As Bangladesh aims to become a trillion-dollar economy, sea ports will play a pivotal role in becoming a global trade hub by connecting the country with major regional and global players and facilitating import-export. Before independence in 1971, Bangladesh relied on only two seaports: Chattogram and Mongla.
However, both seaports have two major limitations. First, these seaports are not adequate to satisfy the growing container handling demand of the country. The Chattogram Port Authority estimates that the container volume in Bangladesh is likely to stand at 14 million TEUs each year by 2041, whereas the container handling capacities of Chattogram and Mongla ports annually are 4 million and 0.2 million, respectively. Second, both ports lack the necessary draft depth that prevents mother vessels from docking at these ports. Only this year (2023), the Chattogram port started to accommodate vessels with a 10-meter draught/draft. Since large mother vessels cannot enter directly at these two ports, they have to dock in nearby deep sea ports in India, Sri Lanka and Singapore and then send goods through feeder vessels. This significantly increases the expenses and time required to transport goods. The Government of Bangladesh (GoB) is, therefore, constructing a deep sea port in Matarbari to facilitate large mother vessels – enabling the country to become a major trading and shipping hub in the world.
Alongside Matarbari, GoB is building the third sea port of Bangladesh – the Payra Sea Port – which is the first sea port constructed in independent Bangladesh. The port is located at Kalapara in Patuakhali. An act was passed in Parliament in 2013 to build the port, and the Port of Payra was officially inaugurated in 2016. An autonomous port authority, named the Payra Port Authority (PPA), was formed to take charge of the port. The port project is the first project in the country financed by the Bangladesh Infrastructure Development Fund (BIDF).
Shipping Hub in the Bay of Bengal
To ensure large mother vessels can load or unload goods directly at the Payra Port without sending feeder vessels, a capital dredging project was undertaken to deepen the channel. A Belgium-based dredging company, Jan De Nul (JDN), was handed over the responsibility for capital and maintenance dredging at the port. The dredging project started in January 2021 and ended in March 2023 – costing BDT 6,500 crore. Now, the Rabnabad Channel of the Payra Port is the deepest channel in Bangladesh, where ships with a draft of 10.5 metres, a length of 225 metres, and a width of 30 metres can easily dock and load or unload goods. The port also has the deepest and shortest river route connection to the capital, Dhaka, at least a depth of 5 km across the river route. The port will operate 24/7.
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Large commercial boats with a capacity of 3,000 TEU or 40,000 BWT of cargo will be able to come to this port due to the completion of the dredging project. Once the full-fledged port becomes operational, the Port of Payra will be able to accept 50 ships per day. From August 2016 to March 2023, the Payra port managed around 1,400 domestic and foreign ships. The port primarily witnesses ships carrying stone and coal from the UAE and Indonesia. Official data shows 236 seagoing ships were accepted at the Port of Payra, and the GoB was able to generate BDT 548 crore in revenue from 2016 to October 2022.
Shipping Hub in the Bay of Bengal
The GoB has intentions to transform the port into a center for global commerce by developing one of Bangladesh’s major economic corridors, taking an integrated economic development approach.
The construction of the Padma Bridge has already connected the previously neglected southern regions to Dhaka – an advantage the Payra port can benefit from. The Payra port will play a pivotal role in the supply of cement clinker and food grain in Khulna and Madaripur through Barisal which will strengthen the supply chain. Large industrial groups are acquiring lands in the JajiraKuakata, and Barishal-Mongla-Khulna areas for future investments. Currently, it takes around 8-10 hours for goods to reach the Chattogram port from Dhaka. However, the Payra port will significantly reduce the travel time as it will take only 6 hours to transport goods from Dhaka to Payra port, and consequently, travel expenses will decrease.
Previously, Bangladesh has allowed India, Nepal and Bhutan to use the Chattogram and Mongla seaports. Direct road and rail connections between Dhaka and other parts of the country are underway to connect India, Sri Lanka, and Bhutan.
To further accelerate the economic prosperity of the South Asian countries, an economic corridor is being set up through cooperative partnerships among Bangladesh, India, China, and Myanmar. Since the port is situated near the Bay of Bengal, other countries will seek to avail themselves of the transit services the port has to offer, which has the potential to transform the region into a Silk Road Transit Hub. Additionally, a waterway can be developed to connect Assam and Bhutan.
