Japanese ODA loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry：The People’s Republic of Bangladesh
Project: Matarbari Port Development Project (E/S)
Loan Agreement: June 14, 2018
2. Background and Necessity of the Project(1) Current State and Issues of the Port/Harbor Sector and Priority of the Projectin Bangladesh
In the People’s Republic of Bangladesh, with GDP having grown at an annual
rate of a little more than 6% during the past ten years, the value of cargo exports
and imports has risen at an average annual rate of approximately 12% during
the same period (International Monetary Fund, 2017). Furthermore, container
cargo demand in Bangladesh, which stood at 1.62 million TEU in 2014, isexpected to reach 9.85 million TEU in 2040 (JICA Final Report on Data
Collection Survey on the Matarbari Port Development, 2017). Chittagong Port,
which handles 98% of container cargo in Bangladesh (approx. 92% of port cargoin total, including bulk cargo), lacks sufficient cargo handling capacity to meetsuch a brisk cargo demand. Results show that the volume of cargo handled at
the port increased from 1.34 million TEU in 2010 to 2.35 million TEU in 2016,indicating that the port is already handling a volume of cargo that exceeds thedesign capacity (1.75 million TEU). Currently, the port has the depth of 7.5 to 9.5
m (tidal data is based on the chart datum level [CDL]), which means that only
vessels of up to 2,700 TEU class can enter. If the recent global trend toward
larger vessels and future growth in cargo demand are taken into consideration, it
seems likely that there will be demand for cargo transport by 2,700 TEU or larger
vessels in Bangladesh, too, in the near future. However, the current depth of theport does not allow it to accept such medium- and large-sized vessels. While theChittagong Port Authority plans to build new terminals around the port to addressthese issues, even the post-expansion cargo handling capacity would be unable
to meet the growing cargo demand. In addition, geographical restrictions meanthat the new terminals are expected to have a depth of only 12 m, so the port willcontinue to be unable to accept large vessels (Asian Development Bank [ADB],2015). For the reasons mentioned above, the development of a new port with adeeper basin and channels than Bangladesh’s existing ones is urgently required

