TA 7979-BAN Strategic Master Plan for Chittagong Port: Final Report

Technical Assistance Consultant’s Report

Project Number: 45078 September 2015

People’s Republic of Bangladesh: Strategic Master Plan for Chittagong Port (Financed by the Japan Fund for Poverty Reduction)

Prepared by:

HPC Hamburg Port Consulting GmbH KS Consultants Limited, Dhaka, Bangladesh

Sellhorn Ingenieurgesellschaft mbH, Hamburg, Germany

For: Ministry of Shipping

Chittagong Port Authority

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Asian Development Bank

Chittagong Port Authority

STRATEGIC MASTERPLAN FOR CHITTAGONG PORT

Final Report, Part 3

HPC Hamburg Port Consulting GmbH Sellhorn Ingenieurgesellschaft mbH

Container Terminal Altenwerder Am Ballinkai 1 Teilfeld 5 21129 Hamburg 20459 Hamburg Germany Germany Phone: +49-40-74008-205 Phone: +49-40-361201-0 Fax: +49-40-74008-133 Fax: +49-40-361201-28 E-Mail: [email protected] E-Mail: [email protected] Internet: http://www.hpc-hamburg.de Internet: http://www.sellhorn-hamburg.de

KS Consultants Limited

House # B/173 (2nd Floor) Road # 23, DOHS Mohakhali Dhaka - 1206 Bangladesh Phone: +88-02-8872512 Fax: +88-02-8812304 E-Mail: [email protected]

Strategic Master Plan for Chittagong Port – Final Report, Part 3 i TABLE OF CONTENTS Page

EXECUTIVE SUMMARY 1

1. INTRODUCTION 11 1.1 Background 11

2. HINTERLAND CAPACITY ESTIMATIONS AND ANCILLARY FACILITIES 15 2.1 Background 15 2.2 Proposed Concept 16 2.3 Rail Capacity 18 2.4 Inland Waterways Capacity 20 2.5 Road Transport Capacity 21 2.6 Summary of Findings 26

3. ENVIRONMENTAL ASSESSMENT OF PROPOSED DEVELOPMENT PROJECTS 31 3.1 Introduction 31 3.1.1 Objectives 31 3.1.2 Methodology 32 3.2 Strategy for Chittagong Port Master Plan 34 3.2.1 Key Issues 34 3.2.2 Vision and Mission 35 3.2.3 Port Development Alternatives 35 3.2.4 Other Alternatives 39 3.2.5 Potential Development of the Bulk and Cargo Terminals 41 3.3 Legal and Regulatory Framework 43 3.3.1 Environmental Requirements for Port Development Project 49 3.3.2 Environmental and Social Requirements of the ADB 51 3.3.3 Standards, Guidelines, and Good Industry Practice 51 3.4 Baseline and Situation Analysis 52 3.4.1 Introduction 52 3.4.2 Overview of the Study Area 53 3.4.3 Environmental Status in the Port Master Plan area 56 3.5 Identification of Impacts of Port Development Alternatives 74 3.5.1 Potential Impacts of Port Developments: Preconstruction 75 3.5.2 Potential Impacts of Port Developments: Construction 76

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3.5.3 Potential Impacts of Port Developments: Operation 78 3.6 Plan and Strategies 82 3.6.1 Environmental Management Plan 82 3.6.2 Impact Avoidance, Mitigation and Offsetting 83 3.6.3 Institutional Capacity Assessment 84 3.6.4 Environmental Monitoring Plan 86 3.6.5 Climate Change Adaptation 87 3.6.6 Occupational, Health, Safety 88 3.6.7 Public Consultation/Participation 89 3.6.8 Conclusions and Follow Up 94

4. SOCIAL ASSESSMENT AND SOCIAL MANAGEMENT FRAMEWORK 96 4.1 Background 96 4.2 Project Objective and Scope 96 4.3 Project location 97 4.4 Profile of Population 98 4.5 Consultation and Participation 107 4.6 Social Management Framework: 112 4.7 Social Management Principles 112 4.8 GoB Legal Framework 115 4.9 ADB Safeguard Policy Statement (SPS) 2009 117 4.10 Gap Analysis between GoB Law and ADB SPS 118 4.11 Safeguard Measures to Bridge the Gaps between ADB SPS 2009 and Gob Law in this Project 119 4.12 Social Impact Assessment 120 4.13 Resettlement Planning 120 4.14 Eligibility and Entitlements 121 4.15 Compensation Payment Procedure 133 4.16 Eligibility and Cut-Off Date 134 4.17 Best Practice Measures 134 4.18 Grievance Redress Mechanism 135 4.19 Grievances Redress Committees 136 4.20 Monitoring and Evaluation 138 4.21 Reporting 139

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4.22 Conclusion and Recommendation 140

5. ECONOMIC ASSESSMENT OF THE CHITTAGONG PORT MASTER PLAN 142 5.1 Background 142 5.2 Economic Scan of the Master Plan 143 5.3 Scope and Approach of Economic Analysis 146 5.3.1 Approach and Methodology 146 5.4 Market Potential and Projected Container and General Cargo Handling 149 5.5 Adjustment of Estimate Financial Costs to Economic Cost 150 5.6 Economic Evaluation 151 5.6.1 Savings in Vessel Waiting Time 152 5.6.2 Savings in Vessel Service Time 153 5.6.3 Savings from Vessel Sizes at BCT 153 5.6.4 Results of the Economic Evaluations 154 5.7 Distribution of Master Plan Benefits to the Society 154

6. OVERVIEW OF POSSIBLE ORGANISATIONAL CHANGES AT CPA 156 6.1 Organisation of Chittagong Port Authority 156 6.1.1 Introduction 156 6.1.2 Current Organisation of Chittagong Port Authority 156 6.2 Identified Problems of Organisation of Chittagong Port Authority 160 6.3 Recommended Institutional Improvements 163 6.4 Introduction to Port Models 166 6.4.1 Public Service Port Model 167 6.5 Current Situation at Chittagong Port 172 6.6 Concessions as PPP Setups for the Port Sector 172

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TABLE OF FIGURES Page

Figure 1: CGPY and Railway Connectivity 19 Figure 2: Proposed Conceptual Layout of Rail Off-Dock Container Terminal at CGPY 20 Figure 3: Map Showing Different Urban Road Connectivity with CGPY 22 Figure 4: Map Showing Dhaka – Chittagong Highway 26 Figure 5: Projected Container & Container to Dhaka 28 Figure 6: Capacity of Road, Rail and Waterways 29 Figure 7: Projected Capacity of available Transport Modes 30 Figure 8: Karnaphuli Container Terminal 1- General Layout 38 Figure 9: Enhancement CCT Terminal –General Layout 38 Figure 10: Multipurpose Terminal Layout- 38 Figure 11: Possible Location of Bay Container Terminal 40 Figure 12: Areas of Possible Bay Container Terminal 41 Figure 13: Location of a potential Laldia Terminal 42 Figure 14: Location Laldia Area 42 Figure 15: Steps to be followed for Environmental Clearance Certificate for Red Category Project 50 Figure 16: Monthly and Annual Humidity (%) in Chittagong (2002-2011) 57 Figure 17: Monthly Average dry bulb temperature in (0C) in Chittagong (2002- 2011) 58 Figure 18: Monthly and Annual maximum temperature in (0C) in Chittagong (2002-2011) 58 Figure 19: Monthly and Annual minimum temperature in (0C) in Chittagong (2002-2011) 59 Figure 20: Monthly and Annual total rainfall in (mm) in Chittagong (2002- 2011) 59 Figure 21: Sky view of the Karnaphuli River and vicinity of Chittagong Urban area with different land use pattern 62 Figure 22: General Information CPA Land use 63 Figure 23: Important waterways of Karnaphuli River and Chittagong Coastal Environment 66

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Figure 24: Shore-based pollution sources of the Karnaphuli River and the Bay of Bengal, based on Landsat TM satellite image 70 Figure 25: Organizational framework for the proposed EMMC of CPA 87 Figure 26: Gender distribution of HHHs 100 Figure 27: Religious distribution 101 Figure 28: HH size distribution 101 Figure 29: Education level of population (7+) 103 Figure 30: Financial capability of the population 105 Figure 31: Chittagong Port Authority (CPA) – Organigram 159 Figure 32: Important Aspects Influencing a Port’s Competitiveness 164 Figure 33: Summary of Port Models 167

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LIST OF TABLES Page

Table 1: Reporting 13 Table 2: Planned Dhaka – Chittagong Road Capacity 26 Table 3: Summary of Government Legislation applicable to the Project 43 Table 4: Relevant Major Policies 45 Table 5: Relevant International treaties, conventions and protocols signed by Bangladesh 47 Table 6: Variation of Climate Parameters in Chittagong for a period of 20 years (1988-2008) 60 Table 7: Yearly Highest and Lowest Water Level for Karnaphuli River 65 Table 8: Design High Flood Levels at different Locations of Karnaphuli River 65 Table 9: Common and Occasionally found fishes in the Karnaphuli River 73 Table 10: Proposed Port Development Project Activities and Its Impacts- Construction Stage 80 Table 11: Proposed Port Development Project Activities and Its Impacts- Operation Stage 81 Table 12: Population and HH size (Lal diar char) 99 Table 13: Population and HH size (Bay terminal) 100 Table 14: Occupation of population (11+) 102 Table 15: Marital status of site population (15+) 102 Table 16: Incidence of child marriage 103 Table 17: Disabled population 103 Table 18: Duration of residence 104 Table 19: Expenditure Trend of the HHs 105 Table 20: Medical services 106 Table 21: Gender balance 106 Table 22: Decision making role of women 106 Table 23: Consultation Meeting outcomes 109 Table 24: FGD responses 111 Table 25: Eligibility and Entitlement Matrix 122

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Table 26: Estimated Annual TEU (‘000) at BCT and KCT1 149 Table 27: Estimated Containers Ships at BCT and KCT1 149 Table 28: Estimated Annual Ship Arrivals at MPT 150 Table 29: MPT, Civil Engineering Costs (in USD) 150 Table 30: Vessel Waiting Time Cost at BCT, KCT1 and MPT (days) 153 Table 31: Vessel Service Time Cost at BCT, KCT1 and MPT (days) 153 Table 32: Results of Economic Evaluations 154 Table 33: Public Service Port Strengths and Weaknesses 168 Table 34: Tool Port Strengths and Weaknesses 169 Table 35: Landlord Port Strengths and Weaknesses 171 Table 36: Private Service Port Strengths and Weaknesses 172 Table 37: Summary of possible Alternative PPP Setups for Chittagong Port 176

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants

Strategic Master Plan for Chittagong Port – Final Report, Part 3 1

EXECUTIVE SUMMARY

The Chittagong Port Master Plan recognises the need for an integrated planning among road, rail, waterways and cargo handling operations. The plan also proposes and recommends the following development projects to be able to handle the future forecast cargo volumes.  Construction of ICD at Dhirassram near Dhaka,  Construction of Off-Dock Container Terminal at CGPY,  Construction of Khanpur ICT,  Immediate operation of Pangaon ICD,  Completion of Akhaura – Laksham railway section into double track,  Promotion of Access Controlled Dhaka – Chittagong Expressway,  Good Rail and road connectivity for the Bay Container Terminal (BCT) for easy handling of port traffic.

Therefore, a joint/coordinated planning and implementation is necessary of these projects i.e. (Bangladesh Railway, Roads and Highways Department and Bangladesh Inland Water Transport Authority integration) in order to create sufficient hinterland infrastructure capacity. Chittagong Port has been identified by the Government as a key (in essence only) international gateway which is a major component of the nation’s transport system that is critical both to the functioning of that transport system, and the economic success of the country. The principal component of cargo flows moving to and from the port over land is containers. Currently around 95.6% of 70% of containers are transported to Dhaka by road; rail moves around 4.4% of 70% and water transport is altogether absent as of today.

Chittagong Port Master Plan has projected the container traffic to 2.7, 4.4, 5.1 and 5.4 million TEUs for the year 2020, 2025, 2030 and 2040 respectively. However, a total of 30% of the container traffic originates/are destined in the Chittagong region. Therefore, Dhaka’s expectation to and from container traffic may be 1.89, 3.08, 3.57 and 3.78 in million TEUs in the year 2020, 2025, 2030 and 2040 respectively, as showed in the figure below.

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It is estimated that the existing four-lane road capacity of Dhaka – Chittagong Highway will come to an end before 2025. The capacity of the implemented and planned inland water based ICD and ICT is assumed to remain at 0.24 million TEUs and come to an end in 2025. However, the Government and the implementing agencies need to dramatically increase the rail share.

It can be observed that all the identified transport components as well as ancillary facilities are to be developed and operated timely, because this is the only way to manage and provide sufficient transport capacity for the forecast cargo volumes. If there will be any delay at implementing rail and water based infrastructural facilities, it may demand urgent completion of Access Controlled Dhaka – Chittagong Expressway.

It is estimated that the integrated capacity of road, rail and waterways could meet the forecast port volumes till 2030/2035. A precondition for this is that all the foreseen transport investment projects on the Dhaka-Chittagong corridor and identified ancillary transport facilities have been implemented.

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To conclude, the projected growth of Chittagong Port container volumes requires a corresponding expansion of the concerned hinterland links, mainly to Dhaka. Therefore, very close cooperation between the concerned transport agencies would be required to ensure a viable and sustainable port expansion solution, which will beneficial to all stakeholders and policy makers to a large extent.

The preliminary environmental assessment carried out as part of the Strategic Master Plan of Chittagong Port, follows ADB’s policies and procedures in preparation of an Initial Environmental Examination (IEE). The IEE will contribute to the understanding of the impacts of port development under possible development scenarios and recommend measures strengthening the sector in order to reduce impacts and manage the sector in an environmentally and socially sustainable manner.

The implementation of various components of the proposed ‘Strategic Master Plan for Chittagong Port’ will be governed by Government of Bangladesh (GoB) Environmental Acts, Rules, Policies, and Regulations. The design, construction and operation of the Port shall comply with good international industry practice (GIIP) through the incorporation of impact avoidance and management measures into each Project phase. The EIA shall identify and specify relevant GIIP to avoid and manage environmental and social risks and impacts associated with Port design, construction and operation.

The influence area (impact zone) for the Environmental Assessment is the area directly affected by the development of the Port Master Plan and the immediate surroundings where development could be visible and audible.

The Master Plan Port development construction activities that have the potential to create significant impacts are:

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 Dredging and dredge material disposal- habitat removal/degradation, river water quality decline;  Jetty construction- habitat removal, river water quality decline; and  Landside development- habitat removal, resettlement, loss of livelihoods, business relocation

For better management of the environmental and social issues during the implementation of port development projects under the Port Master Plan intervention areas, clear strategies and plans are needed.

The Chittagong Port Authority needs to adopt an Environmental Management System (EMS) to operate port environmental management and strengthening the Institutional Capacity.  Environmental Management and Monitoring Plan  Institutional Capacity Assessment

CPA will set up an Environmental Management and Monitoring Cell (EMMC) at Bandar Bhavan, consisting of environmentalist, laboratory technician, samplers and other required personnel from available manpower under the existing setup of CPA.

As the proposed port development projects location is exposed to Bay of Bengal, there is possibility of tidal water flooding due to global warming and sea level rise. Climate change considerations will play a crucial role in the design of port development and its components,

During the project preparatory stage, three tiered consultation meetings (KII, FGD and consultation meeting) were conducted with the objective to identify people to be consulted, to brief stakeholders about the project components, and to discuss potential environmental impacts of the Project. The outcomes of those consultations were used to finalize the preliminary Environmental Assessment Report.

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 5 socio-economic impacts from the Port development projects are proposed in the IEE. The follow up would largely have to be through the detailed planning and implementation of each project. This would require that an EIA is carried out for each project in the plan, taking into account how the design and construction techniques could contribute to minimizing the various negative impacts from the master plan.

Finally, having reviewed all the potential environmental impacts and following the recommended mitigation measures as per this EMP, the proposed Port development projects under Strategic Master Plan are expected to proceed without having unacceptable environmental effects.

The overall objective of the assignment is to develop Chittagong Port in Bangladesh in terms of handling of bulk and container and increase the handling capacity of the port to handle the forecast increased container volumes. The strategic master plan confines three locations for the new container terminals, i.e. existing port area, Laldia Char area for bulk and container handling and South Kattoli to Halishahar area for Bay Terminal.

Amongst these Laldia Char area alone requires displacement of more than 700 households and shops while Bay terminal area requires economic displacement due to loss of fish cultured pond. A detailed census survey, consultation meetings with various stakeholders including Word Councillor, focused group discussion with various occupation groups have been conducted in Laldia and Bay terminal area with displaced households/people. Objective of the study is to prepare a social assessment and social management framework that includes resettlement policy framework (SASMF) which will ultimately lead to develop a resettlement action plan during feasibility stage of the project.

A total of 3,004 people (738 HHs) would be impacted by the project at Laldia Char. Mass consultation meetings were held with residents of Laldia Char and fish cultivator of Bay terminal area to obtain their opinion about the project. Suggestions about relocation of the potential physically displaced people/households were also sought during consultation meetings. Such consultation meeting will also be held during feasibility, detailed design and implementation stage of the project.

The report suggests for preparation of a resettlement plan following ADB safeguard policy statement (SPS 2008) and keeping provision for compensation and relocation of the potential displaced households. In this case some recent project experience in the Chittagong City such as Chittagong City outer Ring

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Road Project may be taken into account for formulating compensation and relocation policies.

It should be underlined that it is currently not planned to use the Laldia area as a port terminal. The carried out survey within the framework of the Port Master Plan should be seen as a “back-up measure” in case CPA decides to proceed with the development, whereas the development of the Bay Terminal area is highly recommended.

The Port Master Plan defines the short-term and long-term development strategy of the port, which will influence the future levels of traffic that are handled at the port. The major development includes expansion of the container terminal KCT1 and the Multi-Purpose Terminal MPT, and new construction of the container terminal BCT. Other development activities such as operational improvements will increase the intensity of port use. However, an economic evaluation of port expansion and development investment should be considered before any action is taken.

This is a decision making process where profitability of the new investment is investigated. The evaluation for such expansion and development programmes requires a calculation of the costs and benefits over the whole economic life of the programmes. The main cost component in a port development project are investment costs, operating costs and maintenance costs, whereas the benefits could be mainly savings in Vessel Waiting Costs, Savings in Cargo Surcharge and Savings in Service Time. A fundamental characteristic of these costs and benefits is that these are spread to other stakeholders in the trade rather than to the port authority.

The results of the economic evaluation show that the calculated benefits are larger than the estimated costs for the planned investments. Using the estimated economic costs and benefits, the measures of selected projects worth are shown below. The results show that the construction of BCT would have an EIRR of 15.64% and the net worth will be US$ 224.39 million. The expansion/remodelling of KCT1 and MPT also attract projects for implementation in context of economic benefits.

EIRR NPV (million (%) US$) BCT 15.64 224.39 KCT1 16.79 81.27 MPT 15.75 42.02

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The intensified activity within the existing commercial port and the future expansion of the port will result in a significant number of employment opportunities associated with both the construction and operational phases of these works. The precise scale of such opportunities cannot be determined in the Master Plan, as the number of jobs created will depend on the nature and scale of any development proposed, however, it could be assumed that about 30,000 jobs will be potentially created during the Master Plan implementation periods. The implementation of the Master Plan would enhance competitiveness of Bangladesh exports as prices of imported and export commodities decrease as a result of shorter shipping time and lower shipping costs, which results in higher employment. In addition, exporters would incur lower financial costs for their shipments due to the shorter processing and shipping time for their cargo, which also results in higher profitability for exporters and more investments.

Regarding the organisation of Chittagong Port Authority, the current governance arrangements are marked by a public sector monopoly in the container segment. Bangladesh differs from the other three countries on the Indian sub-continent, all of which started to replace their state monopolies in container operations with international container terminal operators on the late 1990s. They have then continued to follow this approach which has guaranteed high productivity since then. In Bangladesh the corresponding arrangements have not been implemented and the current regulations are inappropriate for regulating and operating a modern port. A transition to a landlord port model would be in line with best practise worldwide and could be expected to deliver significant improvements in port performance.

