In a big leap forward, the Payra Port Authority yesterday signed a deal with a Belgium-based company to start capital dredging of the port's main channel to facilitate entry of large ships that cannot berth now at Chittagong and Mongla ports.

The dredging of the 36.5 nautical-mile channel is expected to begin in September next year, and it will cost an estimated Tk 5,155 crore (€532.43 million).

Vessels with draught of up to 11 metres will be able to berth at the seaport at high tide once the first phase of dredging is completed by 2020. The second and third phases are likely to end by 2022, facilitating the entry of ships with draught of up to 14 metres to the seaport in Patuakhali, say PPA officials.

The Chittagong port, the country's biggest seaport, can now allow berthing of ships with draught of up to 9.5 metres at high tide while vessels with draught of up to 7-8 metres can enter Mongla port.

Of the 19 components of the Payra port project, capital dredging is the lead one.

As per a government estimate, development of all the components will require $16 billion (Tk 125,000 crore).

“By signing the contract today, we have taken a remarkable step forward in the development of the Payra port. We wish to see timely start and completion of the dredging work,” Shipping Minister Shajahan Khan said at the signing ceremony in the capital's Pan Pacific Sonargaon Hotel.

Commodore M Jahangir Alam, chairman of the PPA, and Jan Pieter De Nul, managing director of Belgium-based firm Jan De Nul, signed the deal on formation of a joint venture company for the task.

The PPA will have 51 percent share in the joint venture company and Jan De Nul the rest.

The firm will bear 20 percent of the cost of capital dredging from its equity and 80 percent of the funding will come from the Belgian government in the form of loans, Commodore Md Saidur Rahman, a member of the PPA, told The Daily Star.

The interest rate on the loans will be 0.85 percent and the money will have to be repaid in 12 years, he said.

The joint venture will be valid for 15 years and loans will be repaid through tolls collected from vessels berthing at the seaport.

According to PPA officials, the Bangladesh government has to give sovereign guarantee for the loans.

The Payra port, which sits on the west bank of Rabnabad channel at the confluence of Galachipa-Tetulia river, started operation in August last year with ship-to-ship cargo transfer on a limited scale.

The two existing seaports in Chittagong and Mongla continue to face challenges in handling growing volume of containers and cargos due to rising exports and imports. The two handled about 20 lakh Twenty-Foot Equivalent Units (TEUS) of containers in 2015.

The number of containers is expected to rise to 1.26 crore TUES by 2045, the PPA chairman showed in a presentation at the programme.

The completion of dredging will speed up development of other components such as establishment of a bulk terminal to handle coal, a container terminal, and oil and LNG terminals, according to the PPA.

Five coal-based and one LNG-based power plants with a capacity of 9,000 megawatt of electricity will be built near the port. The five plants will require 20 million tonnes of coal a year.

Besides, an economic zone and an airport will be set up near the port.

The PPA hopes the seaport will help establish a new north-north economic corridor and transform the entire south-central zone of the country.

Speaking at the ceremony, Md Abul Kalam Azad, chief coordinator for Sustainable Development Goals at the Prime Minister's Office, said Payra is one of the 10 fast-track projects of the government.

He emphasised timely implementation of the dredging work.  

Jan Pieter De Nul said, “This is a green-field project. The job is not easy, very challenging.”

At the programme, Begian ambassador to India Jan Luykx, concurrently accredited to Bangladesh, stressed the need for having well-connected ports for boosting economic activities.    

Talking to The Daily Star, SK Mahfuz Hamid, managing director of shipping line Gulf Orient Seaways Ltd, said development of Payra port is crucial as pressure on Chittagong and Mongla ports continue to rise because of increasing volume of seaborne trade.

At least 84 mother vessels were waiting at the outer anchorage of Chittagong Port and 25 at Mongla Port as of yesterday, he added.