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 (I)Loan Agreement: May 29, 2019
2. Background and Necessity of the Project(1) Current State and Issues of the Port/Harbor Sector and the Priority of theProject in Bangladesh
In Bangladesh, with GDP having grown at an annual rate of a little more than
6% during the past ten years, the value of cargo trade has risen at an averageannual rate of approximately 11% during the same period (InternationalMonetary Fund, 2018). Furthermore, container cargo demand in Bangladesh,which stood at 1.62 million TEU in 2014, is expected to reach 9.85 million TEU in
2040 (Japan International Cooperation Agency (JICA) Data Collection Survey on
the Matarbari Port Development, 2017). In response to the increase in cargodemand, results show that the volume of cargo handled at Chittagong Port,
which handles 98% of container cargo in Bangladesh, increased from 1.34
million TEU in 2010 to 2.35 million TEU in 2016, indicating that the port isalready handling a volume of cargo that exceeds the design capacity (1.75million TEU). The current water depth of the port (the lowest water level (ChartDatum Level) is adopted as the tidal datum) is between 7.5 m and 9.5 m. In lightof the recent worldwide trend of growth in the size of vessels and the future
increase in cargo demand, the port is unable to accept medium and large
vessels exceeding 2,700 TEU which will be indispensable in the near future. In
order to meet future cargo demand, it is urgent to develop a new port andharbors with sufficient depth to accept medium and large vessels.
Based on the situation above, the Matarbari Port Development Project(hereinafter referred to as the “Project”) is planned to be implemented. TheProject aims to increase the overall cargo handling capacity of Bangladesh, help
to meet the expected rapid increase in cargo demand, and allow the port toaccept increasingly large vessels by constructing a new commercial port with adepth of 16 m in the Matarbari area as well as the access roads that will beindispensable to promoting use of the new port. The Project is positioned as
one of the highest-priority projects in the Seventh Five-Year Plan(FY2016/17–FY2020/21) and Vision 2021 which sets out long-term development
challenges to be achieved between 2010 and 2021. The Project will also
contribute to the realization of the Bay of Bengal Industrial Growth Belt(hereinafter referred to as the “BIG-B”) initiative, which is advocated by theGovernments of Japan and Bangladesh, and the Government of Bangladesh
has decided to prioritize the development of energy hubs and industrial
complexes, etc. 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 (March 2019) identifies oneof the important issues for economic growth as being that the volume of cargohandled has remained sluggish due to a lack of depth and facilities at gateway
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 ofBangladesh’s priority areas as being to accelerate economic growth so thateveryone can benefit as Bangladesh strives to become a middle-income country.
It mentions that the Government of Japan will cooperate chiefly in the BIG-B
initiative and contribute to better connections throughout the region by
developing high-quality transportation networks and promoting the efficient
movement of people and goods. The Project is, therefore, consistent with theanalysis and policy. It also promotes investment in the vicinity of Matarbari Portby establishing the new port as a logistics center for energy and materials, bothof which are essential for sustained industrialization in Bangladesh. Furthermore,
it is expected to contribute to achieving SDGs goal 9, “Build resilient
infrastructure, promote inclusive and sustainable industrialization and fosterinnovation.”(3) Other Donors’ Activities
A master plan for Chittagong Port has already been developed with thesupport of the Asian Development Bank (ADB), which plans to support thedevelopment of new terminals for this port and other undertakings. In addition,
ADB is also supporting a project to develop a railway between Dhaka and Cox’sBazar. Furthermore, the World Bank is supporting the strengthening of the inland
water transportation capabilities of Chattogram , Dhaka, and Ashuganj.
3. Project Description(1) Project Objective(s)The objective of the Project is to strengthen port logistics capacity in
Bangladesh by constructing a new commercial port in the Matarbari area inChattogram Division, thereby contributing to the acceleration of logistics withneighboring countries.
(2) Project Site / Target Area
Cox’s Bazar District, Chattogram Division(3) Project Component(s)1) Civil work (construction of terminals, access roads, etc.)
2) Procurement and installation of cargo handling equipment
3) Development of port-related facilities and equipment
4) Consulting services(4) Estimated Project Cost (Loan Amount)
220,066 million Yen (Loan Amount: 38,866 million Yen)
(5) Schedule
June 2018 - December 2025 (91 months in total).
(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 andBridges4) Operation and Maintenance System: CPA and RHD(7) Cooperation and Sharing of Roles with Other Donors
1) Japan’s Activity
In order to support the detailed design of the Project, the Matarbari PortDevelopment Project (E/S) was implemented in FY2018. The Project involves
