.

The Chittagong (Chattogram), Port, which handles over 90 percent of Bangladesh’s international trade volume and 98 percent of its container traffic, currently faces significant capacity constraints. The Bay Terminal aims to alleviate these constraints, allowing for larger vessels to dock and reducing vessel turnaround time, which is expected to save the economy approximately $1 million daily.

According to a press release from the World Bank, the project will involve the dredging of the port basin, entrance, and access channels. Additionally, a 6 km breakwater will be constructed to protect the harbor from wave force, ensuring the terminal’s resilience to climate impacts. Chittagong Port Authority (CPA) Chairman Rear Admiral Mohammad Sohail highlighted that the approval of the World Bank loan is a crucial milestone, as dredging the deep-draft channel is essential for the terminal’s operation.

Rear Admiral Mohammad Sohail also mentioned that around 1,600 acres of land would be reclaimed through the dredging process for the construction of four terminals. The drawings and designs for the channel dredging and breakwater construction have been completed, and a Detailed Project Proposal (DPP) has been submitted to the Planning Ministry for approval. The CPA plans to start the tendering process in August, with dredging anticipated to begin in October.

The government’s plan for the Bay Terminal includes the development of two container terminals, a multipurpose terminal, and an oil and gas terminal. These terminals will be operated by leading international terminal operators, accommodating larger vessels such as panamax vessels, and facilitating round-the-clock operations. This advancement is expected to reduce import and export costs by increasing operational efficiency and mobilizing private investment.

Abdoulaye Seck, the World Bank’s country director for Bangladesh and Bhutan, described the Bay Terminal as a “game-changer” for Bangladesh’s international trade. The terminal will enhance the country’s export competitiveness by improving port capacity, reducing transportation costs and time, and opening new opportunities in key global markets.

The project is also expected to attract significant private investment for the development of container terminals. The World Bank’s investment, combined with government funding, aims to bolster investor confidence and mitigate risks associated with the project. The International Finance Corporation (IFC), the World Bank Group’s private-sector arm, is also considering investing in one of the proposed private sector-led terminals.

Once completed, the Bay Terminal is expected to increase the port’s capacity six-fold. Currently, the port can only receive small feeder vessels during limited hours, with vessels carrying up to 1,800-2,000 containers. However, the dredging of the channel, which will have a 12-14 metre draft and breakwater facility, will enable vessels with a capacity of 5,000-6,000 containers to navigate to the Bay Terminal 24 hours a day. This will eliminate the need for vessels to wait for high tide or daylight to enter or depart.

The terminal, being constructed on approximately 2,500 acres of land, will stretch 6.15 kilometres from the backside of the Chittagong (Chattogram) Export Processing Zone to Rasmoni Ghat at the Halishohor coast of the Bay of Bengal. Rear Admiral Sohail expects the Bay Terminal to attract over $8 billion in foreign direct investments (FDI), significantly boosting the country’s economy.

In the fiscal year 2023-24, the World Bank committed a record $3.4 billion in support to Bangladesh, including the Bay Terminal project. Hua Tan, senior transport specialist and team leader for the project at the World Bank, emphasized that the Bay Terminal will modernize the country’s seaport infrastructure and improve connectivity to regional and international markets.

The World Bank’s approval of the $650 million loan marks a significant milestone for the Bay Terminal project and the broader aspirations of Bangladesh to enhance its global trade competitiveness. By modernizing its port infrastructure and increasing capacity, Bangladesh is poised to reduce trade costs, attract substantial foreign investments, and secure its position as a vital player in the international trade arena. The Bay Terminal, once completed, will not only be a testament to the country’s economic growth but also a pivotal hub for regional and global commerce.

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