in order to meet Bangladesh’s future cargo demand.
Given this, the Government of Bangladesh is considering the development of
a new port in the Matarbari area, which is located about 100 km south of
Chittagong, and in Payra, which is located about 250 km south of Dhaka. The
government’s plan called for Payra Port to have a depth of 16 m and a cargocapacity of two million TEU. However, the area’s geographical condition of being
shallow for some distance from the port means that 60-km approach channel
would need to be dredged, and the development and maintenance of suchchannel would be expected to incur considerable expenses. For such reasons,the feasibility of the project is uncertain.
In the Matarbari area, on the other hand, only the dredging of approachchannel for about 10 km will enable vessels to reach a sea area with a depth of
20 m, so this area would require a considerably shorter length of dredging tosecure a depth of 16 m than other areas would. Given that Matarbari is the only
area with such a geographical advantage and that it has considerable room forfuture expansion, it is considered the most suitable area for developing a newport (JICA Final Report on Data Collection Survey on the Matarbari PortDevelopment, 2017).
The Matarbari Port Development Project (hereinafter referred to as “theProject”) aims to increase the country’s overall cargo handling capacity, help tomeet the expected rapid increase in cargo demand, and allow the port to accept
increasingly large vessels by constructing a new commercial port with a depth of
16 m in the Matarbari area as well as the access roads that will be indispensable
to promoting use of the new port. This is positioned as one of the priority projects
in the Government of Bangladesh’s 7th Five-Year Plan (FY2016/17–FY2020/21)
and Vision 2021.
The Project will also contribute to the realization of the Bay of Bengal
Industrial Growth Belt (BIG-B) initiative, which is jointly advocated by theGovernments of Japan and Bangladesh, and the Government of Bangladesh
has decided to prioritize the development of energy hubs and industrial
complexes and other projects with Matarbari Port as their core.
(2) Japan and JICA’s Cooperation Policy and Operations in the Port/HarborSector
The JICA Country Analysis Paper for Bangladesh (May 2014) identifies one of
the bottlenecks for investment expansion as being that the volume of cargo thatis handled has remained sluggish due to a lack of depth and facilities atinternational ports and has cited the development of national transportation
networks, including ports and harbors, as a priority issue. Moreover, Japan’sCountry Assistance Program for Bangladesh (February 2018) identifies one of
Bangladesh’s priority areas as being to accelerate economic growth so thateveryone can benefit as Bangladesh strives to become a middle-income country.
More specifically, it mentions that the Government of Japan will cooperate chiefly
in the BIG-B initiative and contribute to better connections throughout theregions by developing high-quality transportation networks and promoting theefficient movement of people and goods. The Project is, therefore, consistent
with these policies and the analysis. With regard to JICA’s initiatives for thecountry’s port/harbor sector, a tentative plan to develop a new commercial port in
the Matarbari area was formulated in the Data Collection Survey on Integrated
Development for the Southern Chittagong Region (2015-2016), and a coal port
is being developed under the yen-loan project called the “Matarbari Ultra Super
Critical Coal-Fired Power Project” (approved in 2014).
The new port to be developed under the Project will contribute to enhancing
Bangladesh’s international competitiveness, including serving as a logistics
center for energy and materials, both of which are essential to the country’sindustrialization. This is consistent with the priority efforts under “JICA’s Position
Paper on SDGs: Goal 9” (“Build resilient infrastructure, promote inclusive andsustainable industrialization, and foster innovation”).
(3) Other Donors’ Activity
A master plan for Chittagong Port has already been developed with thesupport of ADB, which plans to support the development of new terminals for thisport and other undertakings as proposed under the master plan. In addition, ADB
is also supporting a project to develop a railway between Dhaka and Cox’s Bazar.
Furthermore, the World Bank is supporting the strengthening of the inland watertransportation capabilities of Chittagong, Dhaka, and Ashuganj. In addition to theGovernment of Bangladesh’s own funding, the Government of India isconsidering providing support for Payra Port.
3. Project Description(1) Project Objective(s)The objective of the Project is to strengthen the port logistics capacity ofBangladesh by constructing a new commercial port in the Matarbari area of theChittagong Division, thereby contributing to an acceleration of logistics withneighboring countries.
(2) Project Site / Target Area
Cox’s Bazar District, Chittagong Division(3) Project Component(s)1) Civil work (construction of terminals (multipurpose terminals dedicated tocontainer cargo), access roads, etc.)
2) Procurement of loading and unloading equipment, etc. (quay gantrycranes, etc.)
3) Development of related facilities and procurement of mechanicalequipment (tugboats, pilot boats, etc.)
4) Consulting services (detailed design, tender assistance, construction
supervision, environmental and social consideration, etc.)
This Engineering Service (E/S) Loan for the Project (hereinafter referred
to as the “E/S Loan”) covers the following aspects of component 4) above:
detailed design and tender assistance.
(4) Estimated Project Cost (Loan Amount)
181,280 million yen (Loan Amount: 2,655 million yen)
The total project cost will be recalculated during the detailed design phase
covered by the E/S Loan.
(5) Schedule
June 2018 – December 2020 (31 months in total). The E/S Loan will becompleted upon its disbursement (December 2020).
(6) Project Implementation Structure1) Borrower: The Government of the People’s Republic of Bangladesh
2) Guarantor: N/A
3) Executing Agency: Chittagong Port Authority (CPA) and the Roads andHighways Department (RHD) of the Ministry of Road Transport and Bridges4) Operation and Maintenance System: CPA and RHD(7) Cooperation and Sharing of Roles with Other Donors
1) Japan’s Activity
The Project involves constructing a new commercial port using part of theport’s facilities (access channel, basin, breakwaters, and groins), which will beconstructed under the yen-loan project called the “Matarbari Ultra Super
Critical Coal-Fired Power Project” (approved in 2014). After construction ofthe new port is completed, its facilities will be used jointly between the coalport and the new commercial port.
2) Other Donors’ Activity
N/A(8) Environmental and Social Consideration / Poverty Reduction / Social

Development
1) Environmental and Social Consideration① Category: A② Reason for Categorization
The Project falls into the port/harbor sector (implemented in a sensitive
area and likely to have significant adverse effects due to itscharacteristics) under the JICA Guidelines for Environmental and Social
Considerations (published in April 2010).
③ Environmental Permit: Confirmed in the preparatory survey for theloan for the construction phase of the Project.
④ Anti-Pollution Measures: Confirmed
preparatory survey for this loan.