constructing a new commercial port using part of the port’s facilities (accesschannel, basin, breakwaters, and groins), which will be constructed under theJapanese ODA Loan project called the Matarbari Ultra Super CriticalCoal-Fired Power Project (approved in 2014, 2016, 2017, and 2018). After theconstruction of the port, the facilities will be shared by the Project and theMatarbari Ultra Super Critical Coal-Fired Power Project.
2) Other Donors’ Activity
N/A(8) Environmental and Social Consideration / Poverty Reduction / Social
Development
1) Environmental and Social Consideration① Category: A② Reason for Categorization: The Project falls into the port/harbor
sector (likely to have significant adverse effects due to itscharacteristics) under the JICA Guidelines for Environmental andSocial Considerations (published in April 2010).
③ Environmental Permit: The Environmental Impact Assessment (EIA)
report on the Project was approved by the Department ofEnvironment, Ministry of Environment and Forests of Bangladesh on
November 26, 2018 (port/harbor) and December 6, 2018 (road).
④ Anti-Pollution Measures: During the construction work, measures for
air quality, water quality, and noise and vibration, etc., such as water
sprinkling, covering vehicle platform, installation of pollution diffusion
prevention film, installation of wastewater treatment equipment,restrictions on nighttime construction, use of low noise/vibrationequipment, etc., will be taken in order to satisfy the emission
standards and environmental standards in Bangladesh. In
accordance with domestic laws and regulations as well as local
government ordinances, the waste discharged from vessels after
opening will be temporarily stored at waste management facilities
prepared by the executing agency in port facilities, and will beappropriately treated by local governments and private companies.
Vessels will be requested to exchange ballast water appropriately inaccordance with the Ballast Water Management Convention, and theexecuting agency will control ballast water in accordance withdomestic laws and regulations. Measures, such as limiting the speed
around residential areas, etc., will be taken against noise andvibration generated on the access roads after opening.
⑤ Natural Environment: The port and access road construction sites do
not fall under protected areas, such as national parks, etc., orimportant habitats. At a location 15 km south of the port site, there isSonadia Ecologically Critical Area (hereinafter referred to as the“ECA”) designated by the Government of Bangladesh. However, theimpact on the area is expected to be reduced because there is asufficient distance from the port and the access channel, and theabove-described water pollution control measures will be taken in theevent of discharge of dredged sediment.
The access roads will beconstructed in the vicinity of the Moheshkhali Forest and Hill Reserveand the Fasiakhali Wildlife Sanctuary, but the impact on the precious
ecosystem in the reserve and sanctuary will be reduced by
implementing awareness-raising programs for workers. In addition,
more than 5,000 mangroves are expected to be cut down for theconstruction of the access roads, but alternative tree planting will beconducted, using the number and area of mangroves as an indicator.
In the project site and its surrounding area, no valuable species havebeen confirmed, but in preparation for the case that valuable species
are confirmed, awareness-raising activities will be carried out forworkers, and nighttime construction will be restricted to reduce theuse of lighting equipment and noise so that appropriate monitoring will
be conducted.
⑥ Social Environment: The Project involves land acquisition ofapproximately 107 ha and 201 ha and involuntary resettlement of 297
and 680 residents by the construction of the port, including the soil
disposal site, and the access roads, respectively. The land acquisition,compensation, and support will be in accordance with the national
procedures of Bangladesh and the resettlement plan formulated
based on JICA guidelines. With the loss of many salt fields andshrimp farms, there has been a growing demand among affected
residents for support for the recovery of their livelihoods. In responseto the demand, implementation of a livelihood recovery support
program is planned. At present, no particular objection to the Project
has been made by affected residents. Although no particular impact of
the Project on coastal fisheries and on the induction of inundation andflooding in the surrounding area is anticipated, monitoring will beconducted under the supervision of the executing agency, andlivelihood recovery support will be provided as necessary.
⑦ Other / Monitoring: In the Project, the contractor will monitor theimpact on air quality, water quality, noise, vibration, and ecosystem
during construction, under the supervision of the executing agency.
The executing agency will monitor the impact on water quality, waste,noise, vibration, and ecosystem after opening. NGOs entrusted by theexecuting agency will monitor changes in the surrounding watercondition, the impact on livelihoods, and the livelihood recovery
condition during construction and after opening, under the supervision

