The World Bank approved $650 million on Friday to help Bangladesh construct the breakwater of Bay Terminal, a mega expansion project of Chattogram port.

The Bay Terminal would significantly improve Bangladesh’s global trade competitiveness and reduce import and export costs by increasing port operational efficiency and mobilising private investment, said a press release issued by the international lender.

The government has planned to develop two container terminals, a multipurpose terminal and an oil and gas terminal under the Bay Terminal.

The World Bank earlier promised to finance the Bay Terminal Marine Infrastructure Development Project, under which a 6-km-long climate-resilient breakwater would be constructed to protect the harbour from the force of waves, current, and extreme weather. It will also carry out dredging of the port basin, entrance, and access channels, said the press release.

The new, modern Bay Terminal, to be operated by leading international terminal operators, will accommodate larger vessels, such as panamax vessels, and substantially decrease vessel turnaround time, potentially saving the economy about $1 million daily.

Currently, the Chattogram Port, the maritime gateway for over 90 percent of Bangladesh’s international trade volume and 98 percent of its container traffic, can only receive small feeder vessels during limited hours of the day.

“Bangladesh’s international trade heavily relies on Chittagong Port, which faces significant capacity constraints,” said Abdoulaye Seck, World Bank country director for Bangladesh and Bhutan.

“The Bay Terminal will be a game changer. It will improve Bangladesh’s export competitiveness through enhanced port capacity and reduced transportation cost and time, opening new opportunities to key global markets.”

Moreover, the project will mobilise private investment for the development of container terminals.

The World Bank investment along with the government funding will bolster investor confidence and contribute to mitigating risks associated with the overall Bay Terminal development.

Furthermore, the World Bank Group’s private sector arm, the International Finance Corporation (IFC) is considering investing in one of the proposed private sector-led terminal, according to the release.

“The Bay Terminal will contribute to modernising the country’s seaport infrastructure and improving its connectivity to regional and international markets,” said Hua Tan, World Bank senior transport specialist and team leader for the project.

The Bay Terminal, located in the Anandangar near Sandwip channel, west of the Chattogram port and close to existing road and rail links to Dhaka, is expected to handle 36 percent of Bangladesh’s container volumes.

In the 2023-24 fiscal year, the World Bank committed a record $3.4 billion in support to Bangladesh, including this project.