Geopolitics hamper modernization of Bangladesh ports

The competition to develop much-needed modern port facilities in Bangladesh has intensified following the recent visit of Chinese President Xi Jinping to the South Asian country, reports www.joc.com.

Despite the clear need for a new port, and plenty of commercial incentives to build one, projects have been slow to materialize, as China, Japan, and India fight for the right to provide financing, and with that a ticket to build their influence in the country and in the region.

During the presidential visit, China committed $24 billion for the development of infrastructure projects, but no details were provided on investment in port infrastructure despite years of attempts on the part of Beijing to finance the construction of a new deep-sea port in the country.

After 10 years of average annual growth of 6 percent, Bangladesh desperately needs modern port infrastructure.

More than 90 percent of its foreign trade and almost all of its containers are currently handled by Chittagong port. Essentially a river port, located 16 kilometers (10 miles) up the Karnaphuli River from the Bay of Bengal, Chittagong has a draft of only 9.2 meters (30 feet), requiring the costly practice of transferring cargo from large to small vessels before berthing and discharge.

More than half of the cargo berths at the port’s three main terminals, some of which date back to the 1940s, are in poor condition, and the port is regularly congested. In a circular to customers in July of this year, NYK Line said its vessels were forced to stay in port for up to six days, two times longer than normal, owing to what it described as unprecedented levels of congestion. As recently as the end of September port operations were again paralyzed, this time by a trucker strike that left 40,000 containers piled up in port yards stocked beyond their already limited capacity.

Bangladesh’s export sector is expected to eclipse $50 billion in value by 2021 as global demand for its ready-made woven and knitted garments, frozen foods, jute, and leather continues to rise. Imports, too, are on the rise, particularly petroleum products, edible oils, cotton, and machinery and equipment.

A joint port development study completed last year by HPC Hamburg Port Consulting, an HHLA subsidiary, together with two other companies, forecasts container throughput at Chittagong will rise to 2.9 million twenty-foot-equivalent units by 2020 and 5.1 million TEUs by 2040.

Bulk throughput is expected to rise to 44 million tonnes (48.5 million tons) by 2023 and 73.3 million tonnes by 2043. The dry bulk segment is forecast to book average annual growth of 3.9 percent to 55.5 million tonnes by 2043, driven by high demand for cement clinker, reflecting the large potential of the construction sector.

Despite all this growth, Bangladesh’s efforts to build new port infrastructure have continued to stumble.

The country is a major component of China’s Belt and Road maritime agenda and Beijing was originally due to build a new deep-sea port at Sonadia in the south of Bangladesh. However, in February of this year, the China Harbour Engineering Company project was scrapped by the Dhaka government following what is thought to have been intense political pressure from India and the United States, both of whom are concerned over China’s growing influence in the Indian Ocean region.

Another port, planned for Pyra on the northwest coast of the Bay of Bengal, and also originally to be a Chinese development, was subsequently turned into a joint project of several countries with significant involvement from India.

Japan has been making better headway recently. Earlier this year, a signing ceremony took place for a multi-billion dollar port and power plant project in Matarbari in the south of Bangladesh with majority funding from the Japan International Cooperation Agency.

That project will cost $4.6 billion, of which it will provide $3.4 billion, and includes development of two 600 MW, coal-fired power plants and 18-meter draft port capable of handling vessels up to 80,000 deadweight tonnes, according to the Japanese development agency.

At the same time, HHLA of Hamburg said it has been selected by the Chittagong Port Authority to carry out a feasibility study for the “Bay Terminal” to be built on the Patenga coast, close to the existing Chittagong port. The containers-focused facility would have a maximum draft of 14 meters, allowing larger vessels to call at Chittagong for the first time, and would be part-funded by the Asian Development Bank.

Whether or not the Bay Terminal project materializes remains to be seen, but for now Bangladesh’s quest for modern port facilities to support its trade potential continues, as does the risk of political delays due to its geopolitical importance.