of the executing agency.
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) Category of Gender: [N/A] GI (Gender Mainstreaming Needs Assessmentand Analysis Project)
Activities / reason for Categorization:
Although the preparatory survey examined gender mainstreaming needs, it
did not result in the implementation of specific activities that contribute togender equality and women's empowerment.
(9) Other Important issues
N/A
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators (Operation and Effect Indicators)
Indicator

Baseline(Actual valuein 2017)

Number of containers handled (TEU/year)

N/A

Target (2026)[Expected value 2years after projectcompletion]
259,000

N/A

770,000

N/A

75

N/A

25

N/A

4,400

N/A

70,000Volume of general and bulk cargo handled(tons/year)
Number of container vessels in port(ships/year)
Number of general and bulk cargo vessels
in port (ships/year)
Maximum hull form in port (containervessels) (TEU)
Maximum hull form in port (general and bulkcargo vessels) (tons)(2) Qualitative Effects
Logistics with neighboring countries will be promoted. Investment in thevicinity of Matarbari Port will be promoted.
(3) Internal Rate of Return

According to the following preconditions, the Project’s Economic Internal Rateof Return (EIRR) will be 11.4%. The Financial Internal Rate of Return (FIRR) willbe 1.6%.
[EIRR]
Cost: Project costs and maintenance/operation costs (excluding tax)
Benefit: Reduction in marine transportation costs, reduction in demurragecosts, reduction in travel time, reduction in travel costs, and reduction ininland transportation costs
Project Life: 40years[FIRR]
Cost: Project costs and maintenance/operation costs
Benefit: Operating revenue of the port
Project Life: 40years
5. Preconditions / External Conditions(1) Preconditions
N/A(2) External conditions
The access channel, basin, and breakwaters will be developed smoothly as
part of the Japanese ODA Loan project called the “Matarbari Ultra Super Critical
Coal-Fired Power Project.” No development project plans for the port's vicinity ortheir implementation 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 by the Japanese ODA
LoanJapanese ODA Loan for the Republic of the Philippines revealed that, when
the construction of a new port is planned, it is important to clarify the division offunctions between the existing port and the new port, to develop a policy or planfor operating each port organically, and to give incentives for using the new port
in an effort to stimulate demand for its use. The Project has confirmed thedivision of functions with other domestic ports through the Data Collection
Survey on the Matarbari Port Development. In addition, CPA will examine port
operation strategies that will promote the use of the new port, such as thedivision of functions with ports in neighboring countries and ensuring theefficiency of the new port operated by CPA, etc. A part of the strategies will beimplemented through technical assistance by JICA.
The results of the ex-post evaluation of the La Union Port Development
Project in the Japanese ODA Loan project for the Republic of El Salvadorrevealed that it is important to consider ways of maintaining the sustainability ofthe project. This can be done by anticipating the risk of fluctuation inmaintenance and dredging expenses and by predicting the volume of soil
accumulated with reliable accuracy in the planning stage. Since it is expectedthat the volume of soil accumulated is large in the Project, the volume waspredicted with the advice of domestic experts. Under the supervision ofconsultants of the Japanese ODA Loan project called the Matarbari Ultra Super
Critical Coal-Fired Power Project and this Project, the executing agencies ofboth projects will continue monitoring of the volume of soil accumulated andmaintenance and dredging expenses, and will verify the countermeasures andcost-effectiveness.
7. Evaluation Results
The Project is consistent with Bangladesh’s development issues and policies
and with the assistance policies and analyses of the Government of Japan andJICA. Through the development of Matarbari Port, the Project will contribute to
the increase in the volume of cargo handled and the promotion of logistics within
Bangladesh and with surrounding countries, thereby contributing to SDGs goal 9,“Build resilient infrastructure, promote inclusive and sustainable industrializationand foster innovation.” Thus, the necessity for JICA to support the Project issubstantial.
8. Plan for Future Evaluation(1) Indicators to be Used
As indicated in sections 4. (1) to (3).
(2) Timing
Ex-post evaluation: Two years after the project completion