The port authority should be made a fully autonomous body with a large degree of flexibility and the right to make independent decisions regarding recruiting necessary manpower and developing investment and expenditure budgets including setting the port tariffs. These questions should be handled and decided by the Port Authority without referring all these matters to the government and wait for approval. A larger degree of autonomy would enable CPA to take decisions in a timely manner and help CPA to develop the port according to the market requirements. The following functions are defined by UNCTAD for a port authority and are recommended to be implemented:  Investment: Power to approve proposals for port investments in amounts above a certain figure. The criterion for approval would be that the proposal was broadly in accordance with a national plan, which the authority would maintain.  Financial policy: Power to set common financial objectives for ports (for example, required return on investment defined on a common basis), with a

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common policy on what infrastructure will be funded centrally versus locally, and advising the government on loan applications.  Tariff policy: Power to regulate rates and charges as required protecting the public interest.  Labour policy: Power to set common recruitment standards, a common wage structure, and common qualifications for promotion; and the power to approve common labour union procedures.  Licensing: When appropriate, power to establish principles for licensing of port employees or agents.  Information and research: Power to collect, collate, analyse and disseminate statistical information on port activity for general use, and to sponsor research into port matters as required.  Legal: Power to act as legal advisor to local port authorities.

A transition of CPA towards a Landlord Port with the functions and powers defined above is recommended.

In the current organisation of CPA, the following short term improvements are proposed:

Department of Planning: The Department of Planning should be strengthened with employees with multi- disciplined skills with the knowledge of Engineering, Operation, Economics and Statistics. It is considered as important to strengthen the capacity of this department.

Department of Civil Engineering: The vacant posts of the department should be filled up with immediate effect and recruitment at the entry level of officers should be made and ensured on regular basis. Furthermore, their timely promotion to higher positions should be ensured so that there is no vacuum at any level at any time in the department.

Traffic Department: The manpower of the department should be optimised in view of the work load of the department,

Estate Branch: The Estate Branch should be strengthened and developed into a department with proper authorities where collection of rent is administered properly.

Training Institute: The Training Institute should be strengthened and upgraded in respect of management, budget and infrastructure facilities.

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Welfare Activities: The welfare activities of CPA and the expenditure on this head should be gradually reduced from the responsibilities of CPA. CPA’s main focus should be on running the port services in a professional and commercial basis.

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1. INTRODUCTION

1.1 Background Bangladesh extends to 147,570 km² (56,977 square miles) with a population estimate of 150 million people in 2013 according to the IMF and a population density of 1,033.5/km² (2,676.8/square mile), which makes Bangladesh one of the most densely populated countries in the world. Bangladesh has experienced an annual economic growth in the range of 6.1 to 6.7% during the last five year period. The economic growth combined with the increasing trade has increased the pressure on Bangladesh main port, Chittagong Port. Chittagong is the principal sea port of Bangladesh, situated in the south of Bangladesh, handling more than 92% of the sea-born trade. The port is basically a river port situated 16 km upstream from the Bay of Bengal. During the last fiscal year 2012 Chittagong Port handled 41.90 million tonnes of cargo, including 1.41 million TEU container cargo, corresponding to an average annual growth rate of 8.1% respectively 10.1%. The port has successively changed and adapted the handling facilities with a focus on container handling. This has led to a narrowing scope for handling of break-bulk and bulk cargos and there is a need for investigating different expansion possibilities. Additionally, it is important to improve the current hinterland connections and improve the different intermodal connections and links. The road and railway links between Chittagong and Dhaka are facing capacity bottlenecks, but different ADB financed projects to improve the situation are in progress. The important role of Chittagong Port for Bangladesh underlines the necessity of investigating how the port should be developed best to meet the future challenges. All pervious development plans for the port are outdated and the last Chittagong Port Master Plan covered the period 1995-2010. Against this background the government of Bangladesh has approached ADB with the aim of preparing a new Chittagong Port Master Plan for the coming 25-30 years. The aim of the Port Master Plan should be to improve the capacity of Chittagong Port which will support and maintain sustainable economic growth in Bangladesh by ensuring access to the international markets. HPC is carrying out the study in cooperation with: Sellhorn Ingenieurgesellschft mbH, Germany; and KS Consultants Limited, Dhaka, Bangladesh.

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1.2 Project Objective and Scope

The overall objective of the assignment is the elaboration of a Strategic Master Plan for the development of the Chittagong Port in Bangladesh. The Strategic Master Plan serves also as a tool to identify potential projects to be funded under PPP schemes, or directly by ADB. To meet the general objective, the following specific objectives, as outlined in the ToR, shall be achieved:  Understanding the role of the Port of Chittagong in the Bangladeshi international trade and elaboration of a long-term traffic forecast for all the commodities currently handled.  In-depth assessment of the port infrastructure (waterside and landside), the hydraulic features of the river and the hinterland connectivity.  In-depth assessment of current port operations, maintenance and port security, comparing them with international benchmarking and best practices, identifying inefficiencies and bottlenecks.  Propose different alternatives to improve the port facilities and the navigability of the Karnaphuli River, taking into account the findings and results of previous steps.  Prepare a cost estimation for the implementation of the improvement plans.  Elaboration of a preliminary environmental assessment of the projects to be included in the Strategic Master Plan, covering also social impacts derived from resettlement of citizens.  Preparation of a comprehensive Strategic Master Plan for the Port of Chittagong, including all the aspects analysed during previous steps, as the best tool for the development of the port during the next 25-30 years. This plan must indicate required modifications of policies regarding port manpower, rules and regulations, as well as alternative sources of financing.

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1.3 The Role of This Report

In the project there will be a total of five reports submitted. The following reports are defined in the TOR:

Table 1: Reporting

Type of Report Indicative Reporting Time Plan Inception Report incl. ToR for detailed Within four weeks after project start hydraulic and hydrologic study of Karnaphuli River Interim Report 1 Six months after project start Interim Report 2 12 months after project start Draft Final Report 21 months after project start Final Report 24 months after project start

The original time plan has been changed and extended due to problems caused by the riot and political unrest end of 2013 and in the beginning of 2014 in relation to the election.

This report – Final Report; Part 3 - presents an overview and analysis of the identified restrictions of Chittagong Port’s hinterland capacity which might hinder the increasing trade volumes, especially to/from Dhaka. Furthermore are the environmental implications as well as the social implications of the planned extension projects described and analysed. The carried out economic assessment of the proposed expansion projects shows that they are feasible and important for Chittagong Port and Bangladesh as country. An overview is also presented of the current organisation of CPA with improvement recommendation. In the medium to longer run it is recommended to implement the landlord port model at Chittagong Port Aithority.

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2. HINTERLAND CAPACITY ESTIMATIONS AND ANCILLARY FACILITIES

This section discusses the various options of hinterland connectivity to handle projected volumes of containers by 2040 and onwards through available transport modes of road, rail and inland water transport system.

2.1 Background

One of the core objectives of the Strategic Master Plan for Chittagong Port is to explore the capability of the port to handle 5.4million TEUs by 2040 and onwards. It is revealed from the analysis that the projected container demand for Chittagong Port has been increasing in volumes from 1.6 million TEUs in 2014 to 2.7 million TEUs by 2020, 4.4 million TEUs by 2025, 5.1 million TEUs by 2030 and 5.4 million TEUs in 2040. Therefore, it is very important to focus on the transport and travel issues concerning the operation of the port and how Chittagong Port connects with transport networks outside the port estate in particular. The Master Plan also considers travel mode within the port estate to ensure that more sustainable modes of transport are to be facilitated and encouraged during the Master Plan period.

About 70 percent of freight movements at Chittagong Port originate and are destined for customers within the Greater Dhaka Region and a significant portion of trade (about 30 percent) originates or is destined for Chittagong Region. To improve the freight movements between Chittagong Port and Dhaka Region, a 12 km Chittagong Port access road between the port and Dhaka-Chittagong Highways (N1) at Faujderhat (Bangla Bazar), flyover connecting Chittagong Container Terminal (CCT) and New Mooring Container Terminal (NCT) of Chittagong port opened in the recent past to directly access the N1 Highway. Moreover, Roads and Highways Department (RHD) has been trying to widen the N1 from two-lanes to four-lanes to ease the traffic congestion since 2006, and it is expected that the widening works will be completed by 2016.

In view of current freight handled in the port and the projected freight in the Master Plan, containers are, and will remain the main contributor to traffic on the inland transport network. At present, the modal-split between rail and road is 4.4% respectively 95.6% on the Chittagong-Dhaka transport corridor. This provides traffic and transportation challenges at two levels, one at a local level; traffic capacity and circulation in and around the port, and the other at the

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 16 Strategic Master Plan for Chittagong Port – Final Report, Part 3 interregional level; capacity of the road transportation corridor between Dhaka and Chittagong. The other challenges could be how the rail share could be enhanced up to 10% of overall port traffic and the remaining challenge to increase the utilisation of widely discussed inland waterways to reduce the road share. In the context of the above issues, this section would try to throw light on existing road capacity and constraints, utilisation of Chittagong Port Yard (CGPY) and railway capacity and opening of inland waterways. In addition, construction of Inland Container Deports (ICDs) near Dhaka Region has also been envisaged.

2.2 Proposed Concept

The Chittagong Port demand forecasts show clearly that the inheritance of the port will not see it through the Master Plan period. To increase the port’s handling capacity, an intensified use of land in the port areas as well as construction of new terminals near the port periphery is proposed. The Port Master Plan also considers the probable impact of the port’s growth expectations on inland access routes. Without continued development of the hinterland transport networks and construction of new ICDs, the trade and economic importance of Chittagong Port may be severely limited and have a negative impact on Bangladesh’s economic growth.

Inland access routes are vital for the transport of import and export cargoes and it is important to be able to efficiently transport import and export cargo to and from the port with minimum delay. Over time the modal choice of customers, and its impacts on traffic growth, are likely to be determined by the available transport options and its connectivity. This chapter describes a possible way forward to handle the forecast freight volumes in the future. The Roads and Highways Department (RHD) has prepared a Road Master Plan (2009) and the plan proposes how the Government will deliver a sustainable transport system, in which the strategic national transport infrastructure is well defined. In respect of the road access to the port, the plan has given due priority to widen Dhaka-Chittagong/Port (N1) road corridor to four-lanes to sustain the country’s economic growth. The N1 is the main road access corridor for HGV freight to and from the port and the Government is planning to construct a parallel road corridor (Dhaka-Chittagong Express Highways) under public-private partnership along the N1 to reduce the handling constraints. In this context, the Port Master Plan emphasises and puts forward the Road Master Plan’s significance for improving of Dhaka-Chittagong road corridor.

Presently, three pairs of container trains are running between Chittagong Port and Dhaka ICD. Bangladesh Railway (BR) has facilitated six paths for container trains which can be increased up to eight paths under the existing infrastructure

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 17 facilities. However, the Railway Master Plan (2009) has recognised that the railway would be in a position to enhance its capacity to cater the increased container handling by the port by more than 10 percent to recapture legacy of BR. The plan has also identified the Dhaka-Chittagong Corridor as strategic national corridors in respect of rail freight. Over the past few years, BR took initiative to improve its railways network including introducing double tracks on the Dhaka- Chittagong railway corridor. The double tracks on the railway corridor have been completed recently and the remaining section, Akhaura – Laksham (72km) is likely to be completed by 2020. It is expected that with the completion of the double tracks the corridor have substantially increased carrying capacity. Additionally, the capacity of the current ICD at Dhaka is not sufficient and the construction of a new ICD is required.

In 2007, a ‘Feasibility Study for Construction of a new ICD near Dhirassram Railway Station’ (Dhaka) was conducted by Chittagong Port Authority financed by the World Bank. The feasibility study suggested the implementation of the project in phases, with the first phase with a capacity of 354,000 TEUs, with a gradual expansion up to 860,000 TEUs. Besides the new ICD, the feasibility study identified the necessity of converting existing Chittagong Port Railway Yard (CGPY) into an off-dock terminal. It is revealed from discussion with Bangladesh Railway, East Zone, Chittagong, that the construction of Dhirassram ICD would be important because of the current physical limitation of the Dhaka ICD. However, with the Dhirassram ICD, the present BR’s capacity of container handling of 80,000 TEUs at Dhaka ICD would then be about 450,000 TEUs.

To reduce the container vehicles’ share on the Dhaka-Chittagong Highway, Chittagong Port Authority (CPA) and Bangladesh Inland Water Transport Authority (BIWTA) jointly constructed Pangaon Inland Container Terminal on the bank of Buriganga River near Dhaka. The terminal would have a storage capacity of 3,500 TEUs of containers and handling capacity of 116,000 TEUs. The capacity could gradually be increased to 160,000TEUs. Besides the Pangaon ICD, BIWTA has planned to establish Khanpur ICT on the bank of Shitalakhya River, Narayanganj with an area of 5.60 hectares and the proposed handling capacity of 80,000 TEUs. BIWTA is contemplating the project under a PPP scheme and did not yet finalise the construction or opening year.

Towards the background of the above prospects, the subsequent sections describe and analyse the existing capacity of intermodal connectivity (rail, inland waterways and road) to carry the Chittagong Port traffic to their respective destinations, which mainly is the region of Dhaka. A consequence of the Port Master Plan is that sufficient hinterland capacities are made available.

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2.3 Rail Capacity

The technological improvement in shipping especially through containerisation, revolutionised ship design, port design, port investments, cargo handling equipment and intermodal facilities (rail, road and inland water transport). Historically, Chittagong Port cargo (bulk and oil), carried by Bangladesh Railway (BR), played an important role in the past. The increased containerisation, the available limited ICD capacity in Dhaka in combination with increased truck transports has led to a point at which the share of railway traffic has diminished. However, on average three pairs of container trains have been moving between Chittagong Port and Dhaka ICD. It could be expected that the handling capacity of existing Dhaka ICD would increase up to 120,000 TEUs by stacking arrangement which needs modern equipment.

To increase the capacity of Dhaka-Chittagong railway corridor, the Government has taken initiative to construct double tracks at the existing single track sections. At present, only Akhaura-Laksham section (72 km) is left for double tracks and it is expected that the line will be ready by 2020. After completion of the section, the capacity will enhance up to 60x2 trains per day as against present Working Timetable No.-50 on the Tongi – Chittagong railway section. Only 23x2 trains a day carry through the section as of today.

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Figure 1: CGPY and Railway Connectivity

Source: KS Consultants Limited

Railway Network with CGPY

At present the railway has a huge port terminal yard (CGPY) consisting of six-line down receiving yard, six-line up dispatch, 16 line down sorting yard and 17 line up sorting yard and sick line for goods stock running maintenance facilities along with a locomotive maintenance shade over an area of about 1.5 square kilometres. The railway yard (CGPY) is located close to Chittagong Port Access Road which is dedicated to carry port traffic. At present, there is rail connection at CCT with two lines accommodating one full train. Similarly, there is a provision for railway connection with two full length rail lines at NCT.

The Feasibility Study for Construction of a new ICD near Dhirassram Railway Station, 2007 recommended for construction of an off-dock container terminal at CGPY in Chittagong. The road connections to CGPY need to be improved and to increase its present capacity the CGPY needs more functional facilities to handle projected container traffic.

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Figure 2: Proposed Conceptual Layout of Rail Off-Dock Container Terminal at CGPY

CONCEPTUAL LAYOUT OF RAIL OFF-DOCK CONTAINER TERMINAL

RAILLINE (PROPOSED AT CGPY) TO PORT

PRESENT CGPY UP MARSHALLING YARD

FENCING 430m 570m

MAINT. OF ENGINES & SICK LINES RTG PATH IN EMERGENCY SMOOTH VEHICLE TO LOCO FOR FUEL LINE & CROSSING - ONLY RLY TRACKS EMERGENCY IMPORT STACK RAIL LEVEL EMBEDED FOR 550 m CROSSING CROSSING RMG (37.5m) 44m to FJT ROW 1 RTG ROAD

140m ROW 2 24m ROW 3 ROAD

GATE R.S. (FOR USE DURING MAINTENANCE & BREAK DOWN) COMPLEX 25m NB: ROW 1 - LOADING EXP. CONT. INTO TRUCKS FROM TRAIN RTG PATH ROAD ROW 2 - PRE-STACKING OF IMPORT CONTAINERS

RTGPATH ROW 3 - TRUCKS BRINGING IMP. CONT. FROM PORT

47m RTGPATH ROAD

FENCING

Source: Feasibility Study for Construction of New ICD near Dhirassram Railway Station, 2007

The Master Plan suggests promoting the increased use of rail freight through the movement of containers traffic including other railway traffic, particularly oil tanker by rail. In this context, Chittagong Port directly needs continuous support of Bangladesh Railway for converting CGPY into an Off-Dock Container Terminal including CFS facilities which also will increase the Port’s space capacity. Besides, dedicated rail terminal facility in the vicinity of the quayside will facilitate the efficient transfer of goods to and from the ships. Apart from this off-dock container terminal, the government should also simultaneously pay attention to construct an Inland a Container Depot (ICDs) at Dhirassram to be supportive to both the port and the railway hand in hand.

2.4 Inland Waterways Capacity

It goes without saying that the construction of ICD at Dhirassram (near Dhaka) and completion of double tracks of the Tongi – Chittagong railway line would reduce the pressure of the Chittagong Port and ease the movement of traffic on the vital Dhaka – Chittagong road corridor. Likewise, the Inland Waterways with ICDs, one established and operational at Pangaon and others are proposed for construction under PPP schemes, which would relieve pressure on land cargo traffic. The joint handling capacities of these ICDs would be approximately 240,000 TEUs (160,000 TEUs of Pangaon ICD and 80,000 TEUs of Khanpur).

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2.5 Road Transport Capacity

The Port of Chittagong is located in the Bay of Bengal, on the east coast of Bangladesh. The port is surrounded on all frontages by the sprawling city of Chittagong, which is the second largest city in Bangladesh. Over the last twenty years both the port and city have experienced phenomenal growth. The city’s growth has been based on high levels of urbanisation and growth in industries and particularly in manufacturing industries. This growth has strengthened challenges for the city in dealing with issues of basic series for the rapid population growth and traffic congestion. As has been mentioned earlier, the present rail and road modal split is 4.4% respectively 95.6% on this transport corridor. This causes traffic and transportation challenges at two levels; one at a local level with traffic capacity and circulation around the Port, and the other at the interregional level, with the available road capacity of the corridor between Chittagong and Dhaka. The Port is located adjacent to the Central Business District (CBD) of Chittagong.

The city frontages as well as commercial area consist of the oldest areas of the port where the Port Authority made significant investments over the past few years to operate multipurpose cargo and container handling facilities. The new facilities in the port are adjacent to two Export Processing Zones (EPZs) and other establishments. The major share of port traffic enters and leaves the Port along the Port Road (because all port gates are located along the road). The road is one of the congested roads in the city and conflicts with passenger vehicles have become a regular feature.

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Figure 3: Map Showing Different Urban Road Connectivity with CGPY

To Dhaka

Road

Port Access Road Access Port

Connecting Connecting

Port Port

Source: KS Konsultants Limited

It is evident from the primary information and collected secondary data that the existing primary road network of the city is insufficiently developed compared to the traffic volume. Additionally, road safety issues which are mainly caused by inadequacy of sidewalks and pedestrian facilities and overall lacks of traffic management need to be solved. The roads performing the functions of primary networks in the city are: Port Road, Patenga Road, Dhaka-Chittagong National Highways, N1 (which is called the Port Connecting Road or Truck Road in the city area and direct connection to the Port), Strand Road, Naval HQ Road, M.A. Aziz Road, SK Mujib Road, Zakir Hossain Road and Arakan Road. Still, JBIC Pilot Study for Project Formulation for Multi-sector Infrastructure Development in Chittagong 2006 suggested constructing an Outer Ring Road (generally known as Coastal Road) having a ROW of 36.58 metre and proposed for widening of existing roads as below:

Widening of Port Road having a ROW of 36.58 metre

Widening of Patenga Road having a ROW of 30.48 metre

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Widening of link road between Patenga Road and Port Road having a ROW of 30.48 metre

Widening of Chittagong Port Access Road. At present, the road is two-lane national highways standard and it will need further widening having a ROW of 30.48 metre

Widening of SK Mujib Road having a ROW of 30.48 metre

Port Connecting Road having a ROW of 30.48 metre

It observed that the suggested road widening works are completely lacking installation of traffic signals, road delineation, road marking and pedestrian facilities. Furthermore, underutilisation of road space is a limiting factor because of illegal parking by freight trucks as well as private car and passenger vehicles. However, the Port Connecting (PC) Road (city portion of Dhaka-Chittagong National Highways, N1 is called PC Road), which is the main connector to the port along the city area. Roads and Highways Department (RHD) is going to complete the city road portion into dual carriageway with eight-lanes which are divided by the Jersey Median Barrier to increase the capacity to carry city traffic and port cargo. In addition, the same department is completing the Dhaka- Chittagong road corridor into four-lane. It could be assumed that the Dhaka- Chittagong road corridor will be completed by end of the year 2015 or early of 2016. It could be mentioned here that the Chittagong Port Access Road (a toll road) which is a 12km road link between the Port and Dhaka-Chittagong Highways at Bangla Bazar near Fouzderhat area. The link has excellent connections to the main port areas and also to the Dhaka-Chittagong Highways to a degree access controlled. However, the Master Plan will give attention to the road sections of (a) PC Road and (b) Chittagong Port Access Road for the capacity analysis and its certainly required expansion investments. In addition, the Plan also pays attention to the capacity analysis of Dhaka-Chittagong road corridor, because both these sections are linked with the road corridor at Bangla Bazar point of Fouzderhat area. The following section will examine the current road capacity and estimated available capacity of the roads years for the years 2020, 2025, 2030 and 2040 respectively.

