Deal on India’s use of Chattogram, Mongla ports on the cards

A deal may be signed during Prime Minister Sheikh Hasina's upcoming India visit on the use of the Chattogram and Mongla ports by India to carry goods to its seven northeastern states.

Besides, a framework agreement will be inked between the two countries on setting up of a branch of India's Exim Bank in Dhaka to expedite Bangladeshi projects financed by the Indian Line of Credit.

During Hasina's visit, a total of 39 accords and memoranda of understanding on different issues, including export, seafaring protection, commerce, river protection and determining river boundaries, sharing of shipping information, will be signed.

The government decided to sign these deals in two separate meetings on September 5 and 11 in the Prime Minister's Office. Both the meetings were presided over by Dr Mashiur Rahman, the financial affairs advisor to the prime minister.

Prime Minister Sheikh Hasina will go to India on an official visit on October 3. She will meet her Indian counterpart Narendra Modi on October 5.

During her visit, the issue of India's investment in the development of Bangladeshi ports, besides their use, will also be highlighted.

Officials of the shipping ministry informed The Business Standard that in October last year Bangladesh signed a primary agreement with India on the use of the Chattogram and Mongla ports.

Now, a deal will be signed on the standard operating procedure of these two ports, they said.

But, no feasibility study has been conducted on the degree of pressure the seaports will have to undergo if neighbouring countries are allowed to use them, according to the sources.

However, the agreement will incorporate the issues of port charges, fees on Indian goods, safety and the extent of rebate for India on international goods transportation.

The officials also said India wants to use Bangladesh's two main seaports due to their convenient geological locations. The use of these ports will benefit India in transporting goods to its northeastern states and also to Nepal and Bhutan.

It will significantly reduce India's transportation distance to these states and also the load of costs the country has to spend to reach its goods to these states.

Agartala, the capital of Tripura, is 1,680km away from the Kolkata port, while the city is only 248km far from the Chattogram port.

Again, it will be a 570km trip from Chattogram to Shilong, the capital of Meghalaya, which is around 1,150km away from Kolkata. The distances of Mizoram and Nagaland from Kolkata will also reduce significantly.

The distance of India's other northeastern states from the Kolkata port is, on average, three times more than that from Chattogram.

India has to transport goods to its far-off states from the Kolkata port through feeder vessels, making it bear extra costs and spend much time.

During Sheikh Hasina's visit, both the countries may also discuss the joint venture ship-building where private entrepreneurs may be given preference, shipping ministry officials said.

The government has sent a copy of a draft framework agreement to the Indian authorities on establishing the Dhaka branch of India's Exim Bank. The agreement will be finalised after their opinions are obtained.

On the framework agreement, an inter-ministerial accord was signed on September 17 with the participation of the Bangladesh Bank, the Legislative and Parliamentary Affairs Division, the foreign ministry, the Security Services Division of the home ministry, and the National Board of Revenue.

Officials of the Economic Relations Division of the finance ministry told The Business Standard that the release of Indian credit will be expedited if the Exim Bank branch is set up in Dhaka. At the same time, it will also ease snags in implementation of the Bangladeshi projects.

So far, Bangladesh has signed three agreements with India under the Line of Credit. India has released only $579.8 million of the total $7.36 billion in the last 12 years – since the first LOC was signed in August 2007.

Under the first LOC, India released $541 million, 62 percent of the promised amount; under the second LOC signed in March 2016, Bangladesh received only $38.8 million, 1.94 percent of the assured sum.

The third LOC worth $4.5 billion was signed in April 2017, but no project work under the latest agreement has started yet. As a result, India has not released any amount yet.

During her visit, Sheikh Hasina will also call for investment in Bangladesh by Indian entrepreneurs. Both the countries may sign an arrangement on this issue too, according to sources at the Prime Minister's Office.

To attract Indian investments in Bangladesh, the government is setting up the Mirsarai Economic Zone in Chattogram on 55 acres of land.