An airport will be constructed to establish air communication under the supervision of the Ministry of Aviation and Tourism which will make the port a major trade hub.
The port can potentially reduce import and export expenses by at least 20 to 30 percent. Bangladesh will be able to earn more foreign reserves by positioning Payra Port as a global trading hub. At the same time, the strategic location of the port will attract foreign investors, especially because it is close to one of the most sought tourist attractions in the country, Kuakata, where so many foreigners visit each year. More and more factories will be established, and the tourism sector will be accelerated, which in turn will create employment for millions. Upon being entirely operational, the Payra port is expected to invigorate the economy by increasing the GDP of Bangladesh by 2%.
Export Processing Zone Centering Payra Port
Bangladesh has 8 export processing zones (EPZ). The country’s 9th EPZ is being constructed in Patuakhali, centered on the Port of Payra. The EPZ is only 40 kilometres away from the Payra port and a short distance away from the Mongla port. The EPZ will be established across 418 acres of land and will house 306 industrial plots. The Patuakhali EPZ is expected to create direct employment for 0.1 million Bangladeshis in the riverine regions of Patuakhali and indirect employment for 0.2 million Bangladeshis. The authorities are also expecting to receive an investment of $1.5 billion and export goods worth $1.8 billion per year.
Special Economic Zone
GoB is also planning to develop a Special Economic Zone in Patuakhali, near the Payra port which will further boost the economic activities of the region as the SEZ will attract more foreign investments and create employment, even in neighbouring districts such as Barishal, and Bhola.
In July 2023, Prime Minister Sheikh Hasina inaugurated Bangladesh’s largest and first green and southern naval base, named after Sher-e-Bangla. The naval base has 4 patrol craft and 4 Landing Craft Utility (LCUs) which were constructed domestically at the Khulna Shipyard Limited and Sher-e-Bangla base. The base also has an aviation facility.
The base will ensure maritime securing across the southern part of Bangladesh and safeguard major establishments such as the Payra Port and Payra power plant.
GoB aims to transform Bangladesh into a shipbuilding country as the country showcases immense potential in the shipbuilding industry due to its geographic location. The country has a global market share of USD 400 billion. In 2014, Prime Minister Sheikh Hasina announced the construction of a state-of-the-art shipbuilding facility in the southern district. GoB has already allocated around 101-acre land near the Port of Payra to building a shipbuilding facility.
A project costing BDT 14,000 crore will be developed near the port. A Singapore and Australian-based company, Gentium Solution and a Netherlands-based company, Damen Shipyards, are interested in financing the project through foreign direct investment (FDI).
GoB intends to facilitate the construction of high-quality vessels to export in foreign markets. Since the shipbuilding industry is labor-intensive, the shipyard will potentially create huge employment opportunities. Additionally, due to the partnership of major foreign shipbuilding companies, the process of transferring technology will be facilitated and the Bangladeshi labor force will be able to receive training for top foreign companies.
Largest Thermal Power Plant
Bangladesh’s largest coal-fired power plant is in Payra. The electricity produced by the plant powers the lives of around 25,358 families through submarine cables in various chars of Patuakhali, Rangbali upazila which are surrounded by sea and rivers.
The Payra port facilitates the operation of this 1320 MW power plant by ensuring a consistent flow of ships carrying coal for the plant.
Components Under Construction
In the upcoming years, the Payra port will see the addition of key components such as multipurpose terminal, container terminal – 1, container terminal -2, liquid bulk terminal, coal terminal, LNG terminal, etc. All of these will be added to the first terminal in the port. A 650-meter jetty and a 325,000 square meter backup yard will be completed by December 2023.
As per the original plans, the entire project has a total of 19 components. Among all the 19 components, the construction of an airport, special economic zone, power plant, water treatment facility, passenger terminal and multipurpose terminal is underway.
Cover photo taken from Kaler Kantho.
About the Author
Shah Adaan Uzzaman is the Blog Administrator at The Confluence. A former Bangladesh Television Debate Champion and winner of several policy & debate competitions, he is currently a student of IBA, University of Dhaka.