$1.3bn Jica loan for key projects to come at higher rate

The Japan International Cooperation Agency (JICA) has agreed to provide Bangladesh with $1.3 billion in loans for three key development projects, but this time the interest rate on the loan will be higher than the previous package, according to officials.

They said that the loan will be part of the 43rd Official Development Assistance (ODA) package and would play a crucial role in the development of Bangladesh.

The three projects that will be funded with the Japanese loan are the highly anticipated Matarbari deep sea port in Cox's Bazar, the Joydebpur-Ishurdi dual gauge rail line, and the upgradation of the Chattogram-Cox's Bazar highway.

The loan agreement is currently at the final stage of negotiation and is expected to be signed soon, according to (Economic Relations Division) ERD officials.

However, this time the loan will come with a slightly higher interest rate for construction compared to the first batch of the 43rd ODA package, which was signed in June 2022.

The interest rate for construction in the second batch will be 1.2% while the consultancy fee and front-end fee remain unchanged at 0.01% and 0.2% respectively. The loan repayment period will be 30 years with a grace period of ten years.

The first batch of the 43rd package was $1.4 billion and is included in the overall $2.7 billion 43rd ODA package.

This loan marks the continuation of Jica's commitment to supporting Bangladesh in its development journey, following its $2.66 billion loan in the 42nd ODA package in 2021 and a $3.15 billion loan in the 41st ODA package in 2020.

Referring to ongoing loan negotiations, ERD officials said there may be some changes in the terms and conditions of the 43rd loan package.

Deep sea port financing to boost Bangladesh's cargo handling

Under the 43rd loan package, Jica will provide $800.75 million for the Matarbari port development project.

Matarbari Deep Sea Port is being constructed at Moheshkhali upazila's Matarbari and Dhalghata area in Cox's Bazar. The Chattogram Port Authority under the Ministry of Shipping is implementing the work at an estimated cost of Tk17,777 crore.

The project will strengthen the cargo handling capacity of Bangladesh by constructing a multipurpose deep-sea port for containers and general cargo. It will help boost the flow of goods domestically and with neighbouring countries.

The port will have two separate 300-metre and 460-metre-long terminals where ships with 8,000 TEU (twenty-foot equivalent unit) containers – four times higher than the Chattogram Port – can dock thanks to the port's channel with a 16-metre draft.

The Executive Committee of the National Economic Council (Ecnec) approved the Matarbari Port Development Project in March 2020.

According to Chattogram Port Authority officials, the project progress is still behind the implementation plan since the tender process, contractor appointment and work orders were not completed as per the action plan.

Funding for smooth traffic flow to beach town

With Jica funding, the Roads and Highways Department is going to construct four outer roads and one elevated bypass for Chattogram-Cox's Bazar highway, aiming at a smooth and congestion-free traffic flow on the route and better cargo access to Matarbari port.

Under the 43rd loan package, Japan will provide $423.54 million in FY23 to the Chattogram-Cox's Bazar transport work.

The bypass roads will be constructed in Chattogram's Patia, Dohazari, Amirabad and Cox's Bazar's Chakaria areas, while the elevated side road will be built in Chattogram's Keranihat.

Officials of the Roads and Highways Department said that Jica is now conducting the feasibility of the project. The report will be submitted within the next two months as the project proposal is now being prepared.

They said the implementation will begin within the next six-eight months after the approval. The funding confirmation by Jica will speed up the process.

Jica notes better cargo access to Matarbari port will contribute to the economic growth of adjacent districts and improve the overall logistics in Bangladesh.

Jica nods to wider train tracks as China pulls out

Japan is funding the survey and design of the Joydebpur-Ishurdi dual gauge rail line project as China pulled out of the project halfway. The Japanese development partner will initially lend $32.13 million to this project as it agreed to finance the main construction work as well.

Implementation of the Chinese-funded project began in 2018. But in the middle, China pulled out of the rail project after the authorities moved to trim the estimated spending of Tk14,250 crore.

Project Director Golam Mostafa said the government contacted Japan subsequently after China pull-out.

"Japan agreed to finance, but the Japanese financier said it will carry out a fresh survey. The foreign development partner is now funding the study and design to determine the project cost. It also assured Bangladesh of providing funds for the basic construction work," he told The Business Standard.