China companies sign $510m deals for Payra seaport

Two Chinese companies yesterday signed preliminary agreements with Bangladesh to develop three components of Payra seaport with $510 million in funds.

The agreements with China Harbour Engineering Company and China State Construction Engineering Corporation were signed at the shipping ministry in Dhaka.

China Harbour Engineering will build the core port infrastructure at $150 million.

China State Construction Engineering will fortify riparian areas to reduce flood risk and soil erosion at a cost of $300 million. It will also set up housing, education and health facilities at $60 million.

Md Saidur Rahman, chairman of the Payra Port Authority; Zeng Nanhai, joint managing director of China Harbour; and Li Shujiang, managing director of China State Construction, signed the deals.

Speaking at the signing ceremony, Shipping Minister Shajahan Khan said the operation of Payra port began in August, earning Tk 17 crore in revenue so far. 

If all infrastructures can be put in place, it will add 1 percentage point to the country's gross domestic product, he said. 

Shipping Secretary Ashok Madhob Roy said the agreements would be implemented on a government-to-government basis.

He requested both parties to sign the loan agreements as soon as possible as the implementation of the deals will only begin after the financing contracts are signed.

The three components awarded to the Chinese companies are crucial as the work for container terminal, bulk terminal, passenger terminal, and power plants will take off only after they are completed.

The Payra seaport, the third in Bangladesh, is being constructed at an estimated cost of $16 billion.

India will also invest $750 million in the seaport to construct a multipurpose container terminal.

The shipping secretaries of India and Bangladesh talked about the issue during a meeting in Dhaka on Wednesday.

Three tanks for crude oil and another three for diesel will be set up on the Moheshkhali Island in the Bay of Bengal. The project is expected to start operations in December 2018.

The project aims to unload imported crude and finished petroleum products easily and reduce cost and time, according to BPC. It also aims to help expand Bangladesh's refinery capacity and ensure energy security.

Bangladesh cannot handle large vessels because of low navigability at Karnaphuli River and constrained facilities at Chittagong port. As a result, large vessels carrying imported crude and finished oil have to anchor at deep sea, and small vessels are used to unload and bring in the petroleum products.

As a result, it takes 11 days to unload a 100,000 dead weight tonnage tanker to unload the product. The existing system will also not be effective if Bangladesh wants to import more crude oil to meet the growing energy demand.

But once the pipeline is installed, it will bring down the unloading time, said Mahmud Reza Khan, chairman of BPC. Nasrul Hamid, state minister for power and energy, said the pipeline will save the country Tk 1,000 crore a year in reduced vessel fare and operational loss.

Abul Kalam Azad, principal coordinator for sustainable development goals affairs at the Prime Minister's Office, urged the Chinese company to complete the project within the scheduled time.

Yujian of CPP Bureau said his company would deliver high-quality infrastructure.

Md Tajul Islam, chairman of the parliamentary standing committee on energy ministry, said the new infrastructure will help meet the growing energy demand.

Nazimuddin Chowdhury, energy secretary, also spoke.

CPP Bureau is the engineering procurement construction contractor for the project while Germany's ILF Consulting Engineers worked as the consultant for the project.

Eastern Refinery Ltd, owned by BPC, can process 15 lakh tonnes of crude oil a year at the moment. The government plans to raise the processing capacity by another 30 lakh tonnes through setting up the second unit of ERL in two to three years.

Once the second unit comes into operation, ERL would be able to meet 75 percent of the country's annual demand for finished fuel. The second unit will help the country save $220 million, said BPC officials earlier.

Bangladesh now imports 35 lakh tonnes of diesel every year. In total, the country consumes 55 lakh tonnes of different types of petroleum products every year.

London-based BMI Research also said Bangladesh will benefit more if it imports refined petroleum products instead of bringing in crude oil and refining it at home.

The country imports crude oil from Saudi Arabia and the UAE, and refined fuels from countries such as Malaysia, China, Vietnam, the Philippines, Indonesia and Brunei, Turkey, Kuwait, the UAE and Oman.