inthecooperationand⑤ Natural Environment: Confirmed in the preparatory survey for the loanfor the construction phase of the Project.
⑥ Social Environment: Confirmed in the preparatory survey for the loan
for the construction phase of the Project.
⑦ Other / Monitoring: Confirmed in the preparatory survey for the loan
for the construction phase of the Project.
2) Cross-Cutting Issues
This is a large-scale infrastructure development project that is being
implemented in an area where there are fears concerning the spread of HIV
as workers are concentrated in a single construction site for a long time.
Therefore, plans call for all related workers, including drivers, who enter theconstruction site to be educated on the prevention of HIV infection.
3) Gender Category: [N/A] GI (Gender Mainstreaming Needs Assessment andAnalysis Project)
Activity Components/Reason for Categorization: Gender mainstreamingneeds will be confirmed during the appraisal process for the loan for theconstruction phase of the Project.
(9) Other Important Issues: N/A
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)

Indicator
Number of containers
handled (TEU/year)
Volume of cargo handled(tons/year)

Baseline(Actual value in 20__)

Target (20__)(Expected value two years
after project completion)

To be determined during the appraisal process
for the loan for the construction phase of theProject.

(2) Qualitative Effects
Revitalization of logistics with neighboring countries (to be determined during
the appraisal process for the loan for the construction phase of the Project).
(3) Internal Rate of Return
To be determined during the appraisal process for the loan for theconstruction phase of the Project.
5. Preconditions / External Conditions(1) Preconditions
N/A(2) External conditions
The access channel, basin, and breakwaters will be developed smoothly aspart of the yen-loan project called the “Matarbari Ultra Super Critical Coal-Fired
Power Project.” No development project plans for the port's vicinity or theirimplementation will prevent the Project from being implemented.
6. Lessons Learned from Past Projects
The results of the ex-post evaluation of the Batangas Port Development
Project and the Subic Port Development Project in the Republic of thePhilippines revealed that, when the construction of a new port is planned tosolve an existing port’s problems, it is important to clarify the division of functions
between the two, to develop a policy or plan for operating each port organicallyand to give the port users incentives for using the new port in an effort tostimulate demand for its use. The results of the ex-post evaluation of the yenloan for the La Union Port Development Project in the Republic of El Salvador
revealed that, when high maintenance and dredging expenses are likely to be
incurred in relation to the operation and maintenance of a new port, it isimportant to consider ways of maintaining the sustainability of the project. Thiscan be done by anticipating the risk of maintenance and dredging expenses
fluctuating and by predicting the volume of soil accumulated with reliableaccuracy in the planning stage.
Since this Project is intended to construct a new port in an area located awayfrom the existing Chittagong Port, it divides the functions between the new port
and other ports throughout the country and considers port operation strategies
for helping to promote use of the new port. Such strategies include positioning
the new port along the Bengal routes, dividing the functions between the newport and others in neighboring countries, and ensuring the efficiency of the newport’s operation by CPA. With respect to maintenance and dredging expenses,
since a large volume of soil is expected to accumulate, the Project carefully
considers the volume that will accumulate in the approach channel andcountermeasures for preventing this and verifies the cost effectiveness of suchcountermeasures.
7. Evaluation Results
The Project is consistent with Bangladesh’s development challenges andpolicies and with the assistance policies and the analysis of the Government ofJapan and JICA. Additionally, the Project aims to contribute to increasing thecountry’s cargo handling capacity by developing Matarbari Port and promoting
investments and industry by furthering logistics in Bangladesh and its
neighboring countries. It also aims to contribute to enhancing the country’sinternational competitiveness, mainly by establishing the new port as a logistics
center for energy and materials, both of which are essential for the sustained
industrialization in the country. Furthermore, it is expected to contribute toachieving SDG 9 (“Build resilient infrastructure, promote inclusive andsustainable industrialization and foster innovation”). Thus, the necessity for JICA
to support the Project is substantial.
8. Plan for Future Evaluation(1) Indicators to Be Used
To be determined during the appraisal process for the loan for theconstruction phase of the Project.
(2) Timing
To be determined during the appraisal process for the loan for theconstruction phase of the Project.