(a) Existing Road Capacity Analysis

It is already mentioned that the Chittagong Port Access road is a two-lane (7.3m carriageway width where shoulder includes 1.5m and verge with 3.0m) highway. In Bangladesh, traffic operation on a two-lane two-way highway is unique because of the driving behaviour pattern. Lane changing and overtaking possibly occur only in the face of on-going traffic in the opposite lane. The overtaking

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 24 Strategic Master Plan for Chittagong Port – Final Report, Part 3 demand increases rapidly as traffic volume increases, while passing opportunities in the opposing lane decline as volume increases. Therefore, flow in one direction influences flow in the other direction. The problem is more acute in case of mixed traffic flow when speed differential among different categories of vehicles is quite substantial and alarming. Roadway factors that influence capacity of a two-lane road include lane width, gradient, lateral clearance, width and type of shoulder. It is observed that the Chittagong Port Access road is being constructed as national highway’s standard and mainly less curve with about zero gradients. In respect of the road characteristics, it could be assumed that the road capacity is up to 3,002 Passenger Car Unit (PCU)/hour. The Geometric Design Standards for Roads and Highways Department in 2000 estimated the PCU value for medium truck is 3.0 but there is no value estimation for articulated truck. However, the Chittagong Port Access road has a capacity of about 1,000 trucks per hour under the existing situation but needs regular maintenance. Moreover, the Report of Highway Design Review and Technical Matters by Roads and Highways Department in 2000 estimated the road capacity of 16,000 per day.

In the case of Port Connecting (PC) Road (the city section of Dhaka – Chittagong National Highways, N1), Roads and Highways Department (RHD) is going to complete eight-lane dual carriageway to make available for growing city traffic and port traffic. Therefore, it would be expected that the upgraded road will make it possible to carry at least 75,000 vehicles per day in the case of mixed traffic flow. However, the PC Road needs proper traffic management, for instance, signalised intersection, road marking and delineation, pedestrian facilities, and taking away of road side illegal parking.

To enhance the existing capacity of Dhaka – Chittagong road (Daudkandi- Chittagong section), the Government has decided to upgrade the highway to a two dual lane (four-lane) carriageway to accommodate present traffic demand as well as future traffic growth, capable of transporting heavy container traffic from the Port of Chittagong to the capital of Dhaka. It could be expected that the upgrading works will be completed in early 2016. Based on the traffic count survey in 2009, 20,000-25,000 motorised vehicles – up to 40% of them trucks – use the highway each day (Roads and Highways Department, 2009). In 2012, the Asian Development Bank (ADB) estimated that the number of motorised vehicles will grow to at least 35,000 in 2020, 48,000 in 2025, 66,000 in 2030, and to more than 119,000 in 2040, depending on the section and selected scenario for the traffic forecast. The 2009 traffic count survey indicated that the capacity of the existing two-lane highway is already saturated; the capacity of four-lane highway under construction is expected to be saturated by the early of 2025 because of the mixed traffic characteristics. In this context, the Government is promoting an Access

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Controlled Dhaka – Chittagong Expressway parallel to the existing one to accommodate future demand of traffic.

(b) Planned Future Road Capacity

It has been mentioned that the Roads and Highways Department (RHD) are in the process of improving the Port Connecting (PC) Road into eight-lanes. The road capacity would be about 75,000 vehicles per day. This would be one of the busiest city roads with a traffic character likely to be with a mix of slow and fast moving vehicles. The Chittagong Port Access Road has the capacity to carry 16,000 vehicles per day and it is mainly dedicated to carry trucks. The Dhaka – Chittagong Highway (N1), which will soon be a four -lane dual carriageway, will have a capacity to carry up to 38,000 vehicles per day. The share of trucks on the road is about 40% of total vehicles and it could be assumed that about 60% of trucks are from Chittagong Port.

Therefore, the road can share its space with port traffic which is about 8,000 per day. The estimated combined capacity of PC Road and Chittagong Port Access Road are estimated to be sufficient. The concern comes from the Dhaka – Chittagong Highway (N1) road capacity, where the four–lanes capacity is estimated to be saturated before 2025. The following Table 1 shows the Dhaka bound projected traffic and Dhaka – Chittagong National Highways, N1 capacity. It could be noted that the construction of Access Controlled Dhaka-Chittagong Expressway would likely add 2.5 million TEUs capacity with an existing four- lane road.

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 26 Strategic Master Plan for Chittagong Port – Final Report, Part 3

Figure 4: Map Showing Dhaka – Chittagong Highway

Table 2: Planned Dhaka – Chittagong Road Capacity

Year Yearly Projected Container Projected Road Capacity to Dhaka in million TEUs in million TEUs 2020 1.89 2.4 2025 3.08 2.5 2030 3.57 2.5 2040 3.78 2.5 Source: KS Consultants Limited

2.6 Summary of Findings

The Chittagong Port Master Plan recognises the need for an integrated planning among road, rail, waterways and cargo handling operations. The plan also proposes and recommends:

Construction of ICD at Dhirassram near Dhaka,

Construction of Off-Dock Container Terminal at CGPY,

Construction of Khanpur ICT,

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Immediate operation of Pangaon ICD,

Completion of Akhaura – Laksham railway section into double track,

Promotion of Access Controlled Dhaka – Chittagong Expressway,

Rail and road connectivity for BCT for easy handling of port traffic.

Chittagong Port has been identified by the Government as a key (in essence only) international gateway which is a major component of the nation’s transport system that is critical both to the functioning of that transport system, and the economic success of the country. The principal component of cargo flows moving to and from the port over land is containers. Currently around 95.6% of 70% of containers are transported to Dhaka by road; rail moves around 4.4% of 70% and water transport is altogether absent as of today.

Considering the future, it is essential to establish connectivity across all modes and an integrated planning. Within the given context, the Port Master Plan is believed to be important to increase the use of rail and waterways as well as maintaining effective road connections. The port’s expectation is to increase the railway’s share of containers to more than 10% by 2025 to keep sustainability of the present Dhaka – Chittagong National Highway. The following sections discuss the transport modes’ capacities and its future options to carry to and from Dhaka Region’s container traffic in tabular form and graphical presentations.

Table 2: Planned Dhaka – Chittagong Road Capacity

Year Projected Container of Projected Container in Chittagong Port in million million TEUs to and from TEUs Dhaka 2020 2.7 1.89 2025 4.4 3.08 2030 5.1 3.57 2040 5.4 3.78 Source: KS Consultants Limited

The Master Plan has projected the container traffic to 2.7, 4.4, 5.1 and 5.4 million TEUs for the year 2020, 2025, 2030 and 2040 respectively. However, a total of 30% traffic will take place to and from Chittagong Regions. Therefore, Dhaka’s

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 28 Strategic Master Plan for Chittagong Port – Final Report, Part 3 expectation to and from container traffic may be 1.89, 3.08, 3.57 and 3.78 in million TEUs in the year 2020, 2025, 2030 and 2040 respectively.

Figure 5: Projected Container & Container to Dhaka

Table 3 below shows the existing share and planned capacity of road, rail and waterways. It is important to mention here that without construction of the Dhirassram ICD and the Off-Dock Container Terminal at CGPY, the rail capacity will remain at a level of annually 0.12 million TEUs. Besides, with the immediate operation of the Pangaon ICD (which is ready for operation), the share of container transport by waterways will remain nil. As a result, the existing Dhaka – Chittagong Highway (N1) is estimated to experience large capacity problems.

Table 3: Planned Dhaka – Chittagong Transport Corridor Capacity

Year Road Capacity in Railway Capacity Waterways Capacity million TEUs in million TEUs in million TEUs 2020 2.4 0.12 0.16 2025 2.5 0.47 0.24 2030 2.5 0.98 0.24 2040 2.5 0.98 0.24

Source: KS Consultants Limited

It is estimated that the existing four-lane road capacity of Dhaka – Chittagong Highway will come to an end before 2025. The capacity of the implemented and planned inland water based ICD and ICT will also remain at 0.24 million TEUs and come to an end in 2025. However, the Government and the implementing agencies need to dramatically increase the rail share.

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Figure 6: Capacity of Road, Rail and Waterways

Table 4 below shows the combined capacity of all modes of transports along the Dhaka – Chittagong corridor. It can be observed that all the identified transport components as well as ancillary facilities are to be developed and operated timely, because this is the only way to sustain port operation efficiently. If there will be any delay at implementing rail and water based infrastructural facilities, it may demand urgent completion of Access Controlled Dhaka – Chittagong Expressway.

Table 4: Projected Container Traffic and Transport Corridor Capacity

Year Projected Container Traffic Transport Corridor capacity to/from Dhaka in million TEUs in million TEUs 2020 1.89 2.68 2025 3.08 3.21 2030 3.57 3.72 2040 3.78 3.72

Source: KS Consultants Limited

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Figure 7: Projected Capacity of available Transport Modes

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3. ENVIRONMENTAL ASSESSMENT OF PROPOSED DEVELOPMENT PROJECTS

3.1 Introduction

The Terms of Reference (ToR) envisage that a preliminary environmental assessment is carried out as part of the Technical Assistance for formulation of the Strategic Master Plan of Chittagong Port. In this context, the study will follow the ADB’s policies and procedures in preparation of an Initial Environmental Examination (IEE) and safeguard policy statement along with Bangladesh legal and policy framework for environment issues. The IEE will contribute to the understanding of the impacts of port development under possible development scenarios and recommend measures strengthening the sector in order to reduce impacts and manage the sector in an environmentally and socially sustainable manner.

3.1.1 Objectives

The IEE constitutes a first step in the scoping of potential environmental impacts of a wide range of possible interventions proposed in the Port Master Plan. The overarching aim is to avoid any major potential adverse impact and thereby promote environmentally sound and sustainable development.

The overall objectives of the IEE include the following:  To provide baseline information about the general environmental settings of the development area, normally from an analysis of existing data;  To investigate the significant beneficial and adverse impacts of the Master plan on the natural and human environment;  Preliminary assessment of the impacts of project options, their significance and the potential for reducing negative impacts by mitigation measures;

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 To assess the best alternative projects with the most benefits and the least cost in terms of social and environmental considerations;  Formulating environmental management and monitoring plans;  Determining the type of further environmental analysis required, considering legal requirements and the scale of likely impacts;  Devising the scope of future environmental analysis, on the basis of legal requirements, likely sensitive issues, and any deficiencies in the data available. IEE is carried out in the early stage of the project before designs are prepared, when the detailed nature of the project has not been determined. It is, therefore, a preliminary analysis, and existing conditions, environmental impacts and mitigation measures are described in broad terms only. These are all considered in more detail in the subsequent EIA, if this is shown to be necessary.

3.1.2 Methodology  A desktop review. All available reports was initially undertaken to familiarize the team with the Port development proposal and associated development issues, previous investigation and environmental and social features at potential port sites. Key reports that were reviewed included: - Draft Final Report, Part 2, Strategic Master Plan for Chittgaong Port prepared by Hamburg Port Consulting et al (March 2015) - Environment and Social Management Framework, Bangladesh Trade and Transport Recipient Executed Trust Fund (RETF), January 2014 - Technical Assistant Consultant’s Report, Chittagong Port Efficiency Improvement Project, ADB, March 2008 - Draft Final Report, Chittagong Port Trade Facilitation Project (ADB TA- 4136-BAN), prepared by TERA et al , June 2004 ADB Chittagong - EIA Report, Feasibility Study for Multilane Road Tunnel under the Kharnaphuli River, Chittagong prepared by DevConsultants Ltd, June 2014 - EIA Report, Coastal Road Construction and Embankment Strengthening Project financed by JICA, December 2008  Field Investigations and consultation. Conducted between late February and May 2015, involving: - Kick -Off Meeting With Concerned CPA Officials - Identification of main stakeholders - Site reconnaissance and Field visit to various route of proposed physical works (Bay Terminal, Laldia, Chittagong Port with NCT, CCT and GCB) due to proposed Master plan interventions to observe the site-specific

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environment concern and to get perception within and vicinity of the route. - Baseline information were collected during field works. These were used to describe the relevant physical, biological, social and economic environment against which the impacts of the projects were evaluated. - Social surveys and stakeholder engagement at Bay terminal and Laldia, including: interviewing each household within or immediate adjacent to the project site; interviewing community representatives  Identification, Prediction and Evaluation of Impacts. This IEE has employed an Environmental Screening Checklist, drawn up for the Port development according to ADB Rapid Environmental Assessment (REA). The screening checklist was used to identify, predict and evaluate the change over time in the natural and human environment conditions as a result of implementing the Master Plan.  The output of the screening process was a matrix that identifies the most significant beneficial or adverse environmental impacts of each project category, whether direct or indirect.  Integration. This IEE investigates the potential consequences of implementing the Master Plan both on natural and human environments. It examines any direct or indirect cause effect relationships between the biophysical and socio-economic impacts, taking note that and insignificant direct impact on one aspect may have the potential to cause a significant indirect impact on the other aspect.  Mitigation. The IEE includes proposals in order to reduce or control, if not eliminate, the identified significant adverse impacts. These measures include technical (such as the choice of location or project design), social (such as compensation or resettlement) and other means by which to restore the environmental conditions to pre-project levels. The aim is to ensure that none is worse off as a consequence of the intervention.  Environmental Management and Monitoring. The IEE includes an analysis of the adequacy of institutional mechanisms for managing environmental effects of the projects. The IEE also includes monitoring arrangements to track the progress in actually carrying out the mitigation measures and alert decision makers to the need for new measures to address any unforeseen or residual impacts.  Tiering. The IEE report contains recommendations for the conduct of detailed follow-up impact assessment prior to implementation of the proposals. The appropriate project-level assessment will depend on the environmental

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requirements of the funding agency and, as necessary, the impact assessment requirements under the GOB EIA system.

3.2 Strategy for Chittagong Port Master Plan

3.2.1 Key Issues

Chittagong Port will increase its container-handling capacity in coming years, once the new mooring container terminal is fully operational. The terminal is located directly west of the existing facilities of Chittagong Container Terminal and will be managed by a private operator under a public–private partnership scheme. Expansion of the port on the northern bank of Karnaphuli River is constrained by the city; in particular, road and rail traffic bound for the port has to pass through the city of Chittagong. Land for port expansion is available on the southern bank of Karnaphuli River, but connectivity to these areas is poor and the consequences of developing port facilities on siltation need to be studied.

Supporting the development of Chittagong Port and improving integrated landside hinterland transport to reduce trade logistic costs for transport services are key objectives of the transport policies outlined in the government’s Sixth Five-Year Plan (2011–2015). The government further recognized the importance of integrated intermodal systems under the draft Integrated Multimodal Transport Policy. Port development provides significant opportunities for improvement of intermodal transport systems and logistics services, hence boosting efficiency of economic activities. Port development also provides opportunities for expansion of regional trade with Bhutan, India, and Nepal.

All previous development plans for Chittagong Port are outdated (the latest Chittagong Port master plan covers the period 1995–2010) and do not consider the recent upgrades of maritime and landside infrastructure, and improvements in port efficiency, e.g., through the recently introduced container terminal management system or the opening of Chittagong Port to transit traffic. Apart from coping with rising demand, there is an urgent need for expansion of port facilities to cope with rising demand and provide specialized facilities for bulk cargo; private investors are approaching Chittagong Port Authority for permission to develop new port facilities such as jetties, new port basins, and warehouses.

To address these ongoing and anticipated developments in demand for and in access to the port, and to ensure continuous sustainable growth for Bangladesh’s economy, a new master plan for strategic development of Chittagong Port shall be prepared, providing a long-term vision for the development of the port with a planning horizon of 25-30 years. Improving the overall capacity of Chittagong

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Port will help to maintain sustainable economic growth in Bangladesh by ensuring access to international markets. This has a direct impact on poverty reduction in Bangladesh by providing employment opportunities during design, construction, and operation and maintenance of the port facilities, in activities related to trade and trade facilitation, in the transport sector, and in export-oriented industrial production.

3.2.2 Vision and Mission

The Chittagong Port Master Plan presents a vision for future operations at the port by reference to developments in merchandise trade and key sectors of the economy. It also examines the existing land utilization at Chittagong Port and suggests some options for future development of the port to facilitate and be able to handle the forecast volumes to 2043. The Master plan will facilitate Chittagong Port Authority to outline some of the options that are available to increase efficiencies and to provide additional throughout capacity at the port to cater for the projected growth in port tonnage over the next 25-30 years.

The Master Plan intends to prepare a phased plan of port development based on different scenarios includes among others hinterland access, navigability, intermodal connectivity at the port (road, rail and inland water ways), development of terminals and jetties.

3.2.3 Port Development Alternatives

HPC proposed several options for port capacity development, inside the existing perimeter of the public port as well as outside, along the River Karnaphuli and at the shore line of the Bay of Bengal.

Regarding the future development, the Consultants analysis underline the importance to establish regular container handling operations in Port of Chittagong, provided by operators that are rewarded long or mid-term concessions. Regular container handling operations shall include the stacking of export containers before commencement of loading operation – this is a condition to achieve acceptable vessel turn-around times.

Stacking of all export containers, full or empty, requires more slot capacities in the port than currently available. It is necessary to increase the yard capacity in all parts of the port (NCT might be the exemption as it is not fully developed yet) in order to meet the installed quay handling capacity.

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As the vast majority of export containers is currently directly loaded from external trucks, the increase of the yard capacity will not yield a proportional increase of the terminal capacity. The gain of yard expansion will be in the vessel turn-around time, not in nominal throughput capacities.

In order to establish regular container handling operations at the current container terminals in Chittagong Port, the following measures are proposed:  CPA must its current practise of berth assignment, so the terminals and operators could be free to compete for vessel calls, including a liberalisation of the port tariff,  Establish container terminal concessions for the operation of the different container terminals with the aim to improve handling productivity,  The NCT Container Terminal needs urgently to be equipped with STS Gantry Cranes as the basis for standard terminal handling capacities and performance. At least the first batch of six STS should be purchased by CPA. With a lead time of 24 months, action needs to be taken immediately,  The CCT Container Terminal needs to be upgraded and additional stacking capacity is needed in order to establish independent operations at CCT. This a pre-requisite to enable an independent concession for the terminal,

To meet the forecast future large increased container volumes, it is important to first identify the requirements for the new terminals in form of a gap analysis .The gap analysis compares the already installed container handling capacities (plus some improvement potential) of the existing container terminals with the future container handling volumes gained from the traffic forecast.

The carried out gap analysis is based on the following assumptions:  CCT will increase its current annual handling capacity of 520,000 TEUs by 1% each year by improvement measures  NCT will increase its current annual handling capacity of 400,000 TEUs to 700,000 TEUs after completion of NCT1 in 2017 and from thereon by 1% each year by improvement measures  Up from 2017 onwards another 300,000 TEU annual handling capacity (NCT2) will be available, also increasing by 1% each year by improvement measures  GCB will maintain its current annual handling capacity of 850,000 TEUs.

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To meet the forecast increasing container volumes the following recommendations are made:  The fastest way of increasing the handling capacity in the port would be the transition of parts of GCB area into a full independent container terminal that can be licensed to a private operator. The transition should be realised at berths 10 to 13 (Karnaphuli Container Terminal , KCT 1). The KCT 1 Container Terminal is planned to have a capacity of 770,000 TEU.  To be able to provide the required container terminal capacity, the KCT 1 needs to be in operation 2020, according to the gap analysis. It is recommended to immediately start with the planning of this terminal.  Parallel with these activities, it is also recommended to immediately start with the planning of the new Bay Container Terminal which will be required from 2023 to meet the forecast container volumes with a capacity of 2.8 million TEU.  It is estimated that between 2018 and 2022 there will be a capacity lack (751,000 TEU) which have to be compensated by temporary measures. It is proposed to use feeder barge system that has been introduced in the port of Hamburg in order to unburden the container terminals in peak situations.

