DSP to act as major player in regional trade: MCCI

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FE Report
The Metropolitan Chamber of Commerce and Industry (MCCI) said the proposed Deep Sea Port (DSP) will enable Bangladesh to be a major player in the regional trade and act as a gateway accelerating intra-regional and international trade.
The government is keen to construct a DSP to handle the country's growing external trade and the first phase of the project will be completed by 2020, and the second and the third phases will be completed during 2021-2035 and 2036-2055 respectively, the MCCI said in the editorial comment of the latest monthly 'Chamber News'.
A feasibility study conducted by Pacific Consultant International (PCI) of Japan has recommended Sonadia Island, at a distance of 130 km from Chittagong port and located between Cox's Bazar town and Maheskhali Island in the Bay of Bengal as the most suitable spot for the proposed seaport.
The study also says that the country's existing ports will find it impossible to handle the growing volume of cargo traffic, which is predicted to increase from the present (2006 level) 7.06 million tonnes to 12.00 million tonnes in 2020, 25.66 million tonnes in 2035, and 48.98 million tonnes in 2055.
The study observes that, medium and large vessels cannot enter Chittagong and Mongla ports due to relatively low water levels in Karnaphuli and Pashur channels, which forces exporters and importers to depend on feeder vessels to carry out their overseas trade.
The study estimates that while the two ports of Chittagong and Mongla together will be able to handle about 72 per cent of the gener al cargo traffic in 2020, they will be in a position to handle only 36 per cent of the cargo traffic in 2035, and just 19 per cent of the traffic in 2055.
The study also predicts the country's container cargo traffic to increase from 853 thousand TEUs in 2006 to 3.33 million TEUs in 2020, 9.23 million TEUs in 2035, and 19.78 million TEUs in 2055, but the two ports will have the capacity to handle only about 46 per cent, 22 per cent, and 11 per cent of such traffic in the respective years.
MCCI noted that the economic rationale of the proposed deep sea port is fairly well supported by the feasibility study. The MCCI also noted the keen interest of the government in the proposed port expressed by the remarks made by the Minister for Shipping and the Prime Minister's Adviser on Economic Affairs in a seminar that the port might be a major vehicle for Bangladesh's economic development. The MCCI is pleased to learn that the government would go through an evaluation of the feasibility report before making any final decision.
The project involves a huge investment and the MCCI felt that its prime objective should be to maximise Bangladesh's own national interest. An immediate beneficial impact of the port will be that it will ease cargo traffic movement from India, which is the single largest supplier of Bangladesh's imports. Currently, shipping lines that ferry cargo from India to Bangladesh unload at Haldia or Kolkata port, and from there the cargo is transported to Bangladesh via road. With the establishment of the deep sea port, the traffic meant for Bangladesh could now go directly to Bangladesh, resulting in a significant saving in transportation time and freight costs, and thus in a decline in the costs of imports in Bangladesh.
According to the report, the project is viable on the criterion of IRR, but it finds the level of return on investment (ROI) low to attract investors. The low ROI is mainly because of the high construction cost. Before implementing the project, the Shipping Ministry should therefore explore options to reduce the cost of completing the first phase.
The draft final report provides for the construction of two break-watersone 1950 metres and the other 2250 metres - at the mouth of the Sonadia channel to protect the DSP from tidal upsurge and waves. It is suggested by some quarters that if only one break-water could serve the purpose, the cost would be cut by about $147 million. The cost of dredging the channel may also be reduced significantly by considering the construction of RCC pile supported jetties instead of the proposed caission Type Quay Wall. In one view, such a change in the quay wall structure may bring down the total project cost in the first phase even below $1.5 billion.
The chamber encouraged public-private partnership to mobilise resources required for implementing the project. The government has committed to bear 30 per cent of the project cost.
"We understand the Government has already contacted the donor agencies in this regard for assistance with easy financial terms," the editorial said.
"We would also ask the government to immediately form an Interim Port Authority (IPA) as recommended in the report. The IPA should have strong representation of the private sector. The IPA could also be made responsible for finding private sector investors to provide 70 percent of the project fund," it added.
In order to make the port effective and spread its benefits across the country, the condition of roads and river routes will need to be significantly improved. In the absence of necessary and adequate domestic transport infrastructure, the DSP cannot be expected to be effective. In order to attract transit traffic from other countries of the region, which would be about 10 percent of the total port traffic according to the feasibility report, the port tariffs would need to be synchronised with those of other ports in the neighbouring countries.
Good governance will be a key component for the success of the proposed port in terms of efficient management and administration. There should be minimum government intervention and maximum private sector participation in port activities. The spirit of the Public-Private Partnership is to ensure a strong private sector commitment and a balanced intervention by the Government that favours the private sector.