The Bay Terminal, the biggest expansion project in the Chattogram port's history, made major progress as the World Bank's board of executive directors approved a $650 million loan on Friday to finance the dredging of the access channel and construction of the breakwater.

Once implemented, the terminal alone will be able to handle around 5 million TEUs of containers. The current port facilities have been handling 3.2 million TEUs in recent years.

The completion of the Bay Terminal would significantly improve Bangladesh's global trade competitiveness and reduce import and export costs by increasing port operational efficiency and mobilising private investment, according to a press release issued by the international lender.

The World Bank earlier promised to finance the Bay Terminal Marine Infrastructure Development Project, under which a 6 km climate-resilient breakwater would be constructed to protect the harbour from the force of waves,

According to the release, dredging of the port basin, entrance, and access channels will also be carried out under the project.

Chittagong Port Authority (CPA) Chairman Rear Admiral Mohammad Sohail told The Daily Star that the World Bank's approval is a big milestone for the mega project since the dredging the deep-draft channel is a pre-requisite for the terminals.

He said around 1,600 acres of land would be reclaimed for constructing four terminals through the dredging process.

The drawings and designs for the channel dredging and breakwater construction have been completed while a DPP has already been sent to Planning Ministry for approval, Sohail said, adding they would go for tender in August after getting the nod.

He hoped the dredging of the access channel would begin in October this year.

The government has planned to develop two container terminals, a multipurpose terminal and an oil and gas terminal under the Bay Terminal.

The new, modern Bay Terminal, to be operated by leading international terminal operators, will accommodate larger vessels, such as panamax vessels, and substantially decrease vessel turnaround time, potentially saving the economy about $1 million daily, the World Bank hoped.

Currently, the Chattogram Port, the gateway for over 90 percent of Bangladesh's international trade volume and 98 percent of its container traffic, can only receive small feeder vessels during the limited hours of the day.

"Bangladesh's international trade heavily relies on Chittagong Port, which faces significant capacity constraints," said Abdoulaye Seck, country director for Bangladesh and Bhutan at the World Bank.

"The Bay Terminal will be a game-changer. It will improve Bangladesh's export competitiveness through enhanced port capacity and reduced transportation cost and time and opening new opportunities to key global markets."

Moreover, the project will mobilise private investment for the development of container terminals.

The World Bank investment, along with government funding, will bolster investors' confidence and contribute to mitigating risks associated with the overall development of the Bay Terminal.

Furthermore, the World Bank Group's private-sector arm -- the International Finance Corporation (IFC) -- is considering investing in one of the proposed private sector-led terminals, according to the release.

"The Bay Terminal will contribute to modernising the country's seaport infrastructure and improving its connectivity to regional and international markets," said Hua Tan, senior transport specialist and team leader for the project at the World Bank.

In fiscal year 2023-24, the World Bank committed a record $3.4 billion in support to Bangladesh, including this project.

Once the project is completed, the port's capacity will be enhanced six-fold by accommodating larger vessels round the clock.

At present, vessels carrying up to 1,800-2,000 containers can berth at the port's existing jetties.

After dredging the channel, which will have a 12-14-metre draft and breakwater facility, vessels with a capacity of 5,000–6,000 containers can navigate to the Bay Terminal 24 hours a day and will no longer need to wait for high tide or daylight to enter or depart.

The terminal is being constructed on around 2,500 acres of land. It will have a length of 6.15 kilometres, stretching from the backside of the Chattogram Export Processing Zone to Rasmoni Ghat at the Halishohor coast of the Bay of Bengal.

CPA chairman Sohail expects the Bay Terminal to draw over $8 billion in foreign direct investments (FDI).