For the future handling of general cargo and break bulk it is recommended to develop a new Multi-Purpose Terminal (MPT) facility to be able to handle these terminals. The new terminal facility should be able to handle up to 4.7 million tonnes of non-containerised import cargo until 2043. The proposed concept foresees that six berths are required with a length of 1,475 meter at the current berths 4-9. A new 1,475 meter long quay wall shall be constructed, which will follow the existing alignment of GCB berths. The new quay wall is proposed to be constructed as concrete deck on piles, similar to the NCT berths. This type of construction is widely used in Bangladesh and is adapted to local unfavourable subsoil conditions.

Figure 8, Figure 9 and Figure 10 show the general layout of KCT1, CCT and MP Terminal.

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Figure 8: Karnaphuli Container Terminal 1- General Layout

Source: HPC and Sellhorn 2015

Figure 9: Enhancement CCT Terminal –General Layout

Source: HPC and Sellhorn 2015

Figure 10: Multipurpose Terminal Layout-

Source: HPC and Sellhorn 2015

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3.2.4 Other Alternatives

Several ideas for alternative developments of a container terminal in and around Chittagong have been expressed by CPA, among them  Patenga Container Terminal at the right bank of the Karnaphuli River, would be too close to the airport which could lead to height restrictions for container cranes, thus not being viable.  River Terminal at the opposite side of the Karnaphuli River towards the estuary of the river completely lacks infrastructure, without any road or rail connectivity to Chittagong and Dhaka and is therefore not considered as feasible.  Bay Terminal, located at the seaside approx. 8 – 10 miles north of the estuary. It would be located next to the Port Link Road, connecting the N1 highway to Dhaka with the existing port. The railway line Chittagong – Dhaka is within close vicinity. The draft restrictions would be only slightly better than at the existing port, but LOA restrictions due to the navigability of the river would no longer apply. Thus the Bay Container Terminal could handle larger vessels of the panamax and post-panamax type, i.e. fourth generation with up to 5,000 TEU.

Due to its location the Bay Container Terminal (BCT) would technically be more feasible than the other sites and thus could be seen as the favourite alternative to KCT.

The physical location of BCT is shown below.

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Figure 11: Possible Location of Bay Container Terminal

Source: Google Earth/HPC, 2014

The possible footprint of the new Bay Terminal, measuring up to 2,500m quay length and up to 1,000m depth of land is also already shown on the figure above. This would lead to a total area of up to around 250ha.

As the terminal would be located directly at the seaside, nautical access is given without entering any river or channel. Landside access would be possible via the Port Link Road that would connect the terminal with the N1 highway to Dhaka as well as with Chittagong Port.

As shown on the picture above, a noteworthy part of the area for the new terminal has to be reclaimed from the sea. The existing part of land and its surroundings are shown below.

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Figure 12: Areas of Possible Bay Container Terminal

“Bay Terminal Area” towards waterside “Bay Terminal Area” towards landside

Port Link Road directly behind the area Railway line Chittagong – Dhaka within vicinity

Source: HPC 2014

3.2.5 Potential Development of the Bulk and Cargo Terminals

As container operations extend more and more into the GCB zone, compensation areas must be developed to accommodate the amount bulk and general cargo forecast in the future.

For the development of a new bulk and general cargo terminal CPA owns a piece of land on the right bank of Karnaphuli River at Laldia Char between Khal no. 14 and Khal no. 15. The said area is located next to the ICD operated by Incontrade. The other neighbour down south is the Navy. In between these facilities CPA would be able to develop a jetty of 1000 m length and paved area of an average depth of a 275 m. Thus the total area would be 27.5 ha (~68 acres). Laldia is located next to the road which connects the airport to downtown Chittagong. The area shown in the picture below is presently occupied with housings, which are said to be illegal.

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Figure 13: Location of a potential Laldia Terminal

Source: Google Earth, 2014 Source: HPC, April 2014

Figure 14: Location Laldia Area

Source: Google Earth 2014

Laldia is located between the airport road and the river. Available space for potential terminal width is limited to about 200 to 250m, which would be too narrow for the development of a container terminal.

The terminal would be situated very close to the airport which would lead to height restrictions for container cranes. Height restrictions might be overcome by

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 43 the utilisation of low profile STS with extendable boom. These cranes, however, are more expensive than the “standard” STS cranes.

The area is currently occupied by illegal settlements. Construction of a new terminal would imply the resettlement of those people, which might raise social and political issues.

3.3 Legal and Regulatory Framework

The implementation of various components of proposed ‘Strategic Master plan of Chittagong Port’ will be governed by Government of Bangladesh (GoB) Environmental Acts, Rules, Policies, and Regulations. Table 1 summarizes the applicable national and local laws, regulations for environment and social aspects.

Table 3: Summary of Government Legislation applicable to the Project

Legislation Responsible Agency Relevance Environment Ministry of Environment and The provisions of the act Conservation Act 1995 Forest apply to all of the and subsequent Department of Environment components of Master amendments in 2000 [DOE] Plan interventions in the 2002 and 20101 construction and operation stages Environment Ministry of Environment and Master Plan components Conservation Rules Forest will be classified as (i) 1997 and Subsequent Department of Environment orange–B, and, (ii) red. amendments in 2002 [DOE] All requisite clearances and 2003 from the DoE shall be obtained prior to commencement of civil works on ground Environment Court Act Judicial Court Provision for the 2010 Ministry of Environment & establishment of an Forests Environmental courts and amends the prevailing act to accelerate punishment of environment related

1 ECA Amendment 2000 focuses on ascertaining responsibility for compensation in cases of damage to ecosystems, increased provision of punitive measures both for fines and imprisonment and the authority to take cognizance of offences. ECA Amendment 2002 elaborates restrictions on polluting automobiles; restrictions on the sale, production of environmentally harmful items like polythene bags; assistance from law enforcement agencies for environmental actions; break up of punitive measures; and authority to try environmental cases. In ECA Amendment 2010, no individual or institution (government or semi-government/non-government/self governing can cut any hill or hillock; fill-up or changed any remarked water body however in case of national interest; the mentioned activities can be done after getting clearance from respective the departments.

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Legislation Responsible Agency Relevance crime. The Forest Act, 1927 Ministry of Environment and Various components of and subsequent Forest Master Plan interventions amendments in 1982 will be in line for the and 1989 conservation and Protection of forests. Bangladesh Wild Life Ministry of Environment and Incorporated in the (Preservation) Act, Forest various components of 1974 Master Plan selection criteria Water Supply and Ministry of Local Regulate the management Sanitation Act 1996 Government, Rural and control of water supply Development and and sanitation in urban Cooperatives areas The Protection and Department of Fishery Water source selection Conservation of Fish will be in line for the Act 1950 and conservation and subsequent Protection of fishes in amendments in 1982 surface water bodies; National 3R (Reduce, Department of Environment, Construction related reuse, recycle) Ministry of Environment and waste management for Strategy for Waste Forest all civil works Management, 2010

Bangladesh Labour Ministry of Labour Provides for safety of Act 2006 work force during construction period. The Land Acquisition Ministry of Land Incorporated in the Act 1894, and The various components of Acquisition and Master Plan selection Requisition of criteria Immovable Property Ordinance 1982 and subsequent amendments in 1994, 1995 and 2004

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Relevant National Policies

During recent years a number of national policy documents have been prepared and where accepted by GOB. These policy initiatives, strategies and plans all emphasize consideration of the environment and natural resources in order to achieve sustainable development. During environmental assessment, mitigation measures to be designed for adverse impacts must ensure that they are not against these policies but to promote them. A summary of the major relevant policy documents prepared is given in Table 2.

Table 4: Relevant Major Policies

Policy Responsible Agency The National Water Policy Ministry of Water Resources (1999) National Policy for Arsenic Ministry of LGRD&C Mitigation 2004 Ministry of Health Ministry of Agriculture National Land Use Policy Ministry of Land (2001) National Forestry Policy Ministry of Environment and and Forest Sector Review Forest (1994, 2005) National Biodiversity Ministry of Environment and Strategy and Action plan Forest (MOEF) (2004) National Fisheries Policy Ministry of Fisheries and (1998) and Inland Capture Livestock Fisheries Strategy (2004) National Agricultural Ministry of Agriculture Policy, 1999 Coastal Zone Policy 2005 Ministry of Water Resources Draft Wetland Policy, 1998 Ministry of Environment and Forest Bangladesh Climate - Ministry of Environment and Change Strategy and Forest Action Plan (2009)

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Port relevant Policies/Acts for Environmental Management a) The Chittagong Port Authority Ordinance 1976

This ordinance has established the role, powers and function of the Port of Chittagong as an Authority but contains no environmental controls.

Penalty for Pollution

‘Any person who throws or allows to fall into water, shore, bank or land within the limits of the Port any goods, ballast, ashes or any other things whatsoever causing pollution of the water or environment shall be punishable with fine which may extend to one lakh taka’. b) Inland Shipping Ordinance 1976 and Inland Shipping (Amendment) Act 1990

This deals with the administration, registration, competency and so on of inland water transport. The parent law will be amended to contain a substituted chapter heading:

Chapter V: Protection of Vessels and Passengers and Environment with insertion of a new section:

57B. Prevention of Pollution: No person shall, by discharge from inland ship or inland ship facility or inland ship activity, cause pollution of inland water. c) Bangladesh Merchant Shipping Ordinance 1983

Which deals with the administration, registration, competency and of merchant vessels and their officers but contains no environmental controls d) Marine Pollution Ordinance 1977

Provides control for oil or pollutants discharged, spilled or dumped into Bangladesh water from ships, ship transfer to land, ports, exploration of seabed, pipelines and offshore installations. It proposes the establishment of spill contingency plans without detailing the way in which this might function. e) Rules for the Environmental Control on Inland Water Transport 1997

Applied to inland water and waterways throughout Bangladesh which are categorized as navigable by inland water transport, and to all waters served by inland water transport including ports and the approaches to ports. The proposed Rules control impacts from all inland water transport, ports, ship-related facilities

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 47 and ship related activities for the protection of inland water in regard to air emissions, handling and storage of harmful materials, solid and liquid waste discharges, dredging, and disposal of dredged sediments. f) Rules for Inland Ship Safety 1994

Under the Department of Shipping (DoS) Institutional Development Action Plan as part of the implementation plan for establishing an Inland Ship Safety Administration (ISSA) within DoS. Chapter II (Classification of Dangerous Goods), Chapter VIII (Carriage of Dangerous Goods on Inland Ships) which specific stowage and precautionary measures to be taken during loading and unloading are relevant port handling of cargoes, but other than this Rules contains no environmental controls

International Treaties

Bangladesh has signed most international treaties, conventions and protocols on environment, pollution control, bio-diversity conservation and climate change, including the MARPOL Convention on prevention of pollution from ships, , Ramsar Convention, the Bonn Convention on migratory birds, the Rio de Janeiro Convention on biodiversity conservation and the Kyoto protocol on climate change. An overview of the relevant international treaties and conventions signed by GOB is shown in Table 5

Table 5: Relevant International treaties, conventions and protocols signed by Bangladesh

Treaty or In Brief Description Responsible Convention Agency MARPOL 2002 The International Ministry of Convention Convention for the Shipping Prevention of Pollution From Ships, 1973, as modified by the Protocol of 1978 (MARPOL 73/78), was promoted by the international Maritime Organization (IMO) to prohibit all ships from discharging wastes at sea which could result in pollution of the marine Ramsar 1971 Protection of wetlands Department of Convention Environment/ Department of Fisheries

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Treaty or In Brief Description Responsible Convention Agency CITES Convention 1973 Ban and restrictions on Department of (Washington) international trade in Environment/ endangered species of wild Department of fauna and flora Fisheries Prevention and 1974 Protect workers against Ministry of Health Control of occupational exposure to and Family Occupational carcinogenic substances Welfare hazards and agents (Geneva) Occupational 1977 Protect workers against Ministry of Health hazards due to air occupational hazards in the and Family pollution, noise & working environment Welfare vibration (Geneva) Occupational 1981 Prevent accidents and Ministry of Health safety and health injury to health by and Family in working minimizing hazards in the Welfare environment working environment (Geneva) Occupational 1985 To promote a safe and Ministry of Health Health Services healthy working and Family (Geneva) environment Welfare UN framework 1992 Regulation of greenhouse Department of convention on gases emissions Environment/ climate change Ministry of (Rio de Environment and Janeiro) Forest Prevention and 1974 Protect workers against Ministry of Health Control of occupational exposure to and Family Occupational carcinogenic substances Welfare hazards and agents (Geneva) Occupational 1977 Protect workers against Ministry of Health hazards due to air occupational hazards in the and Family pollution, noise & working environment Welfare vibration (Geneva) Occupational 1981 Prevent accidents and Ministry of Health safety and health injury to health by and Family in working minimizing hazards in the Welfare environment working environment (Geneva) Occupational 1985 To promote a safe and Ministry of Health Health Services healthy working and Family (Geneva) environment Welfare UN framework 1992 Regulation of greenhouse Department of convention on gases emissions Environment/ climate change Ministry of

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Treaty or In Brief Description Responsible Convention Agency (Rio de Environment and Janeiro) Forest Prevention and 1974 Protect workers against Ministry of Health Control of occupational exposure to and Family Occupational carcinogenic substances Welfare hazards and agents (Geneva) Occupational 1977 Protect workers against Ministry of Health hazards due to air occupational hazards in the and Family pollution, noise & working environment Welfare vibration (Geneva)

3.3.1 Environmental Requirements for Port Development Project

Under the Environmental Conservation Rules (1997) a classification system was established for development projects and industries on the basis of the location, the size and the severity of potential pollution. There are four categories of projects: Green, Orange A, Orange B and Red with respectively No, Minor, Medium and Severe Environmental Impacts. For the Red category of projects a full EIA is required. There is no categorization of Port and Harbour Development’ in Schedule 1 of ECR 97’. Under the Engineering works: capital above ten (10) hundred thousand (one million) taka in serial no. 60 fall in the ‘red category’. Estimated cost of the various components of Port development is above one million taka, and as such it falls within ‘Red category’ projects. Depend on the size and length of the projects which would be proposed in the Master Plan, IEE or EIA need to be conducted. However, the master plan will conduct IEE for selected projects and would be documented in the master plan. The master plan will recommend for conducting a full-scale EIA for ‘Red Category’ projects. The EIA should include the prediction, evaluation and mitigation of environmental impacts caused, based on the characteristics of project, and an Environmental Management Plan (EMP) shall be prepared. The approval of the EIA and EMP is required before submitting an application for an Environmental Clearance Certificate (ECC). The procedure for ‘red category’ projects is shown in Figure 15.

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Figure 15: Steps to be followed for Environmental Clearance Certificate for Red Category Project

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3.3.2 Environmental and Social Requirements of the ADB

ADB requires the consideration of environmental issues in all aspects of its operations. ADB’s Safeguard Policy Statement, 2009 (SPS, 2009) sets out the policy objectives, scope and triggers, and principles for three key safeguard areas: (i) environmental safeguards, (ii) involuntary resettlement safeguards, and (iii) Indigenous Peoples safeguards. ADB adopts a set of specific safeguard requirements that borrowers/clients are required to meet in addressing environmental and social impacts and risks. Borrowers/clients comply with these requirements during project preparation and implementation. For this, ADB Guidelines categorizes the proposed components into categories (A, B or C) to determine the level of environmental assessment required to address the potential impacts. According to ADB Safeguard Policy Statement (2009) and Operational Manual F1 (2010), the Port Development Project is classified as category “A” and therefore an EIA is required for the Project. As this is preparation of master plan stage, an Initial Environmental Examination (IEE) is to be prepared to address the potential impacts.

3.3.3 Standards, Guidelines, and Good Industry Practice

Project design and the EIA shall comply with the following standards, guidelines and good international industry practice (GIIP).

World Bank/IFC Guidelines and Performance Standards

Project design and EIA preparation shall take into account World Bank Group (WBG) and IFC guidelines and performance standards, including, but not limited to:  IFC Performance Standards on Environmental and Social Sustainability2 (IFC, 2012);  Environmental Health and Safety (EHS) General Guidelines (WBG, 2007); and  EHS Guidelines for Port and Harbour, and Terminals (WBG, 2007);

2 IFC Performance Standards and World Bank Group EHS Guidelines

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The EIA shall be prepared in accordance with all IFC Performance Standards (PS). Specific PSs that are known to apply to this development regardless of the site selected within Master Plan interventions area:  PS1: Assessment and Management of Environmental and Social Risks and Impacts  PS2: Labor and Working Condition  Resource Efficiency and Pollution Prevention  PS4: Community, Health, Safety and Security  PS5: Land Acquisition and Resettlement

Good International Industry Practice

The design, construction and operation of the Port shall comply with good international industry practice (GIIP) through the incorporation of impact avoidance and management measures into each Project phase. The EIA shall identify and specify relevant GIIP to avoid and manage environmental and social risks and impacts associated with Port design, construction and operation. GIIP that requires consideration is provided by the following organisations:  International Maritime Organization- (IMO)-regime if shipping  International Association of Ports and Harbours (IAPH)  World Dredging Association (WODA);  United Nations Environment Program (UNEP);  American Association of Port Authorities- (AAPA)- Environmental Management Handbook; and  European Seaports Organization- Green Guide

While Bangladesh has yet to ratify the main IMO Conventions or implement them nationally through domestic law, the Port will be planned, built and operated to fully comply with all relevant IMO conventions, standards and guidelines, consistent with GIIP and IFC’s PSs and guidelines.

3.4 Baseline and Situation Analysis

3.4.1 Introduction

The objective of the baseline analysis is (1) to identify key environmental and social issues in master plan port development area to provide a basis for the

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 53 selection of project priorities; and (2) to collect and collate data that can be used to inform the scenario analysis and the assessment of environmental and social impacts of Chittagong port master plan. During IEE preparation, the team collected a wide range of baseline information and data relevant to the implementation of Chittagong port master plan.

The following section provides a summary of the baseline environmental characteristics that were identified during scoping and taken into account during the assessment of the Chittagong Port Master Plan Strategic Options.

3.4.2 Overview of the Study Area

In general, the study area as shown in Figure 9, covers inside the existing perimeter of the Chittagong port as well as outside, along the River Karnaphuli and at the shore line of the Bay of Bengal. The influence area (impact zone) for the Environmental Assessment is the area directly affected by the development of the Port Master Plan and the immediate surroundings where development could be visible and audible. The following impact zones have been identified as follows:

a) Primary impact zone: the immediate footprint of the Project, including onshore infrastructure, dredge areas and dredge material disposal sites, where probable impacts on existing environmental resources will occur due to port master plan interventions.

b) Secondary impact zone: areas adjacent to the primary impact zone (terrestrial and marine) that may receive effluent, emissions, etc. from the Port and ships that use it, during both the construction and operational phases. Potential impacts include: sediment plumes from dredging; bilge, ballast and other discharges from ships; runoff from shore-based infrastructure; and air pollution from dust and exhaust emissions (from ships, machinery and vehicles).

c) Socioeconomic impact zone: the extent of the socioeconomic impact zone is difficult to define, but will include:  Master plan intervention area, where people may have displaced or their current sources of livelihood disrupted or curtailed (e.g. Laldia Char between Khal no. 14 and Khal no. 15 and Bay Terminal site for loss of shrimp gher) or improved (e.g. through employment at the Port); and  other parts of country where people’s lives may improve indirectly from the goods imported via the Port.

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Figure 9: Chittagong Port Master Plan Study Area

Source: Sellhorn Engineering

The present status of the proposed port development locations can be visualized from recent photographs affixed below. :

Bay Terminal Site- Halishahar end Bay Terminal Site- Kattoli end

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Industrial effluent from CEPZ near at Bay Shrimp ghers which will be Terminal site (Kattoli end) affected due to Bay Terminal intervention

Major Aquatic habitat found within the Project Homestead Vegetation within Area at Laldia, Ward 41, South Patenga Project Area at Laldia, Ward 41, South Patenga

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Mosque (Prayer Room) will be relocated due to Shpos/Stall will be displaced due Laldia Project Intervention to Laldia Project Intervention

3.4.3 Environmental Status in the Port Master Plan area

3.4.3.1 Physical Environment

Physical Environment covers climate, Topography, Geology, Soils, Land use, Hydrology.

Climate

The weather of Chittagong is characterized by tropical monsoon climate. The dry and cool season is from November to March; pre-monsoon season is from April to May which is very hot. The sunny and the monsoon season is from June to October, which is warm, cloudy and wet. On average, the temperatures are always high. A lot of rain (rainy season) falls in the months of April, May, June, July, August September and October. It has dry periods in January and December. On average, the warmest month is April and the coolest month is January. On the other hand, the wettest month is July and the driest is the January. Around 70-80% of the annual rain falls during the months from April to October. The rain is often accompanied by strong winds, sometimes exceeding 100 km/h. The highest rainfall during the last ten years (2002 to 2011) recorded was 4,340 mm in the year 2007 and lowest of 2331 mm in 2005. The highest maximum annual average temperature of 39.5⁰C in 2009 and the lowest is 35.4⁰C in 2011. On the other hand, the highest minimum annual average is 12.5⁰C in 2008 and the lowest of 9.5⁰C in 2011.

