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Bangladesh launches $2 billion fund to finance port construction

Priorities include channel dredging for Payra Port

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This week the Government of Bangladesh announced plans to set up a US$2.0 billion fund from its foreign exchange reserve to finance port and power sector infrastructural projects.

 

Bangladesh Prime Minister Sheikh Hasina said the fund will allocate the equivalent of €524M to capital and maintenance dredging at the country’s third main seaport, Payra. This will fund dredging the 75km long Rabnabad channel to a depth of 10.5m, from the existing depth of 6.3m, and widening to 125m. The capital dredging work will be performed by the Jan De Nul group.

 

In late 2017 the Jan De Nul Group signed a Joint Venture Company agreement with the Payra Port Authority (PPA) for the Payra Deep-sea Port dredging. That project was worth €550M and would have seen Jan De Nul deploy up to nine Cutter Suction dedgers. A shipping ministry official said that work was supposed to be carried out with funding from HSBC bank, but the interest on the loan was too high.

 

Over the last 12 months Bangladesh has grown its foreign currency reserve to over US$44 billion, which the government said is higher than its requirements for imports and emergency needs for six months. The Government has decided to use some of the forex fund to finance infrastructure projects.

 

For this purpose it has created a new fund called the “Bangladesh Infrastructure Development Fund” which the Prime Minister inaugurated this week. As well as capital dredging the fund will be used to purchase a dredger for the PPA, and appoint a consultant to advice on its port project. The government said the fund can borrow at a cost of 2%.

 

Payra Port has been on the drawing board for many years now, and there is skepticism in the International and local shipping communities over whether the port is actually feasible, given the length of its channel and the large commitment to maintenance dredging that will be needed every year.

 

Furthermore, funds still have to be found to develop terminals at the port. China has shown an interest in participating and MoU’s were signed China Harbour Engineering Company (CHEC) and China State Construction Engineering (CSCEC) in 2016, but the government is yet to decide whether work with China’s state-owned companies.

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