The government of Bangladesh is to set aside $2bn to create the "Bangladesh Infrastructure Development Fund" from its foreign exchange reserves, which have swollen thanks in part to remittances sent home from overseas workers.
The fund will be used to finance port and power sector projects, beginning with a major dredging project at the port of Payra, presently the third largest in the country, which Dhaka hopes to turn into a global trade hub.
An agreement to set up the fund was signed this week between the country’s finance ministry, the Payra Port Authority and the state-owned Sonali Bank, Dhaka Tribune reports.
The fund’s first disbursement will be €524m for Payra port, where Dutch dredging specialist Jan De Nul has been hired to increase the depth of a 75km Rabnabad channel from 6.3m to 10.5m, and to widen it to 125m. It also has a 10-year contract to maintain that depth.
Speaking as a virtual guest at the signing ceremony, Prime Minister Sheikh Hasina said Bangladesh had to fund infrastructure with its own money with the aim of becoming a developed country.
She added that work was in the offing to build terminals at the port. In 2016, a memorandum of understanding was signed with China Harbour Engineering Company and China State Construction Engineering, but the government is yet to decide whether to go ahead with these companies.
Bangladesh is in a position to fund its own work because it has built up $44bn in foreign exchange, largely as a result of remittances from citizens working in other countries.
In July last year, GCR reported that Bangladesh sent China a $6.4bn "infrastructure wishlist", including $1.6bn to expand Payra (see further reading). Altogether, the development of the port and its supporting infrastructure is expected to cost up to $15bn.
The World Cargo News website reports that Jan De Nul will deploy up to nine cutter suction dredgers. A shipping ministry official said that work was originally to be carried out with funding from HSBC bank, but the interest on the loan was too high.
The publication added that there was scepticism in the shipping community over the feasibility of the work, given the length of the channel and the dredging required to maintain it.
Image: Fishing on the Payra river. The port is presently used mainly for coal imports (Md Atiqul Islam/Dreamstime)