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Wind data from the Bangladesh Meteorological Department Climate Division suggests that wind directions vary month-to-month in Chittagong, though predominantly in the NW, S, and NE directions.

Although weather patterns are broadly similar throughout the country, differences in topography, winds and other factors produce some quite marked local variations. This is particularly evident in the annual rainfall of around 3,128 mm (in 2011) in Chittagong. Relative humidity, average dry bulb temperature, maximum and minimum temperatures and rainfall patterns are represented as under based on the raw data obtained from the Bangladesh Meteorological Department (Figures 10, 11, 12, 13, and 14)3

Figure 16: Monthly and Annual Humidity (%) in Chittagong (2002- 2011)

Source: IEE Report, Chittagong Secondary Transfer Stations, funded by ADB, January 2013

3 Source of raw data(Figure 109,11,12, 13 and 14), Bangladesh Meteorological Department, July 2012

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Figure 17: Monthly Average dry bulb temperature in (0C) in Chittagong (2002-2011)

Source: IEE Report, Chittagong Secondary Transfer Stations, funded by ADB, January 2013

Figure 18: Monthly and Annual maximum temperature in (0C) in Chittagong (2002-2011)

Source: IEE Report, Chittagong Secondary Transfer Stations, funded by ADB, January 2013

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Figure 19: Monthly and Annual minimum temperature in (0C) in Chittagong (2002-2011)

Figure 20: Monthly and Annual total rainfall in (mm) in Chittagong (2002-2011)

Source: IEE Report, Chittagong Secondary Transfer Stations, funded by ADB, January 2013

Table 6 shows the variation of climate parameters in Chittagong for a period of 20 years.

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Table 6: Variation of Climate Parameters in Chittagong for a period of 20 years (1988-2008)

Parameters 1988 2008 Change Annual max temperature (°C) 30.72 29.53 -1.19 Annual min temperature (°C) 22.03 22.05 0.02 Annual average temperature (°C) 26.13 25.78 -0.35 Length of winter (day <15 °C) 21 26 5 First winter day (<18 °C) 8-Dec 18-Nov -20 Length of summer (day >35 °C) 4 2 -2 First summer day (day >30 °C) 13-Feb 4-Mar 19 Annual Rainfall (mm) 3104 3039 -65 (2%) Length of rainy season (day >10 mm) 74 62 -12 First rainy day (>10 mm) 13-May 17-May 4 Annual max temperature (°C) 30.72 29.53 -1.19 Source: Hossain et al, 2010

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Topography and Soil

Topographically Chittagong city and surrounding areas including the Project site are coastal areas of Bangladesh, which are mainly plain land with a general elevation of 3.6 m above mean sea level with some hilly areas in the city and suburb towards north and north-east of the proposed site, reaching an elevation of 60 m above mean sea level.

The area is located on a narrow piedmont zone along the western base of the Chittagong Hills. The geographic environment of Chittagong city comprises hills, plain lands, ponds, ditches, lake and other water bodies due to change in land use pattern in the recent past. The land slopes quite uniformly from east to west and is dissected by courses of generally parallel small streams from the base of the hills to the sea.

The fluvio tidal complex of the Chittagong formed of very recent cohesive, saturated, homogenous silty clays. Soils are generally sandy loam and clay loam. Grey piedmont soils and brown hill soils formed in hill outwash alluvium along the hill ranges. Soils in this area are generally younger and coarse and consist primarily of fine sands, silts, silty sands, sand silts, and clayey silts. Hill soils (brown hill soils) occupy gentle to very steep slopes of northern and eastern hills. These soils have been developed over consolidated or unconsolidated rocks, which are imperfectly to excessively drain.

Geology

The geology of Chittagong is affected by its location, as it has both high elevation (hills) and large depression (Bay of Bengal). Another very important physical characteristic of the Chittagong city is its noticeable piedmont and valley topography in between hill ranges. Tectonically Chittagong occupies a western margin of Tripura-Chittagong folded belt (Alam, et al, 1990). The trend of this folded belt is in the NNW-SSE direction, and the folds are frequently dislocated and faulted (Matin et al, 1983) longitudinally or transversely to the strike. The Chittagong city is located in the plunging zone of the Sitakunda asymmetrical anticline (Muminullah, 1973). This anticline is stretched up to Feni river form Chittagong. The lands in the area have been formed by piedmont alluvial deposits transported from the Chittagong Hills by local streams and rivers; some lands were formed by beach and tidal flat deposits.

Land use

Hossain et all (2010) reported that the area of 30 wards of Chittagong City covers 10,963 ha, of which the pre-dominant land use activities are residential area

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(2,207.27 ha), commercial area (2,021.00 ha), hill forest (1,405.70 ha), agriculture (977.46 ha), industrial area (802.84 ha), grassland (725.84 ha) and aquaculture (386.09 ha), which account for 20%, 18%, 13%, 9%, 7%, 7% and 4% respectively of the total land area. The other land use types are mangrove forest, airport, seaport, naval academy and export processing zone that comprised about 1000 ha (10% of the total land area). Sky view of the Karnaphuli River and vicinity of Chittagong urban area with different land use patterns have shown in Figure 15.

Figure 21: Sky view of the Karnaphuli River and vicinity of Chittagong Urban area with different land use pattern

The survey found the following land use types within CPA master plan interventions area.  Land under direct use of CPA (3,373,871 m2)  CPA land leased licensed out (2,105,358 m2)  CPA Land Temporary licensed out (533,987 m2)  Road- paved, pacca, brick soling, earth work etc.(366,006m2)  Water bodies- Khal, Canal(323,436m2  Licensed Jetty (258,094m2)  Fallow/Barren (258,094 m2)  Unused land (27,088 m2)  CPA land unauthorised by govt., club, jetty etc. (329,912 m2)

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 Foreshore land (411,635 m2)  River side land (693,065 m2)

Figure 22 shows General land use pattern surrounding CPA.

Figure 22: General Information CPA Land use

Source: Sellhorn, 2015

Hydrology

Surface Water Resources

Karnaphuli river and the estuary of the Bay of Bengal are the nearby water bodies of the proposed CPA Master plan. As Karnaphuli is connected with Bay of Bengal it is tidal and very turbulent river. The tides in the Bay of Bengal changes in water level in the Kamaphuli river of as much as 3.5 m, flooding the lower parts of Chittagong area during monsoon season.

Karnafully originates from the south Lushai Hills beyond the limits of the Chittagong Hill Tracts at latitude 23°50' N and longitude 92°27' E and after following a south-westerly course through the Hill Tracts it enters the district of Chittagong through the east of Chandraghona. It runs over the district in a zigzag path and after a course of about 121 miles falls into the Bay of Bengal at latitude 22°12' N and longitude 91°47' E, about 10 miles south-west of Chittagong town. It is navigable throughout the year by sea-going vessels as far as Sadarghat and by large boats, shallow draughts and all sorts of freighters and launches upto Kaptai in the Hill Tracts. In Kaptai is situated the Hydro-electric Kaptai dam in the river. This dam has the maximum flood discharge capacity of 525,000 cu.ft/sec through

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 64 Strategic Master Plan for Chittagong Port – Final Report, Part 3 its 16 tainter gates. Opening or closing of the sluice gates has a very important significance on the hydrobiology of the entire Karnaphuli River and its estuary.

The river during its course to the Bay of Bengal receives many small streams, tributaries and an important river, the Halda. Many of the tributaries and streams either completely dry up or make no significant contribution to the river during the dry season. Among these the important ones are the Ichamati and Sylock streams in the Hill Tracts, the Halda River, Kalurghat Khal, Balio Khal, Rakhalia Khal, Bakalia Khal, Boalkhali Khal, Rajakhali Khal, Chaktai Khal, Sikhalbaha Khal, Mohesh Khal, Danger Char By-Channel, Gupta Khal and the Parki Khal (Figure 22). The significant Halda River meets the river (Karnaphuli) on its right bank near Kalurghat, at a distance of about 15 miles from the river mouth. Sikhalbaha Khal, the important tributary opens to the left bank of the river opposite to the city of Chittagong. These tributaries, streams and river play a dominant role on the hydrobiology of the Karnaphuli estuary, contributing large amount of fresh water at different times at different rates. The principal places along the banks of Karnaphuli are Chondroghona, Kaptai, Rangunia and Chittagong town. These industrially and commercially important places play a significant role on the biological atmosphere of the river and its estuary by various sewage and industrial waste discharges

Yearly highest and lowest water level data at station Khal – 18, Khal – 10 and Sadatghat was collected for the year 1980 to 2010 which is presented in Table 5.

The Design Highest Flood level at different locations of Karnaphuiy river is shown in Table 7.

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Table 7: Yearly Highest and Lowest Water Level for Karnaphuli River

Year Sadarghat Khal - 10 Khal - 18 HWL LWL HWL LWL HWL LWL 1980 5.21 -0.15 5.76 0.12 5.85 0.00 1981 5.03 -0.21 5.57 0.30 5.79 0.03 1982 4.88 -0.15 5.13 0.02 5.91 0.05 1983 5.11 -0.15 5.23 0.07 5.95 0.00 1984 4.90 -0.09 5.60 0.20 6.60 0.01 1985 5.00 0.00 5.95 0.03 5.96 0.10 1986 4.99 -0.07 5.00 0.10 …. …. 1987 5.13 0.02 5.70 0.15 6.00 0.20 1988 4.99 0.00 5.30 0.35 5.88 0.05 1989 5.03 -0.12 5.41 0.09 6.10 0.02 1990 5.05 -0.25 5.53 0.02 5.77 -0.28 1991 6.30 -0.25 5.32 -0.13 …. …. 1992 4.87 -0.23 5.29 -0.19 5.75 0.20 1993 5.28 -0.40 5.75 -0.05 6.37 -0.05 1994 4.77 -0.40 5.25 -0.10 5.60 -0.30 1995 5.25 -0.34 5.96 -0.15 5.80 -0.25 1996 5.10 -0.20 5.82 -0.19 …. …. 1997 5.15 -0.25 5.48 -0.27 5.90 -0.45 1998 5.08 -0.46 5.68 -0.18 6.05 -0.17 1999 5.15 -0.10 5.45 0.00 5.82 -0.10 2000 5.29 -0.35 5.78 -0.60 6.10 -0.05 2001 5.06 -0.27 5.56 -0.16 5.90 0.10 2002 5.35 -0.22 5.79 -0.22 6.00 -0.15 2003 5.05 -0.15 5.62 -0.19 5.90 -0.20 2004 5.10 -0.40 5.50 -0.42 5.97 -0.07 2005 5.32 -0.30 5.78 -0.26 6.00 -0.15 2006 4.97 -0.30 5.80 -0.17 5.90 -0.05 2007 5.25 -0.40 5.78 -0.31 6.15 -0.25 2008 5.85 -0.25 5.60 -0.20 6.05 -0.25 2009 5.26 -0.36 5.68 -0.22 6.25 -0.20 2010 5.35 -0.34 5.99 -0.22 6.50 -0.15 Source: CPA, April 2012, all levels are in meter MSL

Table 8: Design High Flood Levels at different Locations of Karnaphuli River

Return Period Khal- 18 Khal -10 Sadarghat Patenga end in Years DHFL (m) DHFL(m) DHFL (m) DHFL (m) 2.33 5.99 5.58 5.17 6.04 5 6.15 5.76 5.38 6.20 10 6.28 5.91 5.55 6.33 20 6.41 6.05 5.71 6.46 50 6.57 6.23 5.92 6.62 100 6.69 6.37 6.08 6.74 200 6.81 6.50 6.24 6.86 Source: Hydrological Report for Multilane Tunnel Project, April 2012

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Figure 23: Important waterways of Karnaphuli River and Chittagong Coastal Environment

Source: Draft Final Report, Volume 3; Chittagong Port Trade Facilitation Project, (ADB TA- 4136- BAN); Tera et al, June 2004

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Ground Water Resources

The major subsurface lithological units of the project area are Recent and Pleistocene sands and clays, silt and clays and sand and clays respectively. There are unconformable relations between the two depositional phases. The flood-plain deposits covering the older rock formation of Tertiary age probably constitute one large semi-confined to confined aquifer system. Though unconfined condition do exists, the aquifer system becomes more semi-confined to confined usually with increasing depth. The encountered hydro-stratigraphic units depicted a moderate to low hydraulic conductivity indicating major portion of the aquifer composed of fine-grained particles. The recharge to the upper aquifer occurs from the vertical percolation of rain and floodwater and by horizontal inflow from the surrounding areas.

The present groundwater head of the city area is below the mean sea level. The maximum depth to dry season groundwater table is 16-17 m that is 9-10 m during monsoon4. The groundwater heads of the city area is declining continuously due to huge withdrawal for municipal demand with little seasonal fluctuation of water table. In the surrounding aquifers the water heads are above the mean sea level and very close to the surface with significant water table fluctuation, mainly due to groundwater irrigation in dry season. However, the groundwater head generally regains it equilibrium condition in monsoon.

3.4.3.2 Natural Hazards and Risks

This section covers Floods, Seismic Effects, Cyclones, Bank Erosion etc.

Floods

Chittagong is highly elevated from rest of the areas of the country. Seasonal flooding is not seen here which is observed in whole country. But many parts of the port city including the low-lying areas have submerged due to daylong torrential rain and causes untold sufferings to the townsfolk. Commuters faces a lot of trouble to reach their destinations as several city streets went under waist- deep water at busy points like Bahadderhat, Muradpur, Sholoshahar Gate No 2, Agrabad Access Road and Badurtala creating gridlock throughout the day. The worst sufferers were residents of low-lying areas like Chawkbazar, Bakalia, Kapashgola, Sholakbahar, Agrabad CDA Residential Area and Dewanbazar.

4 Ground water Table contour map of Chittagong district (both dry and wet season, 2011

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Low-lying lands of both Chittagong metropolitan and Chittagong district is flooded if tidal surges and relentless rainfall occur.

Though the Chittagong city is blessed with two perennial rivers, the River Karnaphuli and its tributary River Halda as the major river basin in the southeastern region of the country and the principal water supply source for Chittagong City, the rivers are also responsibilitie for causing natural calamities like flash floods during early monsoons and inundation with tidal surges.

Seismic Effects

The entire master plan area falls in zone 2 i.e. moderate seismic zone5. Recent rapid seismic activity in Chittagong region has generated a potential threat to the people of that locality. Chittagong is located in a region where a major earthquake can occur at any time. Its rapid urban growth is causing further deterioration and increasing the vulnerability of human lives, economy and infrastructures. If large earthquakes occur, it will causes heavy damage to its large infrastructures. Chittagong has a long history of experiencing seismic activity. For the last few hundred years around 4.3 earthquakes occurred within 200 km of Chittagong. The Mandalay earthquake with a surface wave magnitude of 7.9 was strongly felt in Chittagong. Now a day in every year Chittagong is experiencing several earthquakes.

Cyclones

Chittagong, the biggest sea port and the second largest city of Bangladesh, is prone to cyclone and storm surge flooding. Of the last 18 severe cyclones in Bangladesh that occurred in the period 1905-1991, as many as seven hit Chittagong city and its vicinity and caused severe damage. Cyclone of 1991 causes a severe damage in this area. Recently occurred cyclone Aila, Sidr and Nargis has also had divesting impacts on inhabitants of the region. Bangladesh is a disaster-prone country. Nearly one million people have been killed in Bangladesh by cyclones since 1820 (Talukder et al 1992, Hossain 2001) due to there being an estimated 10% of the world’s cyclones developing in the Indian Ocean (Gray 1968). The physiology, morphology and other natural conditions have made it vulnerable to disaster, cyclonic storms and floods which are very devastating and cause immense suffering and damage to people, property and the environment. Cyclonic storms have always been a major concern to coastal plains and offshore island of Bangladesh. The cyclone accompanied with

5 Bangladesh National Building Code

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 69 torrential rain and devastating tidal surge causes disaster to lives and property in the cyclone path, and the environment in the affected area. Approximately 54 damaging cyclones were reported in the coastal area of Bangladesh from 1793 through 2009. Thus cyclone frequency during this period averaged about once in every 4.5 years.

Erosion

The soil of the site is more or less stable having no soil erosion problem though the Karnaphuli river is turbulent and tidal. Cyclonic storm frequently hits this coastal region during monsoon periods. A little bit erosion is found in Patenga sea beach area which is a popular tourist spot and is very close to Naval Academy and Shah Amanat International Airport. Part of the seashore is built-up with concrete walls. Also large blocks of stones have been laid out to prevent erosion.

3.4.3.3 Environmental Quality Surface Water Quality

A large number of chemical and fertilizer industries have been established since the independence on both the banks of the Karnaphuli. Effluents from these industries are reportedly being directly discharged into this river. Leaking and leaching of oil from ships and boats are also polluting the water of the Karnaphuli River. Biologically, the surface water bodies in the Chittagong metropolitan area were polluted, and concentration of total coliforms was high enough to make the raw water unpalatable. Turbidity is another factor that is to be addressed to make water from these resources usable. Trace metal concentrations in the water from surface water bodies were within the limits outlined by the WHO standards for drinking water (Rahman et al, 2010).

A case study of Karnaphuli river6 was conducted between the Kaloorghat Bridge and Patenga estuary including Chittagong port. This is the most polluted area due to the presence of many chemical fertilizers, iron, leather and pharmaceutical industries. All these industries discharge their untreated toxic waste water directly into the river Karnaphuli. The study involved determination of physical and chemical parameters of surface water at different points. The concentration of

Dissolved Oxygen (DO), Biochemical Oxygen (BOD5) and Chemical Oxygen

6 Bangladesh Journal of Scientific and Industrial Research, 2010

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Figure 24: Shore-based pollution sources of the Karnaphuli River and the Bay of Bengal, based on Landsat TM satellite image

Source: Hossain et al, 2009

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Demand (COD) are ranges from 0.1- 3 mg/l; 160-397 mg/l and 350-865 mg/l respectively. All the values exceeded the allowable limits of Bangladesh Standards prescribed by EQS in ECR 1997. Ground Water Quality

From the secondary source, it was found that water quality is very good, not saline and readily available. The aquifer is rich and most of the people in this area use ground water as the pure drinking water.

Groundwater samples were collected nearby industries within CEPZ area7. Results show that the iron concentration ranges 0.32- 1.0 mg/l; arsenic concentration lies within 0.03 mg/l and chloride concentration ranges from 40-460 mg/l which indicates favourable for drinking water.

Air Quality

The major sources of air pollution in the Project area are boat traffic, vehicular traffic and dust, and emissions from brick fields. As the proposed port development area is an industrial area the emission from industries (mainly CEPZ, Karnaphuli EPZ etc.), ships, brickfields, transportation, etc. cause pollution of the environment. The ambient air of the proposed site is polluted by the emission of dusty materials in the air.

Noise Quality

Noise quality in the port city have reached intolerable level making city dwellers suffer from different complicated diseases, environmentalists and locals said, reports BSS. People of different strata in Chittagong are passing hard time tolerating sound pollution created by the hydraulic horns of different kinds of vehicles, power generators and wielding engineering workshops located in and around residential areas. Normal living standard is being hampered due to round- the-clock operations of the power generators in different posh residence in the city and wielding engineering workshops. Experts said sound pollutions have reached nearly 200 decibel (dB) against its tolerable level is 60 (dB). The continuous sound of generators in different apartments and motorized vehicles makes the environment a mere hell, alleged some residents who live around.

7 DoE, 2010

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3.4.3.4 Ecological Resources

Biodiversity

Chittagong is endowed with vast inland water resources in the form of rivers, flood-plains, pond, etc., and marine water, the Bay of Bengal, having great fisheries potential. Beside aquatic ecosystem, terrestrial ecosystem of Chittagong (hill and forest) also supports diverse floral and faunal biodiversity.

Degradation of the Karnaphuli river ecosystem results from a wide range of shore- based activities. River biodiversity greatly damaged due to continuous pollution by industrial effluents and boat discharge as well as domestic waste contamination. Karnaphuli River is highly affected by the pollution and human interference. Many studies on the river reported, 15-20 fish species of fresh water, 10-15 fish species of brackish water and 5-6 fish species of migratory water disappeared over the years from the river due to severe pollution of its water but only 11 species are found in this river presently (Hossain et al).

