Payra to offer Bangladesh shippers new port option

Payra to offer Bangladesh shippers new port option

Chittagong handled nearly 700,000 more TEU than it was designed for in 2016.

Bangladesh is set to start construction of a third seaport at Payra, in Patuakhali district, opening another avenue for shippers in Dhaka and the south-central region of the country to avoid other congested ports.

The port will be connected to Dhaka and elsewhere through railways, roadways, and inland waterways. The new port will be 309 kilometers (192 miles) from Dhaka by road, slightly closer than the 329 kilometers between Dhaka and Chittagong, a route that is often congested with trucks, delaying shipments for hours. Mongla, Bangladesh’s second port and currently undergoing expansion, is 283 kilometers from Dhaka.

British company DP Rail in December signed a memorandum of understanding to build a 240-kilometer rail line between Dhaka and Payra at a cost of Tk600 billion ($7.3 billion). Officials have said work will start soon.

The Paira port will compete with Chittagong to the east and Mongla to the west.

Because of its location and congestion at the Chittagong and Mongla ports, Payra will be positioned to compete with both for container cargo.

The first work taking place at Payra will be $600 million in dredging by Belgium’s Jan De Nul to bring draft at the site to nine meters by 2018, at which point multipurpose and bulk terminals will begin operations, said Payra Port Authority member Saidur Rahman.

Payra is striving for a depth of 16 meters by 2023 when the port is fully operational, said Rahman. Chittagong currently has a draft of 9.2 meters, and Mongla has a depth of 7.5 meters but is dredging to 10 meters.

A major advantage for Payra will be its ability to handle ships larger than Chittagong, as it will be able to handle 2,800-TEU vessels compared with 1,100-TEU ships at Chittagong, Rahman said.

The cost of a full-fledged port at Payra could come to $20 billion, according to British consultancy company HR Wallingford, which conducted a feasibility study on the Payra project. Of that $20 billion, $3.5 billion would go to dredging, with the remainder going toward port terminals and equipment as well as hinterland connectivity such as roads and railways.

Payra has been put on a fast track by the government and has five components that rely on foreign direct investment. Several companies have already expressed interest in providing funding, and four companies have been shortlisted for some of the projects, Rahman told Those five components are capital and maintenance dredging of the main channel of the port, two container terminals, a dry bulk terminal, and a 200-megawatt coal-fired power plant in the port area.

Even without the heavy congestion at Chittagong and elsewhere, Bangladesh would need more port capacity, as the country’s foreign trade continues to grow. Traffic through Chittagong rose 16 percent year over year last year to 2.3 million TEU although its annual capacity is 1.7 million TEU, exacerbating already serious congestion.

“But the port’s capacity is not increasing in the same pace. So, Payra port having capacity to handle big-sized vessels will definitely get huge traffic,” Rahman said.

IHS Markit expects that merchandise exports from Bangladesh will rise 9.5 percent year over year this year. Much of that growth will be driven by ready-made garments, which make up 80 percent of all exports from the country, and will come even as the local currency, the taka, appreciates against the dollar this year, to 83.2 per US dollar against 78.7 per dollar last year, according to IHS Markit.

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