Among the three terminals that the government has decided to build at the Chattogram port under the Bay Terminal project, two will be constructed and operated by DP World UAE and PSA Singapore in public-private partnership arrangements.
The Chittagong Port Authority (CPA) will construct and operate the other terminal with its own funding and management, according to decisions made at a high-level meeting held at the Prime Minister's Office (PMO) recently.
Ahmad Kaikaus, principal secretary to the prime minister, presided over the meeting held on 6 March this year, reveals the meeting minutes.
Md Abul Bashar, director general of the PPP Authority, told The Business Standard that letters were sent to DP World UAE and PSA Singapore last week asking for detailed technical and financial proposals for the construction of the terminal.
The proposed Bay Terminal will have rail, road, marine and air connectivity and ships with a capacity of at least 5,000 twenty-foot equivalent units (TEUs), a draft of about 12 metres and a length of 285 metres will be able to anchor there, said Salman F Rahman, private industry and investment adviser to the prime minister.
This will reduce the shipment charge in import-export activities by about 30-40% as well as reduce the turnaround time and fixed operation cost, he added.
The construction of the Bay Terminal was first discussed in the 30-year strategic master plan adopted in 2013 to increase the capacity of the Chattogram port and make it a hub of regional trade.
Four years later, a technical and economic feasibility study for the construction of the terminal showed that the Bay Terminal would be economically viable and investment-friendly for Bangladesh.
The construction of the Bay Terminal at the Chattogram port will be completed by 2026. After that, about 35 ships will be able to berth at the terminal at a time and it will be possible to handle an additional 50 lakh containers.
DP World and the PSA have signed memoranda of understanding (MoU) with the PPP Authority for the construction of the Bay Terminal. India's Adani Group, Saudi Arabia's Red Sea Gateway Terminal and the South Korean government's Ocean and Fisheries Ministry also presented proposals for the construction of the Bay Terminal.
The recent meeting at the PMO decided to give the job to DP World and PSA Singapore after analysing their experience in international port management and the proposals of different countries.
According to sources, the Singapore government signed an MoU with the PPP Authority after expressing interest in constructing and operating the Bay Terminal in accordance with G2G policies based on which the prime minister has approved the PSA Singapore as a potential investor for the construction of the Bay Terminal.
The company has been given consent to conduct a feasibility study and it has already appointed a consultant. The Ministry of Shipping has assured PSA Singapore that it will negotiate with the company regarding Terminal-1 once the feasibility study is done.
DP World on behalf of the Dubai government signed an MoU with the PPP Authority in February 2019 for the construction and operation of the Bay Terminal under the G2G model. The company also sent a concept note, making proposals based on a holistic approach including rail, road and port.
The Dubai-based company is going to get the job of constructing one terminal, said the sources.
Besides, the Asian Development Bank, China and DP World have expressed their interests in investing in the proposed construction of a Bay Terminal rail link with the Chattogram port and the proposed Inland Container Depot (ICD) construction project at Dhirashram in Gazipur. The government, however, has kept DP World ahead considering its innovativeness and technological advancement.
The PPP Authority has sent a letter to the company asking for detailed technical and financial proposals for the project.
The Chittagong Port Authority expressed interest in constructing and operating a terminal under its own management at a meeting held at the shipping ministry in February this year.
The Prime Minister's Office has decided to allow the CPA to construct and operate a terminal so that the two foreign companies can operate the terminals on a competitive basis.
Earlier, the shipping ministry had signed an MoU with Red Sea Gateway Terminal. The prime minister also gave her consent for the construction and operation of container terminal-2 by the Saudi company. But, the Saudi government has not yet signed an MoU with the PPP Authority.
Adani Group of India showed interest only in building and operating the terminal, not in dredging. Despite the availability of a $400 million fund under the Line of Credit (LOC) 3, the Indian government has not signed an MoU for the construction of the terminal.
On the other hand, South Korea's Ministry of Ocean and Fisheries has expressed interest in providing low-interest loans and being involved in the construction work on the Bay Terminal even though it has not made any specific proposals.
The World Bank has proposed funding for breakwater and channel dredging or non-revenue-generating infrastructure.
The CPA chairman told the shipping ministry meeting that there was administrative approval for the acquisition of 870 acres of land for the project. Of this, about 67 acres of privately owned land has been acquired, while the acquisition of another 803 acres of khas land at a token price is under process with the Ministry of Land for its final approval.
Abul Bashar of the PPP Authority said the port authority had taken an initiative to conduct a feasibility study on the Bay Terminal but that the tender was cancelled on the advice of the Central Procurement Technical Unit due to a conflict of interest. PSA Singapore has now given consent to conduct a feasibility study following the company's request in this regard, he added.
According to the Ministry of Shipping, the International Finance Corporation has promised to finance PSA Singapore for the feasibility study. Meanwhile, the PPP Authority and the Chittagong Port Authority have jointly prepared an updated timeline and shared it with PSA Singapore.