Fishes

The Karnaphuli River is the important aquatic ecosystem with tidal influenced, where water becomes saline, brackish and even fresh for certain period. As a result, the ecosystem favours both marine and freshwater organisms including fishes. Common and occasionally found fishes in the Karnaphuli River are given in Table 7.

Homestead Vegetation

Common fruits, woods and medicinal trees are found in the homestead areas. These include mango, banana, betel-nut, jackfruit, amra, papaya, lemon, coconut, mehagoni, raintree, neem, keora, akashmoni etc.

Mangrove Forest

No mangrove forest present in the vicinity of the project intervention.

Reserved Forest

No reserved or protected forest present in the vicinity of the project intervention

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Table 9: Common and Occasionally found fishes in the Karnaphuli River

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Source: Field visit and consultation with local people

Bird Habitat

No designated bird habitat present in the vicinity of the project intervention. But common birds are seen in the locality. These includes crow, pigeon, salik, charui, fenga, etc,

3.4.3.5 Socioeconomic Environment

The socio-economic profile of the villages in the project influence area in terms of demographic, occupational pattern, income and poverty dimension etc. is described in Section 3.1 of Chapter 3.

3.5 Identification of Impacts of Port Development Alternatives

This section discusses how a proposed port development options could affect the people or any sub-group and influence the social position positively or negatively, directly and indirectly.

Before the options can be compared on the basis of their likely impacts on the environment, the types of impact on various port development options can have needs to be established. The following account therefore describes the most common impacts associated with port developments at perimeter of the Chittagong port as well as outside, along the River Karnaphuli and at the shore line of the Bay of Bengal, in the construction phase and when new facilities are operating.

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This does not mean that these impacts will be produced by all or any of the options being considered by this Study. The assessment for each physical component proposed for port development interventions have been carried out with respect to the potential impacts during the following stages of the proposed project planning and implementation:

Location impacts: Impacts associated with site selection, including impacts on environment and resettlement or livelihood related impacts on communities

Design impacts: Impacts arising from project design, including the technology used, scale of operations etc.

Construction impacts: Impacts resulting from construction activities including site clearance, dredging and dredge material disposal, jetty construction, landside development etc.

O&M impacts: Impacts associated with the operation and maintenance of the infrastructure built in the port.

The impacts will be determined as significant, positive or negative, direct or indirect, long term or short term.

During Master Plan preparation, screenings were conducted applying Rapid Environmental Assessment (REA) (Annex 1) checklists adopted by ADB to initially address the environmental and social issues and evaluate impacts due to different phases of activities expected under the interventions of proposed ‘project development’ for Strategic Port Master Plan.

3.5.1 Potential Impacts of Port Developments: Preconstruction

Social Impact

Land acquisition is not a key issues for port development projects as all land of development sites owned by CPA. About 738 nos. HHs need to relocate fully for the development of Laldia bulk and cargo terminal due to illegal occupied by them. About 447,592 sq. ft primary structures including houses/shops also need to be removed at Laldia site. One mosque may also be removed before development of Laldia site. Total 97 nos. shrimp ghers covering 29,100 decimal area in Bay terminal site will be affected. The best practice for avoiding this resettlement impacts should be achieved through extensive open consultation with those affected, and development and implementation of a mutually agreed resettlement plan that involves relocation to an acceptable area, provided with improved housing

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 76 Strategic Master Plan for Chittagong Port – Final Report, Part 3 and infrastructure. This would be addressed through ‘Resettlement Policy Framework’ which has been detailed in Chapter 3- Social assessment.

Environmental Impact

About 2357 no. of trees covering fruit, timber, medicinal plant of different sizes will be removed for site development during construction of Laldia terminal. To protect the environment, CPA will make up for the uprooted trees after the construction is complete.

3.5.2 Potential Impacts of Port Developments: Construction

Physical Environment

The proposed construction of port development projects involve dredging of substrate. The rotary action of the dredger and the dragging of the suction pipe along the bottom will disturb the substrate and place sediments into suspension. These suspended sediments may then smother nearby bottom-living flora and fauna as and when they settle. The effect will be significant in areas with fine sediments, which are more easily placed into suspension. The suspension of sediments would be minimised to the extent that the powerful suction pumps on the dredgers are able to suck up these materials out of the water column.

Port development construction can also cause major changes in the physical appearance of the landscape, initially from the presence of site vehicles, vessels and machinery, which disturb views, and subsequently from the new permanent structures as they begin to develop. The main effect of these changes is on people and the enjoyment they gain from views of the landscape, so this is discussed with other aspects of the socio-economic environment below.

Workers accident will invariably occur in all stages of construction works. To prevent accidents during construction phase, recommended control principles and measures under Bangladesh conditions will be followed. This is regarded as minor impact.

Temporary concentration of labour force on contractor’s camp may create un- hygienic conditions, if not mitigated properly. This is considered to be a minor impact, as standard mitigation measures will be applied to control the potential environmental impacts.

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Biological Environment

Terrestrial Ecology

The Project component includes land clearing and preparation entailing the loss of vegetation. However, since this area is not a significant habitat of valuable flora or fauna, adverse impacts on the ecological environment are considered to be minor.

Marine Ecology

The master plan components include dredging works. The work methods during dredging will be of such a nature that will cause minimal disturbance to the marine environment. Environmental Quality

Water Pollution

Dredging can have major negative impacts on water quality, because the normal practice is to pump the extracted material into the hold of the dredger, which is allowed to overflow to reduce the water content and increase the retained sediment, before the vessel travels to the dumpsite. It can also increase pollution levels if the dredged sediment is contaminated, as the chemicals re-enter the water column.

Another potential source of water pollution at construction sites is from spillage of site materials, such as fuel, oil and detergents, if these are not properly used and stored. This can be avoided relatively easily by storage in closed drums in bounded areas, and by implementing routine controls on their usage.

Air Quality

The construction activities will involve the use of vehicles and construction machinery, which may temporarily affect the air quality locally in and around the port development site. The spatial impact on air quality during construction is limited to the immediate vicinity of the work area. Increased dust and particulate is expected during dry months and windy days. Dust from aggregate production and construction traffic, emission from any bituminous plants and heavy diesel equipment will affect air quality during the construction phase. Minor impacts due to generation of fugitive dust from earth-workings, air pollution due to exhaust gases from vehicular movement and traffic congestion will be managed by periodic watering of the construction material stockpile and working area and through controlled vehicle movement during the peak hours of local traffics. Air quality problem will be for a short period and minor impact is anticipated.

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Noise Emissions and Vibration

The construction activities will generate noise by the use of heavy machinery and equipment. Key sources of construction noise at the project site include dredging, piling for quay walls, and constructing buildings. Levels of noise are expected to increase during construction activities with the use of machinery and earth moving equipment and will be confined to the daytime hours only. Minor impact is anticipated. The impact from vibrations from construction activities is considered insignificant, particularly because no vibration-sensitive marine mammals live in the project area.

Socio-economic

Port development construction will have positive impacts on the human environment by providing opportunities for local people to be employed in the construction workforce, and for local businesses to supply goods and services. This provides at least temporary improvements in socio-economic conditions and may stimulate the economy, and these benefits can increase if greater opportunities develop when the development projects begin to operate.

Visual impacts of construction activities are both temporary and permanent. Views of the landscape are disturbed by construction vehicles, vessels, cranes and heavy machinery, but these impacts cease when building work finishes. However the landscape begins to change permanently as structures are built, and the changes increase as the scheme progresses.

3.5.3 Potential Impacts of Port Developments: Operation

Port development projects can make a significant impact on the environment. There can have an direct impact on receiving water in the vicinity of ports from the spillages of oil and oily wastewater from vessels or ports, release of ballast water, spillage of noxious substances or washing from tanks containing noxious liquids from both vessels or ports, site runoff from the port storage area or dust emission from storage or transfer area, or the discharge of solid waste from ships or ports. Oil can be released in the event of vessel accident or collision, or from transhipment of oil.

A waste reception facility has been established by CPA to deal with such liquid and solid wastes. Solid wastes generated at the port area will be collected and disposed of by the Port Authority. Sewage generated at the port area will be treated in septic tanks.

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A large quantity of waste water will be generated from various sources like sewage from toilets, waste water from canteen, oil and grease pollutants from repair quay and the like during the operational stage. Oil pollution will be a major nuisance and proper mitigation measures should be taken. The direct disposal of the various effluents into the water body should be prevented at all cost and separate treatment facilities for sewage, wastewater and pollutants should be provided. The treated effluents, only on verification that the parameters are under permissible limits, should be allowed for disposal into the water body. The water quality of the receiving water bodies should be thoroughly monitored and kept under allowable limits.

During the operational phase, transportation activities will increase and also the ambient noise and air quality will get affected due to the various operational activities like berthing, unloading, auctioning and transportation. Loading, unloading and transportation of Cement will affect the air and noise quality. Even though all the operational activities will affect the air and noise quality, the impacts are considerably negligible and will not cause much direct or indirect harmful effect on any living form around the area. At loading and unloading points, arrangement for Water sprinkling is being made so that dust generation during transportation of materials be minimized further. It would be ensured that all the vehicles plying in the working zone are properly tuned and maintained to keep emissions within the permissible limits. Competent authorities should strictly monitor all operational phase activities and rules and regulations should be strictly adhered to. All environmental parameters must be checked regularly by an Environmentalist (proposed for CPA) and should be maintained within allowable limits. Potential sources of air pollution are ships and vehicles for the transportation of cargo and other port operations. However, such impacts will be limited to the hours of port operation, and the intensity will be relatively low; hence no significant impacts are anticipated. Also, no dusty or hazardous cargo will be handled in the port. Since there are few local residents near the project area, noise generated at the port area will not have significant impacts on local people.

The purpose of port development projects is expanding Chittagong port is normally to bring economic benefits at national level by attracting increased trade, which provides improved income for the Government. This might then confer benefits on people throughout the country, if new revenues are spent on social projects, providing improved healthcare, public education, transport, etc, or used to encourage business expansion and other investment that generates employment. There can also be improvements in the human environment in the vicinity of a new port, as it provides increased employment, which improves socio-economic conditions and can stimulate the local economy.

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Summary of Impacts

Construction and operation of proposed Port development projects and its associated activities and their probable impacts on the various ecosystems and environmental processes have been outlined in detail in the previous sections. These are summarised in Table 9 and Table 10 respectively. The various impacts can be reduced considerably through proper mitigation measures and implementing Environmental Management Plan, including good house-keeping practices.

Table 10: Proposed Port Development Project Activities and Its Impacts- Construction Stage

Air Quality Surface Soil/ Ground Fresh Marine Activity Water Sediment Water Water Environ- Quality Quality Environ- ment ment ST LT ST LT ST LT ST LT ST LT ST LT Dredging M L M L L M L L H M H M Dredge M L H M L M L L H M H M Material disposal Land Filling M L M L L L L L M L M L Site Clearing M L M L L L L L M L M L Building M L M L L L L L M L M L Construction Building M L M L L L L L L L M L Renovation Utility M L M L L L L L M L M L Construction

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Table 11: Proposed Port Development Project Activities and Its Impacts- Operation Stage

Air Surface Soil/ Ground Fresh Water Marine Activity Quality Water Sediment Water Environment Environ Quality Quality ment ST LT ST LT ST LT S LT ST LT ST LT T Automobile Transport Off-Loading M L L L L L H M M L Storage M L M L L L L L M L M L Cargo Handling Dry Bulk H M H L M L L L M M M M General Cargo L L M L L L L L L L L L Containers L L L L L L L L L L L L Chemical Storage M M M L M L M L M L M L and Handling Fueling On-Loading H M M L M L M L M M M M Storage M M M L M M M M L L L L Off-Loading M M M L M L M L M M M M Ship Liquid Discharges Ballast Water L L H L L L L L M M M M Tank Cleaning M L H L L L L L M L M L Bilge Water L L H L L L L L M L M L Sewage L L M L L L L L M L M L Solid Waste Ship-Generated L L M L L L L L M L M L Shore-Generated L L M L L L L L M L M L Vehicle and H L M L M L M L M L M L Equipment Maintenance Note: The type and magnitude of impact is dependent on the extent to which an activity occurs, its proximity to sensitive receptions, and the controls employed by the port or its tenants; ST- Short Term; LT-Long Term; L-Low impact; M-Moderate impact; H-High impact

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3.6 Plan and Strategies

For better management of the environmental and social issues during the implementation of port development projects under master plan intervention areas, clear strategies and plans are needed. In view of this two plans have been suggested for the better implementation of the projects considering their sustainability both environmentally and socially.  Environmental Management and Monitoring Plan  Institutional Capacity Assessment

3.6.1 Environmental Management Plan

General Considerations EMP will be done for the port development projects, in the following order of priority, to:  Eliminate or avoid adverse impacts, where reasonably achievable.  Reduce adverse impacts to the lowest reasonably achievable level.  Regulate adverse impacts to an acceptable level, or to an acceptable time period.

 Create other beneficial impacts to partially or fully substitute for, or counter‐balance, adverse effects.

At the time of the implementation of any project, the potential environmental impacts must be clearly identified and if needed an Environmental Management Plan (EMP) formulated, implemented and the plan’s performance monitored during and after execution of project activities. The impacts should be avoided or neutralized where possible or mitigated in conformity with Bangladesh’s and the Donor’s (ADB/World Bank) prescriptions for sound environmental management.

The Environmental Management Plan (EMP) is intended to ensure efficient environmental management of different projects. The EMP should lists:  the relevant project activities,  the potential negative environmental and social impacts,  the proposed mitigating measures,  responsibilities for implementing the mitigation measures,  responsibilities for monitoring the implementation of the mitigation measures,  the frequency of the afore-mentioned measures,

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 capacity building needs, and  the cost estimates for these activities.

At this stage of project preparation, the environmental management plan has been prepared in outline only, as many important elements have yet to be fully defined. However, the plan indicated in the following sections provides the broad approach, which will be adopted. The plan will be expanded during the detailed design stage when more information is available, and a fully detailed environmental management plan will then be prepared. The expected environment issues in the port development projects and their impacts are shown in table 8 and 9 respectively.

3.6.2 Impact Avoidance, Mitigation and Offsetting

Management measures to avoid and mitigate the environmental and social risks and impacts of the Port will be designed in accordance with national requirements, IFC PSs, World Bank EHS Guidelines and good international industry practice, based on the following mitigation ‘hierarchy’:  Prevent/avoid impacts; then  Mitigate/reduce impacts; then  Offset residual impacts

Some of the more important impact avoidance and mitigation measures that are likely to be implemented to manage major issues are summarised below:

Avoidance

Port development site selection and design alternatives are the two key aspects that are being fully investigated to avoid significant Port impacts where possible from the outset, and minimise or lessen other significant risks and impacts where avoidance is not possible.

An overall Chittagong Port Development Master Plan is proposed to plan activities within existing port along the River Karnaphuli and at the shore line of the Bay of Bengal in an integrated manner, recognizing that induced landside development will result from the Port.

Mitigation

Port construction techniques that minimise construction impacts will be investigated to select appropriate methods. A full range of construction

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Resettlement of directly affected households will aim to ensure that these households are no worse off following resettlement, including compensation at full replacement cost for land and other assets lost. Alternative sustainable livelihoods for affected households will be investigated and supported as required to replace any loss of access to coastal natural resources caused by the Port, while additional measures will be proposed to mitigate other negative impacts of displacement.

Oil Spill Contingency Plan will be prepared to manage any spills that may occur during Port construction or operation. Waste reception facilities will be dealt oily wastes generated from the port.

Offsets

A Biodiversity Action Plan will be prepared containing management actions to maintain/improve ecosystem health, and establish biodiversity offsets as required.

3.6.3 Institutional Capacity Assessment

3.6.3.1 Organizational Management Aspects

The Chittagong Port Authority need to adopt an Environmental Management System (EMS) to operate port environmental management. This EMS is an integral part of the overall management of CPA. The system will provide more confidence to the port users, government agencies, support service organizations, alike industries to the effect that CPA’s environmental objectives are met.

The Organizational EMS is based on the following tier elements as follows  Define policy including vision and mission  Create commitment and awareness on environmental aspects/issues  Formulation of plans and objectives  Formulation of organizational structured team  Arrangement of Training on environmental awareness and competency of team members  Establish working environment together with OHSMP for employees and workforce of CPA  Emphasis on EMP documentation

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 Provide support services/facilities for implementing monitoring plan, program to check the execution effect of EMP  Data compliance and records keeping  Review of overall environmental and operational performances index

Thus the EMS in question following aforesaid 10 tier elements will provide order and consistency in addressing all environmental concerns related to CPA.

3.6.3.2 Job Specification of EMS

In the top level of the Organizational EMS Flow Chart of CPA, the Chairman and Members will set the policies and strategies for all the environmental issues. The Member Operation holds administrative responsibility for planning and management for all environmental requirements. He is also responsible for arranging / providing environmental related training program of key personnel of the project on environmental key issues with a view to safe guard the adjacent environmental conditions from adverse impacts resulting port activities. As well as to reduce the damage and loss to the environmental resources including CPA assets, life and property of workforce under the project during occurrence of natural calamities.

In addition to above, all other specific mitigation measure plans and environmental management plan for prevention of potential/adverse impacts on surrounding environmental condition as recommended in this document will be implemented by the Deputy Conservator of Marine Department.

The Environmentalist along with Lab Technician will perform routine responsibility for environmental and operational performances at port areas on the basis of EMP Manual and maintain daily performance index/reports for subsequent review by competent authority.

The responsibilities and function of the EMMC will include the followings:  Obtaining all the statutory clearances (if any) for the implementation of the proposed port development projects  Environmental review of various project activities

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 Coordination of environmental monitoring  Liaison with member of the public, local organizations and government and non-government organizations  Ensuring all data on environmental aspects of port operation is continuously updated and available in the data form/sheet suitable for immediate inspection by authorised personnel  Monitoring hazardous substances/material on-site to ensure that the possibility of accidental release is minimised  Promoting on-site environmental awareness  Keeping liaison with allied industry to keep abreast of current situation prevailing in the concern industry

The proposed EMMC is mainly a field oriented working group of both operational and environmental personnel, which will be headed by the Harbour Master. An Organizational Framework for the proposed EMMC of CPA is shown as Figure 19.

3.6.4 Environmental Monitoring Plan

The strategic master plan contains a number of options which have been assessed within this report. Any of the options that are chosen to be taken forward for development will be subject to an EIA. It is at this stage that the engineering designs will be finalized and the mitigation measures decided upon. During the EIA stage, the likely significant effects will become apparent and at this stage, monitoring for construction and opration phases will be defined. Therefore no monitoring of the preleminary assessment is considered to be required at this stage.

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Figure 25: Organizational framework for the proposed EMMC of CPA

3.6.5 Climate Change Adaptation

The main risks to the Port from climate change include:  Sea level rise –with implications for the design height of infrastructure;  Increasing air and sea surface temperature- affecting rates of deterioration, corrosion and erosion  Changes in the frequency and intensity of extreme weather events

These potential impacts primarily relate to Port structures and therefore mainly require engineering solutions. This includes ensuring that the design height of all structures is sufficient to cope with predicted sea level rise, and that construction materials are sufficiently resistant to the estimated increasing rates of deterioration, corrosion and erosion.

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3.6.6 Occupational, Health, Safety

Chittagong Port has encountered a number of challenges with regard to safety, health and environment concerns in the port. First, because Chittagong Port has been developed in a coastal area, it has experienced multi-resource conflicts among other coastal users. Furthermore, since the construction method of the port involved dredging and setting up of a long breakwater, shore erosion and sedimentation have occurred. In addition, Chittagong Port has been experiencing various problems that have challenged the port to come up with short term and long term solutions, including:  Environmental problems from massive traffic volume of container trucks  Waste management in the port  Hazardous Materials Handling  Port Security

Hazardous substances handled at port area should follow the International Dangerous Cargo Code as practiced by international shipping, and be clearly marked and stored in such a way so that there is no possibility of spillage into the river causing pollution. Port management is required to be aware that hazardous substances handled at the port need to be stored where they can cause no environmental damage. When harmful substances are spilled on to the dock, the site needs to be contained and cleaned immediately, otherwise the substances are can be blown into the air as dust, or washed into receiving water during rain, causing pollution and hazard to dock workers.

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In order to protect the environment, ports are required not to handle or store in the port, or load or unload from ships berthed or moored in the port area, banned substances without prior authorization. Harmful substances can also be present in the sediments on the bottom of rivers and estuaries. These pollutants will have got into the sediments from industrial discharges or urban runoff into the water, or even from accidental spills and leakages from ships and ports.

