China seeks loan application for Mongla port expansion
The Chinese embassy in Bangladesh urged the government to send a formal loan application in order to secure funds for the expansion and modernisation of Mongla port.
"I am convinced that early commencement of this project is conducive to the economic development of Bangladesh and improving the livelihood of local people," Yao Wen, ambassador of China to Bangladesh, said in a letter near the end of last month.
On condition of anonymity, a senior official of the Economic Relations Division (ERD) said they received letters from China urging formal applications to this end, adding that they were yet to send a loan application.
The official also informed that the ERD had been trying to mobilise funds for the expansion and modernisation of Mongla port, the second largest seaport in Bangladesh, since 2016, but had not been getting a positive response from China.
He said the Chinese fund would be used for modernisation of the port and to facilitate quality and quick services. Meanwhile, funds from India, which will provide Tk 4,459 crore under a separate agreement for the development of the port, will be used to build up the port's capacity.
In January this year, the Chinese embassy informed the finance ministry that Beijing had granted approval to finance the project, for which Bangladesh initially sought $353.52 million.
But while the Chinese embassy did not mention how much money they would provide for the project, it did suggest signing a commercial agreement with the nominated contractor beforehand.
On September 12, the Executive Committee of the National Economic Council (ECNEC) approved the Mongla Port development project involving Tk 4,282.36 crore.
According to the project summary, the Chinese government will provide a loan of Tk 3,782.36 crore under a government-to-government mechanism. The rest, amounting to around Tk 500.39 crore, will be financed by the government.
The Mongla Port Authority (MPA) undertook the project to enhance the port's container-handling capacity. The aim is to set up modern facilities, including the construction of a jetty and container delivery yard.
According to the Planning Commission, the project will provide port users with modern services and play a vital role in ensuring proper and safe handling of containers and cargo at the port.
The project, which was officially scheduled to start in July this year, is yet to start.
Contacted, Rear Admiral Mir Ershad Ali, chairman of the MPA, did not clearly say when work on the project would start.
He said they were focusing on dredging first in order to ensure anchorage for mother vessels as facilitating cargo movement would help generate revenue.
"Businesses will not use this port if we do not provide the necessary services," he added.
The MPA Chairman said the importance of Mongla port had been growing since the opening of the Padma Bridge on June 25, 2022.
Mongla port, located on the country's southwestern coast, serves as a vital gateway for trade with neighbouring nations.
The port handled 26,590 TEUs (twenty-foot equivalent units) of containers in fiscal 2022-23, down 17.5 percent from 32,269 TEUs the previous year. In FY 2019-20, Mongla port handled a record 59,736 TEUs.
In 2016, the MPA struck a deal to appoint China National Complete Engineering Corporation as a contractor but that deal fell through due to delays in fund mobilisation.
In July, 2021, the MPA signed a memorandum of understanding with China Civil Engineering Construction Company to implement the project.
The development plan to enhance and modernise the Mongla port was one of 27 projects that Dhaka and Beijing agreed to execute with Chinese assistance under an umbrella deal struck during Chinese President Xi Jinping's visit in 2016.
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