Bangladesh initially canceled the economic zone project that was supposed to be established near Mongla Port for India. The country has now secured a loan from China worth approximately $335.78 million (equivalent to about 3.223 billion Indian rupees) to expand the same port.
The loan funds will be used to construct two new container terminals and create a separate area for cargo storage and handling, which will allow the port to process more goods.
Mongla Port is the second most significant seaport in Bangladesh after the major Chittagong Port, and the government intends to increase its capacity. The agreement to receive the loan from China is part of this strategy. The signing of this agreement between the two countries took place on Saturday, as reported by media outlets on Monday.
A key condition of the deal is that China will provide the loan at an interest rate of 2%, and Bangladesh will have 20 years to repay the debt, with the first five years granted as a payment deferral.
According to information from the state news agency BSS, this agreement was concluded between the Export-Import Bank of China and the Department of Economic Relations of the Government of Bangladesh. The project plans include the construction of two container terminals and the development of separate sites for loading and unloading operations. The goal of these measures is to improve the port's infrastructure to ensure easier inflow and further transportation of goods.
Mongla Port is located on the eastern bank of the Pasur River, situated 71 nautical miles from the coastline and approximately 80 kilometers west of the Indian border.
Previously, there was a plan to create an economic zone covering an area of 110 acres near Mongla Port for India. This land was allocated to India according to an agreement signed between the two states in 2015. Initially, the Indian government selected Avita Constructions, a partner of the Hiranandani group, to implement this project. However, about a year ago, the then-government of Bangladesh canceled the economic zone project proposed for India, citing that the company chosen by India failed to commence construction work within the stipulated timeframe.
The Mongla Port agreement with China is the result of negotiations held in June following the visit of Bangladeshi Prime Minister Tarique Rahman to Beijing. India had previously expressed concerns about China's growing presence in Bangladesh, especially in strategically important areas close to the Indian border. Now, with the receipt of the loan from China for the expansion of Mongla Port, plans to increase its capacity will move forward.