Bangladesh government ministers said yesterday the country may drop an $8bn deep water port project it has been negotiating with China and opt instead for a combined port and power plant scheme proposed by Japan.
It’s the clearest sign yet that Japan is beating its Asian rival, China, in the race to give Bangladesh its first deep water port, deemed necessary to ease pressure on the old port of Chittagong (pictured above in 1960).
Planning Minister Mustafa Kamal told Reuters yesterday that Dhaka had cleared Japan’s proposal to finance and build a seaport in Matarbari, 25 km from where Beijing had offered to build one at Sonadia.
Matarbari is designed in such a way that it will be comprehensive, with power plants, an LNG terminal and a port. Matarbari is sufficient, we may have to give up the other port project– Mustafa Kamal, Bangladeshi Planning Minister
China and Japan had earlier gone head to head in a competition to build Indonesia’s first high-speed railway, although that contest was called off when Indonesia scrapped the plan.
Bangladesh’s choice of Japan, if it comes to pass, would be a setback for Chinese President Xi Jinping’s "One Belt One Road" strategy to build a network of seaports, roads and railways to boost Chinese trade and influence in the region.
It would follow Sri Lanka’s decision to suspend a major Chinese-funded port complex in Colombo earlier this year.
Minister Mustafa Kamal told Reuters that the Japan International Cooperation Agency (JICA) had offered 80% financing on easy terms to build four coal-fired power plants of 600 MW each and a port complex in Matarbari.
The offer had prompted a review of whether the Sonadia project was needed at all.
"Matarbari is designed in such a way that it will be comprehensive, with power plants, an LNG terminal and a port," Kamal said, adding: "Matarbari is sufficient, we may have to give up the other port project."
But he said the government was still reviewing the proposals.
According to Reuters, state-owned China Harbour Engineering Company was the front runner for the contract to build the Sonadia port.
Last year the two sides were expected to make a formal agreement during the visit of Bangladesh Prime Minister Sheikh Hasina to Beijing, but deal did not materialise.
According to Reuters, officials in Dhaka said financing was an issue, with Beijing willing to offer only partial support for what would be Bangladesh’s biggest foreign investment.
Image: Elephant loading at Chittagong Port, Bangladesh, in 1960 (Bangladesh State Archive/Wikimedia Commons)