Port operation activities should be conducted in accordance with the following international regulations and standards, including:  International Labour Organization (ILO) Code of Practice for Safety and Health in Ports (2005)  International Maritime Dangerous Goods Code (IMDG Code)  Code of Practice for the Safe Loading and Unloading of Bulk Carrier (BLU Code)

3.6.7 Public Consultation/Participation

2.3.1 Overview of the Consultation Process

The EA process included public participation, consultation and focus group discussions to help CPA achieve public acceptance of the Project. The views, needs and aspirations of the affected people as expressed during these consultations have been incorporated in the project design and the proposed mitigating measures with the objective to maximize benefits and minimize adverse social and environmental effects.

During the project preparatory stage, three tiered consultation meetings were conducted with the following objectives:  Key Informant Interviews (KII): KII were consulted through individual and group meetings, including the officials of CPA, selected individuals and organizations with professional knowledge of EIA processes. The meetings were conducted at a very early stage (EIA Scoping Stage) of the EA with the objective to identify people to be consulted, to brief stakeholders about the project components, and to discuss potential environmental impacts of the Project. The outcomes of those consultations were used to finalize the preliminary Environmental Assessment Report.  Focus Group Discussions (FGDs): Six (6) FGDs were conducted with the affected communities at various locations of port development sites. The purpose was to discuss specific issues, such as their current sources of livelihood disrupted or curtailed at Laldia Char and Bay Terminal site for loss

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of shrimp gher; livelihood restoration, compensation and resettlement, community involvement and sustainable environmental management.  Public Consultation: As per harmonized safeguard requirements, public consultations (3 nos.) were conducted for the Project as part of the Environmental Assessment (Scoping). The public consultations were conducted at Laldia and Bay Terminal site involving a wide range of participants representing affected persons, Project Director, CPA Ward Counselor, NGOs, and local communities. The public consultations were meant to achieve the following objective: - to make the public aware of the project - to ensure that the public was provided with opportunities to participate in the decision making process and to influence decisions that would affect them; - to identify the widest range of potential issues about the Project as early as possible and in some cases, have those resolved; - to ensure that government departments were notified and consulted early in the process; and - to ensure a board range of perspectives were considered in any decision

2.7.2 Details of Consultation Meetings and Discussion

2.7.2.1 Key Informant Interviews

In order to get current situation and relevant problems in terms of environmental and Occupational, Health and Safety issues, met with the concerned personnel of CPA 1. Chief Planning/Project Director 2. Member Engineer 3. Director Admin 4. Deputy Conservator (Marine Department) 5. Dock Master 6. Director Security 7. Chief Medical Officer 8. Deputy Manager (Estate)

During the consultations, guidance was obtained on various aspects of the assessment of major issues for Port Management with particular emphasis on the

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 91 assessment of the environmental pollution, dredging, oil spill, handling and storage of dry bulk cargoes etc. Major findings are as follows:  Environmental pollution

In interviews with different stakeholders and site observation around the Karnafully River bank, the environmental specialist has identified the shore-based pollution sources as well as issues in respect of environmental management of CPA. Major shore-based pollution sources are ship breaking activities, industrial discharge, municipal wastes, sewage, agricultural run-off, etc.  Other pollutants

Other pollutants are untreated industrial organic effluents including mercury, ammonia and various agricultural and municipal wastes.  Dredging

At present there is no control over the disposal of dredged spoil in the Karnafully River. The use of estuarine sediment potentially contaminated with industrial, agricultural and domestic pollutants for land fill will reproduce the number of contaminated sites in the area.  Compliance of MARPOL Convention

Bangladesh intends to sign the MARPOL convention. The main concern of port authority under MARPOL 73/78 is the provision of adequate reception facilities for Oily wastes, Noxious liquid substances, Sewage, Garbage. However, presently the CPA has own waste reception facilities at CPA own land on the right bank of Karnaphuli downstream of Chittagong Dry Dock adjacent to the Bay Fishing Corporation works, but no operation to receive and treat normal vessel wastes especially oils and oily bilge waters due to the tariff system. The Ministry of Shipping has recently approved Tariff system and now waiting for Board Consent. In the waste reception site, there is also setup laboratory to monitor water quality as well as oily waste effluents. Due to the proper manpower establishment in the laboratory, there is no function in the laboratory.

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Waste Reception Facilities of CPA, Front Waste Reception Facilities of CPA, Entrance View

Laboratory premises of CPA at Waste Reception Facilities site

2.7.2.2 Stakeholder Views

Stakeholder consultation and engagement initiated as part of the Preliminary Environmental &Social Assessment Study obtained the views of the households in the Project area, Project Director of Strategic Master Plan of CPA and representatives of Government agencies and NGOs. Most parties stated that they understand the need for a port development projects for Chittagong Port and support this development subject to a number of concerns and issues being addressed. The main issues raised were:  Previously the local people, workers of surrounding industries/organizations and the mariners used to catch different fish from the Karnaphuli River and adjacent areas. Now a days, most of the fish have disappeared due to pollution

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problem. Even now some cat fish are that usually caught from the Karnaphuli River, have oil smell in the muscle. This is due to heavily oil contamination and bio-accumulation of oil residues;  Oil and petroleum related materials were found to be the main issue for environmental management at CPA. Oil spill may occur from ships, tankers, ship breaking factories, oil company’s terminals, and oil refinery. The danger of the large-scale oil spill by an accident has been pointed out during stakeholder consultation. The disposal of oil is frequent in the offshore anchorage and onshore operation that becomes a problem concerning environmental management.  All legislative and regulatory requirements and processes should be fully compiled with, including full transparency and accountability during Project assessment and approval. The community should be consulted and given every opportunity to have input into this process  The maximum opportunity for employment should be provided to the local community for both construction and operation stage of master plan interventions, including the provision of appropriate training in advance.  During relocation/resettlement of 738 households at Laldia, the replacement facilities/conditions must be better than current conditions at Laldia. Separate resettlement sites are to be developed at Block A. Development of Port in a manner that allows existing fishing uses at Bay Terminal to continue or proper compensation will be paid.

FGD with Project Affected People at Laldia site

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Consultation at Govt. Primary School at Block Consultation at Bay Terminal site, South A, Laldia site Kattoli

3.6.8 Conclusions and Follow Up

The Government of Bangladesh has approached ADB with the aim of preparing a new Chittagong Port Master Plan for the coming 25-30 years considering all previous development plans for the port are outdated and the last Chittagong Port Master Plan covered the period of 1995-2010. The aim of the Port Master Plan should be to improve the capacity of Chittagong Port which will support and maintain sustainable economic growth in Bangladesh by ensuring access to the international markets. A Preliminary Environmental Assessment in the form of IEE has been prepared for the port development projects according to the requirement of ADB Environmental Safeguard Policies for any development projects. The IEE has been prepared through identifying the potential impacts, assessing them and recommended possible mitigating and enhancing measures for negative and positive impacts, respectively.

The key impacts which were identified and are addressed in the IEE are, involuntary resettlement (at Laldia), loss of structure, loss of fishing gher (at Bay Terminal), dredging and dredged material disposal, air and noise quality, disturbance during construction, construction pollution, management of the construction workforce and workers health and safety, management of accidents and emergencies.

Port operations can make a significant impact on the environment. There can have an direct impact on receiving water in the vicinity of ports from the spillages of oil and oily wastewater from vessels or ports, release of ballast water, spillage of

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 95 noxious substances or washing from tanks containing noxious liquids from both vessels or ports, site runoff from the port storage area or dust emission from storage or transfer area, or the discharge of solid waste from ships or ports. Oil can be released in the event of vessel accident or collision, or from transhipment of oil. Hazardous cargoes can be spilled by accident from vessels at sea, or during loading at ports.

At this stage of project preparation, the environmental management plan has been prepared in outline only, as many important elements have yet to be fully defined. Several mitigation measures to reduce or eliminate negative environmental and socio-economic impacts from the Port development projects are proposed in the IEE. The follow up would largely have to be through the detailed planning and implementation of each project. This would require that an EIA is carried out for each project in the plan, taking into account how the design and construction techniques could contribute to minimizing the various negative impacts from the master plan. The various EIAs should be undertaken in parallel with the implementation of the institutional Action Plan. Necessary environmental clearance should be obtained for the project before start of construction work.

Finally, having reviewed all the potential environmental impacts and following the recommended mitigative measures as per this EMP, the proposed Port development projects under Strategic Master Plan are expected to proceed without having unacceptable environmental effects.

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4. SOCIAL ASSESSMENT AND SOCIAL MANAGEMENT FRAMEWORK

4.1 Background

Bangladesh has demonstrated a steady growth tendency in economy over the last decade with economic growth in the range of 6.1 to 6.7% during the last five year period. GDP share of export goods of the country has been 19.5%8 through this period. Due to high expenditure level through air transportation, majority of the export products follow the port route and Chittagong being the largest and principal sea port of the country, 92% of the export transportations is sent through Chittagong port. The economic growth combined with the increasing trade has increased the pressure on Bangladesh main port, Chittagong Port, which is basically a river port situated 16 km upstream from the Bay of Bengal. During the last fiscal year 2012 Chittagong Port handled 41.90 million tons of cargos, including 1.41 million TEU container cargos, corresponding to an average annual growth rate of 8.1% respectively 10.1%. The port has successively changed and adapted the handling facilities with a focus on container handling. This has led to a narrowing scope for handling of break-bulk and bulk cargoes and there is a need for investigating different expansion possibilities.

The important role of Chittagong Port for Bangladesh underlines the necessity of investigating how the port should be developed best to meet the future challenges. All pervious development plans for the port are outdated and the last Chittagong Port Master Plan covered the period 1995-2010. Against this background the government of Bangladesh has approached ADB with the aim of preparing a new Chittagong Port Master Plan for the coming 25-30 years. The aim of the Port Master Plan should be to improve the capacity of Chittagong Port which will support and maintain sustainable economic growth in Bangladesh by ensuring access to the international markets.

4.2 Project Objective and Scope

The Chittagong Port Master Plan recognizes the need for an integrated planning among road, rail, waterways and cargo handling operations. The overall objective of the assignment is the elaboration of a Strategic Master Plan for the

8 http://data.worldADB.org/indicator/NE.EXP.GNFS.ZS/countries

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 97 development of the Chittagong Port in Bangladesh. As the project will impact the inhabitants residing in the proposed locations for a considerably long time, therefore it will involve displacements and require relocation as well as other support from the project. In this context, the objective of the SASMF would be to address:  Present socio-economic condition of the residents in the project area;  Needs assessment according to local populations’ perspectives;  Income and livelihood restoration options;  Relocation requirements to the residential and commercial HHs;  Peoples’ preferences;  Best practice measures adopted in similar projects.

Scope of work of the SASMF has been addressed by performing participatory information compilation of the residents of Laldia Char and Bay terminal through:  Socio Economic Survey of the 100% affected HHs;  Meaningful consultation meetings with the residents to ensure their recommendations to be incorporated in project planning and preparation;  FGD with vulnerable focused groups to ensure inclusiveness from all level of population to be affected by the project.

4.3 Project location

The Chittagong Port Master Plan recognizes the need for an integrated planning among road, rail, waterways and cargo handling operations. In this context, the Laldia bay terminal and the Laldia Char (Block-C) have been aimed to be developed, where a Bulk container terminal is being planned to be developed in Laldia Char Block C and a versatile container terminal is to be developed in the Bay terminal. With this scheme, Social Assessment and Management Framework as well as Environmental Impact Assessment (Chapter 3 of the document) has been prepared for the population residing or performing livelihood activities within the administrative boundaries of North Halishahar- Ward No. 37, Middle/South Halishahar- Ward No. 38 and South Kattoli- Ward No. 11 (Bay Terminal) and South Patenga - Ward No. 41 (Laldia Terminal).

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Pictures of project site; Bay Terminal

Pictures of project site; Lal Diar Char

4.4 Profile of Population

This section will scrutinize the field findings in order to extract the socio- economic bonding of the community to the location. For social assessment of the communities to be affected by the port master plan, stakeholders’ consultation meeting, PRA analysis and 100% household socioeconomic survey has been conducted. The household survey covered demographic information as well as information like ownership of property, living condition, access to utilities and services, assessing income and expenditure, etc. Valuable comments from the local councilor and community leaders have been acquired during consultation meetings. Their opinions have been reviewed and analyzed through household survey findings.

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History of settlement

According to the local people, the settlements in Lal-diar char in Block A, B and C are residing in the area for 43-44 years since 1973. They alleged that the settlements had been offered to them in exchange of their previous residence, which was acquired by the ruling government after independence of the country for extension of the Air-force base. Since then, their third generation is growing up in the area at the moment. During deportation from their primary residence, the considerations of the ruling government were to resettle them in an agro based area, where they can organize their livelihood without interruption in consequence with their previous standard of living. Therefore, this char-land was conditionally offered to them for residence. According to the order of DC, they had to build polders for flood protection, protection from tidal surge as well as cyclones, built walk ways, plant trees, dig ponds for fishery cultivation, construct school and mosque compounds for themselves, etc. They have carried out all these work accordingly and also, paid tax for the land for two years. They have kept this prolonged history well documented, which has been presented to the survey team.

On the other hand, the Bay Terminal site is mostly occupied by Shrimp and fish cultivators. Most of the owners live outside the project site and the residents are mostly tenants and fishermen. Few road side shops and kiosks were found during survey, but the road side shops have been acquired by another government project (SRTPPF-2).

Population and HH size

For social assessment of the impact population, 100% socio-economic survey has been conducted. The following tables represent total population with HH size and sex ratio.

Lal diar char

The table represents that there are 738 HHs residing in Lal-Diar Char with population of 3004.

Table 12: Population and HH size (Lal diar char)

No of Households Population Male Female HHs Size 738 3004 1532 1472 4.07

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The HH size in the area is smaller compared to the national average: 4.359. The sex ratio according to the survey findings is 104, which is higher compared to the national ratio of 99.68.

Bay terminal

There are 22 HHs have been identified in the bay terminal during survey with HH size of 4.59.

Table 13: Population and HH size (Bay terminal)

No of Population Male Female HHs Siz Households 22 101 53 48 4.59

Gender distribution of HHHs

The figure below represents gender distribution of the HHHs in Lal diar char. It represents that 14.91% of HHs are headed by female, which is comparable to the national picture with 12%10 HHs being headed by female. Majority of the HHs are male headed. This represents the national scenario that male members being the earning members are mostly the decision making members in the family.

Figure 26: Gender distribution of HHHs

9 BBS population and housing census 2011;

10 Population and housing census 2011;

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Figure 27: Religious distribution

Figure 31 represents religious distribution of the population in the project area in Lal diar char. It exhibits that majority of the population follow Muslim religion, with only 1.46% of Hindu community in the area.

Figure 28: HH size distribution

The average HH size in the project area is fairly small compared to the national context. However, the figure demonstrates that majority of the HHs have 3-4 members. Some (15.45%) of the tenants have even smaller HHs consisting of 1-2 members. Whereas 26.02% of HHs have 5-6 members. Very few HHs in the area have more than 6 members in the area.

Occupation of population

The field findings on occupation of the population represent that job opportunity is very low for both male and female residents in the area. Majority of the female population are unemployed with 26.03% housewives and 14.76% unemployed. However, there are 6.12% service holders among the female residents, who are mostly workers at the EPZ in garment factories. A large number of male respondents have been also unemployed in the area. Most of the male day labourers some are engaged in business and some are service holders.

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Table 14: Occupation of population (11+)

Occupation Male Female Total % % % Day Labor 14.76 1.49 16.25 Business 8.32 0.27 8.60 Service 6.36 6.12 12.49 Technical Worker 0.47 0.04 0.51 Transport Worker 3.26 0.12 3.38 Self Employed 1.81 0.94 2.75 Housewife 0.00 26.03 26.03 unemployed/ retired/ 15.23 14.76 disable/child Total 50.22 49.78

Marital status of the site population is represented in tabular form to the left. It indicates that there are more married residents than unmarried. The number of male and female married and unmarried groups is comparable, yet there are a number of widows in the area. Widows are considered financial burdens to the families, especially in a region with fewer job opportunities for both male and female. This issue should be considered carefully during social safeguard planning.

Table 15: Marital status of site population (15+)

Marital Status Male Female Both sex Married 690 703 1393 Unmarried 332 205 537 Widowed / 13 113 126 Abandoned Divorced 0 8 8 Total 1035 1029 2064

The respondents were asked regarding their age at first marriage. It has been revealed that incidence of child marriage is very prominent among the female respondents. About 33% of the female population at the sites stated that they had been married before 18 years of age. This was found rare among the male respondents.

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Table 16: Incidence of child marriage

Range of year Male Female Total % % % Up to 15 0.39 11.26 11.66 16 to 18 3.80 21.48 25.28 19 to 20 8.64 13.95 22.59 21 to 25 20.37 6.48 26.85 Above 25 12.84 0.79 13.62 Total 46.04 53.96 100.00

Figure 29: Education level of population (7+)

Figure 29 represents education level of the impact communities. In consequence with national level education, the dropout rates are subsequently higher for advanced studies. Education levels are analogous for male and female population. Nevertheless, illiteracy is higher among female population to some extent.

Table 17: Disabled population

Disability Percentage Yes 1.00 No 99.00 Total 100.00

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Percentage of disabled population11 is presented in Table 28. Only 1% of the population are physically or emotionally disabled to support their fellow members of the HHs.

Table 18: Duration of residence

Period of residence (year) Total No. % Up to 10 117 15.85 11 to 20 130 17.62 21 to 30 171 23.17 31 to 40 162 21.95 41 to 50 154 20.87 Above 50 4 0.54 Total 738 100

Majority of the residents have lived in the area for 30-50 years. They have their keen members residing next to them in the same vicinity. On the other hand, as the area have the benefits of city services; many tenants also have been living there from last two decades.

Financial capability

Financial capability of the population has been represented in the figure below through their savings stock in ADB or with NGO and loans to personal level or NGOs. Savings and loan information has been collected from each member of the HHs. The abstract of the findings is that the residents have more loans than savings. 36.99% of the population agreed to have savings, of which the most have savings up to BDT 5,000 and the number of population decreases with increasing amount of savings. On the other hand, the picture is completely opposite for loans. The residents mostly depend on personal loans from keen members to recover any financial shortfall of their HHs.

11 Disabled population: The populations that are physically or emotionally challenged and are considered to be incapable to be engaged in any form of occupation or support to their keen are considered as disabled. The respondents that consider themselves or keen members disabled to their own accord have been listed as disabled by the survey team.

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Figure 30: Financial capability of the population

HH Expenses

The expenditure inclination of the population has been revealed through their monthly expenses for food, utility, transport, entertainment and education. The residents stated that their expenditure for education is very limited. As schooling is free and educational items as books, etc are also provided from school. On the other hand, their expense trend on food, utility, transport and entertainment represent that they spend mostly on food. As only the owners pay house rents, therefore utility expenditure is also limited. Expenses on transport or entertainments are rarely more than BDT 5,000 a month.

Table 19: Expenditure Trend of the HHs

Amount in BDT Monthly Monthly Monthly Monthly Expense on Expense on Expense on Expense on food Utility Transport Entertainment Upto 5000 19.11 99.85 98.96 99.71 5001 to 10000 64.91 0.00 0.84 0.15 10001 to 20000 15.85 0.15 0.00 0.15 20000+ 0.14 0.00 0.21 0.00 Total 100.00 100.00 100.00 100.00

Medical services

Type wise use of medical service by the community is represented in the table. It indicates that allopathic treatments are mostly taken by the residents in case of medical needs other than informal treatments. But other than consulting doctors, they mostly follow advise from the pharmaceutical shops.

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Table 20: Medical services

Type No. % Herbal 4 0.54 Homeopath 1 0.14 Allopathic 733 99.32 Total 738 100.00

Gender balance

The HH respondents were enquired about gender balance in the area. Majority of the respondents believe that there is good gender balance in the area as the incidence of violence on women is very low.

Table 21: Gender balance

Type % Yes 96.76 No 3.24 Total 100.00

Role of women in decision making

Majority of the HHs stated that women play equal role in their respective HHs in decision making. Only a few disagreed with the concept of women’s role in decision making.

Table 22: Decision making role of women

Type No. % Yes 744 98.25 No 16 1.75 Total 760 100.00

Merits and demerits of the residence:

The residents shared merits and demerits of the location as residence with the survey team. The most common (32.44%) answer to this issue was that this is their only residence/ shelter; therefore, they have no other options to move away. Many of them (20.43%) mentioned that the location and civic facilities available in the area are good enough and 8.31% mentioned that the major benefit of the area is that they can live nearer to their relatives and keens.

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On the other hand, as the major problems of the area, they mentioned natural disasters like flood, water logging and tidal serge. Drinking water has been identified as one of the major problems (25.36%) of the area. Some of the HHs lack gas and electricity connectivity. Other than that, eviction threat was found as one of the major concerns of the local population.

