China to fund potential Mongla port project

Beijing wants management control of $400m project

| Updated: January 04, 2023 17:33:40

China to fund potential Mongla port project

A major development it is being billed as China finally agrees to fund a $400-million project for upgrading the Mongla seaport that holds potential to promote sub-regional cooperation.

Officials say in a letter sent to the Bangladesh government recently the Chinese side said in response to Bangladesh's request, they decided to fund the 'Expansion and Modernisation of Mongla Port Facilities' through government concessional loan (GCL) as their feasibility study found the project "crucial to development of Bangladesh".

The project-funding GCL framework stipulates that the project will be implemented by a Chinese enterprise or by a consortium of Chinese companies selected by them.

"The Bangladeshi side has kindly requested to fulfill the relevant business procedures in accordance with Chinese GCL policy including the selection of Chinese enterprises or a consortium led by Chinese enterprises as the implementing enterprise according to the procedures stipulated by the Bangladeshi laws, signing the business contract…," the letter sent by the Chinese government reads.

Under GCL, a framework agreement will be signed between the Exim Bank of China and the ERD of Bangladesh before the final loan agreement, which will last three years.

The project-bidding process and loan agreement will have to be signed. However, in the case of PBC, there will be no such rules.

China, during the negotiations, sought to get the responsibility of implementation, operation, maintenance and management of the project.

A senior official of the ministry concerned told the FE that they had agreed in principle to give China the responsibility, as this would help the Mongla Port Authority assess whether there is any fault in project implementation.

Recently, the MPA wrote to the Ministry of Shipping (MoS) to take step to expedite the loan approval for the project, prompting the ministry to request the ERD to complete negotiations with China.

Earlier, the Ministry of Foreign Affairs (MoFA) had informed the MoS about the Chinese proposal, saying that China wanted control of the project after implementation.

The Chinese authorities articulated interest in the integrated approach for construction, implementation, maintenance and management of the project.

Following construction of many mega-infrastructures, particularly in Bangladesh's southern part - especially the Padma Bridge--the Mongla seaport's importance has increased manifold with vistas of opportunities in trade and connectivity opening up.

It has now become nearest seaport to the capital, Dhaka, and recently many international shipping lines have shown interest in plying to the port.

A good number of garment exporters have also started shipping their goods through the port, as its distance with the capital is 100 kilometres shorter than those from other ports, the MPA chairman said in a letter to the MoS, urging quick approval for loan for the modernisation project.

The crucial US$400-million project will be funded by China under a multibillion credit line instituted by a MoU signed during the visit of Chinese President Xi Jinping to Dhaka in 2016.

In line with the accord, Bangladesh sent a proposal to China in April 2019 through a preliminary loan application for funding the project.

Bangladesh highlighted importance of the port-modernisation project in a recent meeting with CIDCA officials, saying that it would contribute to backing up the Bangladesh, China, India and Myanmar Economic Corridor (BCIM) on the sub-regional plane.

The entire western part of Bangladesh and its adjoining areas are considered hinterland, having a unique opportunity to play vital role in the arena of international and regional trade and economy, Bangladeshi officials told their Chinese counterparts regarding the importance of the project.

The MPA signed a MoU with China National Complete Engineering Corporation (CNCEC) on August 12, 2015. Later, an agreement was inked with the company on October 6, 2016.

But it stopped communication with the MPA in 2019, prompting the port authority to scrap the deal.

Later, the MPA signed an agreement with another Chinese company - China Civil Engineering Construction Company (CCECC).

In unlocking its potential the Mongla seaport recently registered a record in terms of ship arrivals, cargo handling, and revenue earning.

In 2020, the port saw a turnout of 970 ships--the highest in its 70-year history. It earned a profit of Tk 1.30 billion from the limited-scale port operations.

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