The MMM Group, Canada, has been engaged for the provision of PPP Transaction Advisory services for the “construction of the Laldia Bulk Terminal” at Chittagong Port.
The Chittagong Port, the main seaport in Bangladesh, handles more than 92% of the total sea born trade of the country, covering container cargo, dry bulk and break bulk. The port is operated by the Chittagong Port Authority (CPA), which is under the administrative control of the Ministry of Shipping.
As the main seaport for Bangladesh, Chittagong Port has experienced continuous growth of cargo volume reflecting the wider economic growth of Bangladesh, which has averaged GDP growth of approximately 6% per annum over the past 10 years. With forecasted continued growth of cargo volumes, it is envisaged that the existing port facilities will rapidly approach capacity.
Additionally, a key constraint faced by Chittagong Port is the lack of any specialist terminals to handle bulk cargo. Currently the bulk cargo is being handled at the existing container terminal; however, this is not viable over the long term. The lack of dedicated equipment for bulk cargo, and the strong growth of container and bulk cargo volumes are having an adverse impact on overall performance of the port and vessel waiting times.
In large part to address these issues, the CPA is intent on developing a dedicated bulk cargo handling facility and has identified the Laldiar Char as a strategically appropriate location for developing a bulk cargo handling terminal. CPA has decided to explore the viability of development of the new bulk terminal using a Public-Private Partnership arrangement. In this context, it has engaged the services of the MMM Group as Transaction Advisor to evaluate the viability of such an arrangement and to assist with the implementation of the procurement process for a private partner.
Project Description
As currently contemplated, the project will include the construction, operation and maintenance of the new Laldia bulk cargo handling terminal, comprising 2 jetties with the supporting back up facilities.
The key stated objectives of the project are to:
Set up a dedicated terminal with specialist equipment to handle bulk cargo;
Enhance capacity at the Chittagong Port to deal with additional cargo volumes to meet forecasted future demand;
Enhance operational performance at the Chittagong Port and reduce vessel waiting times.
The transaction advisors have been engaged to assist with achieving the stated objectives through the provision of its services in two phases:
Phase 1:
Assessment of the technical, commercial, financial, environmental and social viability for the construction of the Laldia Bulk Terminal on a PPP basis; and
Phase 2:
Subject to a positive confirmation of the viability of the project, to assist the CPA in delivering, designing and implementing the project on the basis of a PPP structure; and
To structure the project, develop a commercial model; assist in the bidding process and award of the project with a view to encouraging private sector participation in the bidding process and optimizing the revenue potential of the project.