4.5 Consultation and Participation

This part of the chapter describes the nature and level of the consultation meetings carried out in the Port Master Plan impact area. According to ADB safeguard policy SPS 2009, it is vital to conduct meaningful consultation meetings with the project impact population. Consultation meetings are the best resolutions to bridge the gap between the APs and primary stakeholders of the project (i.e. Donors, acquiring and requiring bodies, Implementing agencies, etc). Through this, the project beneficiaries and affected communities can participate directly by putting forward their opinions and views about the project from preparation to execution stage. Views of community level project stakeholders are needed to be considered in decision-making about project design, impact assessment, mitigation measures, and implementation. The key objectives of the consultation meetings are (1) How the consultation were carried out (2) How people were engaged and involved in the process (3) The scope of consultation meetings (4) How the local stakeholders perceive the project and other feedback received. Following the objectives the study team conducted 03 consultation meetings and 6 FGD’s.

Consultation meeting outcomes in brief

Mr. Khairul Matin (Safeguard Specialist) briefed the participants concisely about importance of the consultation meeting to ensure participation of the local people in project planning. He gave brief team introductions of the KS consultant team; Mr Abu Nahid Muniruddin being the Environment Specialist, Kazi Akhmila- Social and Gender Expert and Mr. Shariful Islam-The Social Development Expert. He also described the resettlement issues of the project. He described the participants about current project discernment. Shariful Islam coordinated the meeting and stated that the consultants have organized the meeting to have both way mutual discussions, so that the stakeholders are aware and they can plan for their future and to be decisive about their rearrangements. Then the commissioner Saleh Ahmed and their leader Alomgir introduced themselves and described their opinions on behalf of the community.

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Pictures: Consultation meetings at Lal-diar char and at the Bay terminal.

The Project Director Mahabub Motin elaborately described the project, after getting introduced with the locals, he started speaking in local language and the crown truly appreciated that. He stated that all of the affected entities within the project Right of Way (RoW) will be enlisted and conducted surveys. He said that as it is an ADB project, the project will ensure proper compensation and resettlement according to ADB policy (SPS 2009). Therefore, he requested to provide accurate information to the survey team. He also said that, the project will try their level best to ensure proper resettlement. He anticipated that the community will support the team to run census survey efficiently. The surveyors will note the description of the affected properties on the right of way. He pointed out on the probable impact on the project and mitigation measures to be taken based on best practices of the recent project experiences.

The discussion was mutual and after discussion about the project the participants were requested to raise issues about project implementation, impacts mitigation and their expectations. They were answered with best possible mitigation measures by the consultant group, which is attached in the following table.

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Table 23: Consultation Meeting outcomes

Date and Venue Issue Discussed Time Attendance

19.05.15 Commissioner’s 24 Project Design. 5.30 P.M House Discussed about the present socio economic condition of the community. The locals insisted the project to ensure resettlement site and residence for all. They suggested Block A as a resettlement site for all the residents of three blocks. Discuss about the difficulties during project period. 22.05.15 Lal-diar Char 89 Eviction procedure of 2005 in 9.30 A.M Government Block B was discussed by the Primary School residents and it was admitted that safeguard issues were not addressed in the procedure. They demanded Proper resettlement before starting the project. They suggested Block A as a resettlement site for all the residents of three blocks. The project ensured that their requirement will be duly addressed during planning and preparation of project documents. They requested to resettle them in Block A of lal diar char with proper land documents. 26.05.15 Dokkhin Kattroli 27 People will lose their “Shrimp 10.00 A.M Gher”. So, they want proper recovery. It is big business damage for them. People also lose their various kinds of business and they want proper relocation and business compensation.

FGDs with affected communities:

KMC field staff and Social Development experts arranged 06 FGDs through the inception period of the study. The potential project impacts were discussed with

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 110 Strategic Master Plan for Chittagong Port – Final Report, Part 3 the focus groups. The participants of the FGDs were selected from affected vulnerable HHs, female group, day labourers, businessmen, etc.

Pictures: FGD with evicted residents from Block B and vulnerable female group;

The major issues discussed in the FGDs were about impact of the Master Plan to their residence, income and livelihood and desirable mitigation measures of affected community. The residents suggested arranging residential facility in the surroundings to minimize resettlement impacts. They suggested Block A area as their preferred resettlement site. The FGDs were conducted from 19-21 May 2015 at the inception of the socio-economic survey. A detailed description of the FGD issues and participant opinions are attached in a tabular form underneath:

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Table 24: FGD responses

Date and Group Attendance Issue Discussed time 19.05.15 Female 12 (F) There are no job opportunities for women 12.30 P.M Group in the area. The female members were hesitant to have to leave their familiar environment. They were also concern about notice period before relocation; The respondents finally agreed that if the project provides them land for land with legal papers, then they will leave the area with no regret; 19.05.15 Business 12 People would lose their business and 3.00 P.M Group structure. So, affected people want business compensation and relocation of their business facilities properly. They are concern as they have a face value in the area, which is important for business; The members assist each other in need so they want to be relocated with their keen members; 20.05.2015 Evicted 33 In 2005 they were evicted from block B 10 A.M Group f without any notice and now they are living in Block C and A. So, now they are anxious about the project. They want proper relocation arrangements with legal documents to each of the HHs. They want to be relocated with their keen members together. They were also concerned about notice period before evacuation as they were not allowed any time previously. 20.05.2015 Worker/L 20 The labours were more concerned about 3.00 A.M abour livelihood opportunities, They stated that if they lose jobs due to project then project should ensure preferential job opportunities to them, They also stated that if the port requires special tasks then they can provide skills development trainings.

21.05.15 Female 13 (F) The female members want job

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Date and Group Attendance Issue Discussed time 10 A.M Group 2 opportunities/ trainings for women in the area. They were also concern about notice period before relocation; The female members agreed to be relocated if the project provides proper compensation; 21.05.15 Day 13 Assurance of work opportunities is their 2.00 P.M Labor main demand with proper resettlement opportunities. They stated that if they lose jobs due to project then project should ensure preferential job opportunities to them, They also stated that if the port requires special tasks then they can provide skills development trainings.

4.6 Social Management Framework:

This Social Management Framework (SMF) has been prepared for the Chittagong Port Master Plan as the guidance for Chittagong Port Authority and target communities to mainstream social development and safeguard compliance issues; it spells out principles, processes and guidelines for management of resettlement and other issues inclusive of all target population residing in project area irrespective of social and ethnic identity, poverty, gender and vulnerability. The SMF will also guide Chittagong Port Authority in developing preferred solutions for resettlement and rehabilitation of the impact population through legal framework and the ADB policies on social safeguard issues. The SMF provides the guidelines for social impact assessment and preparation of resettlement plans (RP) as necessary.

4.7 Social Management Principles

Inclusion and participation

The port Master plan will be designed to ensure that the all sections of the communities including the very poor, women, small ethnic communities, and marginalized and disabled persons either titled, non-titled, or renters, get relocation facilities under the project. Chittagong Port Authority will adopt a bottom up approach for identification of communities based on their expressed demand and agreement to relocation and ILRP solutions suitable to their

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 113 circumstances. Master plan will be done through engagement of the communities and each constituent group for inclusion and participation.

Transparency and social accountability

The Right to Information Act (2009) recognizes that stakeholders can exercise their rights to access information in context of development programs and the public institutions including Chittagong Port Authority are obligated to place information in public domain. This creates an enabling environment to develop trust among implementing partners. Information will be disclosed in public domain including social assessment and social management plan, as applicable.

Specific measures should be designed on (i) consultation, feedback and grievance- redress mechanisms to alert project staff to problems identified by beneficiaries, affected people, and other stakeholders; (ii) participatory planning to ensure the project meets the needs of impact population; and (iii) participatory monitoring and evaluation for identification of problems.

Social safeguards

Legal and policy framework provides for acquisition of land and assets and compensation measures for the assets to be acquired. The approach will be to avoid or minimize, to the extent feasible, the hardships and impoverishment that land acquisition or displacement associated with implementation of the master plan. Following principles would be addressed in preparation of safeguard documents:  Acquisition of private and public lands causing physical displacement of people will be avoided or minimized to the extent feasible.  In unavoidable circumstances, if additional land is required, the CPA may explore alternatives to voluntary contribution and mitigate possible adverse social impacts.  CPAs may also opt to purchase the required lands directly through negotiation and get them in exchange of similar lands or on contribution against compensation.  Acquisition of lands owned by tribal peoples will be avoided in all circumstances. Acquisition of lands owned by any other vulnerable groups will be considered only in exceptional circumstances, if no other feasible alternatives are available.

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 Displaced people will be compensated and assisted for livelihood restoration, and demolished physical structures will be replaced or compensated commensurate to ground situations.

The above principles will be mainstreamed adopting appropriate process for social impact assessment and mitigation of impacts. Grievance Response

The project will establish a grievance response mechanism (GRM) to answer to queries, receive suggestions and address complaints and grievances about any irregularities in application of the guidelines adopted in this framework for inclusive project design, and assessment and mitigation of social and environmental impacts. Based on consensus, the procedure will help to resolve issues/conflicts amicably and quickly, saving the aggrieved persons from having to resort to expensive, time-consuming legal action. The procedure will however not pre-empt a person’s right to go to the courts of law. Grievance response focal points will be available at the city level at URC and project level within Chittagong Port Authority. A Grievance Redress Committee (GRC) will be formed for each location affected communities.

Approval and Disclosure

The SMF will be submitted to ADB for review and clearance by the designated regional safeguard unit and formally agreed with the Government of Bangladesh. Appraisal of the social management issues for the Master Plan as well as the RP wherever required, will also be subjected to review and clearance by ADB. Whenever requested, Chittagong Port Authority will provide the ADB with copies of the social screening reports for all components by the project consultant. Chittagong Port Authority will upload the SMF in their official website along with Bangla translation of the executive summary. The English version of the SMF will be forwarded to the ADB for disclosure at country office information centre before appraisal. Chittagong Port Authority will advertise the date of disclosure and its website address through newspapers.

Implementation Arrangements

Implementation arrangements will be organized following the SMF as a guideline. A Project Management Unit consisting requiring body and consultants will be in charge of monitoring resettlement implementation. An eligible implementing agency can be chosen from experienced NGO or social consulting farm with experience in planning and implementation of similar projects in a large scale. Further elaboration of implementing arrangements will be provided in detailed RP document.

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Resettlement Policy Framework

This Resettlement Policy Framework (RPF) provides norms and procedures to screen, assess, and plan land acquisition and resettlement activities to mitigate adverse social impacts on the communities. The proposed resettlement policy is prepared in full compliance with ADB safe guard policy SPS 2009 as well as applicable laws of the Government of Bangladesh.

The resettlement principles suggested for the project recognizes the Acquisition and Requisition of Immovable Property Ordinance 1982 (subsequent amendment in 1993 and 1994) and the requirements of the ADB policies on Involuntary Resettlement (SPS 2009) and relevant local laws, policies and guidelines related to the project. The RPF has been prepared based on the general findings of the review of existing experience and stakeholder consultations at the selected sites as a guide for relocation and resettlement of affected persons at instances of both involuntary displacement and voluntary relocation for site development and construction.

Chittagong Port Authority will get existing land in possession of a selected community (khas land or departmental land) transferred to it before leasing out to the community for tenure security of longer term. Land acquisition and involuntary displacement will be avoided or minimized to the extent possible through the incorporation of social considerations into project design.

Involuntary Displacement

Involuntary displacement is likely when Chittagong Port Authority will acquire private lands or resume public lands from private uses for allocation of the same to the selected communities for beginning construction for development of the sites according to the new master plan. Involuntary displacement due to acquisition of land for sites for voluntary relocation and voluntary displacement due to land sharing will be covered under the RPF as project responsibility addressed by the Chittagong Port Authority.

4.8 GoB Legal Framework

The Government of Bangladesh (GoB) does not have a national policy on involuntary resettlement. Eminent domain law is applied for acquisition of land for infrastructure projects where it is evident as required for public interest. However, in projects with external finance, GoB adopts project specific policy on land acquisition and resettlement. The legal and policy framework of the Project on land acquisition and resettlement, therefore, is based on the GoB laws on Land Acquisition and ADB's Safeguard Policy Statement 2009. Based on the analysis

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 116 Strategic Master Plan for Chittagong Port – Final Report, Part 3 of applicable laws and ADB’s Policy requirement, land acquisition and resettlement (LAR) principles for Chittagong Port Master Plan has been adopted. In this section following things are described 1) GOB and ADB’s legal framework and the gaps 2) Compensation principles and standards adopted in this project 3) Persons entitled for compensation, entitlements and application guidelines etc.

The principal legal instrument governing land acquisition in Bangladesh is the ‘Acquisition and Requisition of Immovable Property Ordinance 1982’ (Ordinance II of 1982 including amendments up to 1994 - ARIPO 1982. The 1982 Ordinance requires that compensation be paid for (i) land and assets permanently acquired (including standing crops, trees, houses); and (ii) any other damages caused by such acquisition. The Ordinance provides certain safeguards for the owners and has provision for payment of “fair value” for the property acquired.

The Deputy Commissioners (DC) in all the cases, determine “market value” of acquired assets on the date of notice of acquisition (notice under section 3 of the Ordinance). The DCs then adds 50% premium of the assessed value for cash compensation under law (CCL) of all acquired assets except standing crops due to compulsory acquisition. The CCL paid for land is generally less than the market value as owners customarily report undervalued land transaction prices to avoid higher stamp duty and registration fees. If land acquired has standing crops cultivated by tenant (Bargadar) under a legally constituted written agreement, the law requires that part of the compensation money be paid in cash to the tenants as per the agreement. Places of worship, graveyard and cremation grounds are not to be acquired for any purpose. The law requires that the government will auction the savaged materials upon payment of compensation out. Under the 1982 Ordinance, the Government is obliged to pay compensation only for the assets acquired. Households and assets moved from land already acquired in the past for project purposes and/or government khas land are not included in the acquisition proposal and therefore excluded for considerations for compensation under law.

Under the 1982 Ordinance, the Government is obliged to pay compensation only for the assets acquired. Further, the Ordinance does not deal with social and economic impacts as a consequence of land acquisition. For instance, the Ordinance does not cover project-displaced persons without titles such as informal settler (squatters), occupiers, and informal tenants and lease-holders (without registration document). Further, the Ordinance has no provision for resettlement of affected households and businesses or any assistance for restoration of livelihoods of the displaced persons.

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4.9 ADB Safeguard Policy Statement (SPS) 2009

The Asian Development Bank’s (ADB) Safeguard Policy Statement (2009) on the other hand, recognize and address the R&R impacts of all the displaced persons irrespective of their titles and requires for the preparation of RP in every instance where involuntary resettlement occurs. The ADB policy requirements are: i. Avoid or minimize impacts where possible; ii Consultation with the Displaced people in project planning and implementation; iii. Payments of compensation for acquired assets at the replacement value; iv. To enhance, or at least restore, the livelihoods of all affected persons in real terms relative to pre-project levels; and to improve the standards of living of the displaced poor and other vulnerable groups. v. Planning through a survey and/or census of displaced persons, including gender analysis, specifically related to resettlement impacts and risks vi. Explore viable alternative project designs to avoid and/or minimize involuntary resettlement. vii. Carry out meaningful consultations with affected persons, host communities, and concerned agencies /organizations. viii. Inform all displaced persons of their entitlements and resettlement options. Ensure their participation in planning, implementation and M&E of resettlement programs. ix. Pay particular attention to the needs of the vulnerable groups, especially those below poverty line, the landless, the elderly, women and children and Indigenous people, and those without title to land, and ensure their participation in consultations. x. Establish a grievance redress mechanism to receive and facilitate resolution of the DPs concerns. xi. Support the social and cultural institutions of displaced persons and their host population. xii. Ensure that no one is worse off as a result of resettlement and would maintain their at least original standard of living. xiii. Resettlement assistance to Displaced persons, including non-titled persons; and xiv. Disclose the resettlement plan and other relevant information in a form and language(s) accessible to key stakeholders, civil society, particularly affected groups and the general public. xv. The borrower/client will conduct socioeconomic surveys and a census, with appropriate socioeconomic baseline data to identify all persons who will be displaced by the project and to assess the project’s socioeconomic impacts on them.

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 118 Strategic Master Plan for Chittagong Port – Final Report, Part 3 xvi. As part of the social impact assessment, the borrower will identify individuals and groups who may be differentially or disproportionately affected by the project because of their disadvantaged or vulnerable status xvii. Ensure that the existing social and cultural institutions are supported and used to the extent possible, including legal, policy and institutional framework of the country to the extent that the intent and spirit of the IR policy is maintained. xviii. Resettlement plans will elaborate of displaced persons entitlements, the income and livelihood restoration strategy, institutional arrangements, monitoring and reporting framework, budget and a time-bound implementation schedule.

4.10 Gap Analysis between GoB Law and ADB SPS

There are some gaps in the land acquisition law of Bangladesh and ADB Safeguard Policy Statement (SPS) 2009 related to land acquisition, compensation and involuntary resettlement. The LA law of Bangladesh does not recognize unauthorized occupants on the government land and there is no clear indication about avoiding or minimizing displacement rather mitigation of impacts through compensation payment while ADB SPS suggests avoid or minimize adverse impacts through alternative design options. According to the existing LA law people will be officially noticed about land acquisition but community level prior consultation and information dissemination regarding land requirements for the project are not usually done. The ADB SPS 2009 requires meaningful consultation with the affected people and other stakeholders to disseminate project goals and objectives obtain peoples’ opinion about the project, roles and responsibilities of the project authority and affected communities, etc. The adverse social impacts due to the project are not mitigated as per existing LA law while uphold or at least restore previous standard of living of the affected people is one of the goals of the ADB SPS 2009. The existing law does not require any resettlement planning for the affected people whereas the ADB SPS requires preparation of resettlement plan, if the proposed project will have involuntary resettlement impacts. The objective of the resettlement plans will elaborate the displaced persons entitlements, the income and livelihood restoration strategy, institutional arrangements, monitoring and reporting framework, budget and a time-bound implementation schedule.

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4.11 Safeguard Measures to Bridge the Gaps between ADB SPS 2009 and Gob Law in this Project

This SMF has been prepared for the proposed Chittagong Port Master Plan as per ADB SPS 2009. Affected persons will be advised to be provided with replacement value for affected properties under the project. The SMF has proposed the mitigation plans to bridge the gaps as under- i. The detailed Resettlement Plan (RP) will adhere to the principle- i.e., avoid resettlement impacts where feasible ii. Minimize displacement of people as much as possible by exploring all viable design alternatives. iii. If unavoidable, provide for prompt payment of adequate compensation, replacement cost (for lost assets and income) and rehabilitation and livelihood assistance, towards better condition than before relocation for all displaced households regardless of title to land iv. Provision for replacement value for assets lost (i.e. structures, trees, etc.) at replacement cost. Other resettlement benefits are to be provided v. The detailed RP is to be disclosed to the community in Bengali version. vi. RP requires identification of impacts caused by displacement whether or not through land acquisition (maintaining the principle that lack of formal title to land should not be a bar to compensation and resettlement assistance), including number of affected persons. The RP also addresses indirect impacts. vii. Resettlement Policy Framework of the project requires full census and/or updating, where possible, for up-to-date database. The detailed RP will be developed based on updated survey database viii. Provide guidelines to ensure displaced persons and communities’ compensation for lost assets at full replacement costs and other assistance to help them improve or at least restore their standard of living at pre-project level. Includes special attention to gender and preparation of gender action plan ix. Provide guidelines to ensure displaced persons and communities’ compensation for lost assets at full replacement costs and other assistance to help them improve or at least restore their standard of living at pre-project level. Includes special attention to gender and preparation of gender action plan x. The detailed RP will consider feasible alternative project design to avoid or at least minimize physical or economic displacement, while balancing environmental, social, technical and financial costs and benefits. xi. RPF has provisions for community consultation and public disclosure of impacts as well as mitigation measures, including disclosure of Resettlement Plan. Further, grievances redress procedures involving cross-section of people, including representative of affected persons,

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have been established for accountability and democratization of the development process

4.12 Social Impact Assessment

The Social Impact Assessment will provide a rapid assessment of the socio- economic characteristics of the communities and its potential impacts and risks. It will also identify potential need for additional lands and the methods of obtaining those lands. SIA will be carried out during the preparation stage during identification of social safeguard issues. The principal opportunity of the SIA involves identifying viable alternatives; identifying potential social impacts, including direct or indirect; permanent or temporary; physical or economic, assessing their significance; designing least-cost mitigation measures and monitoring requirements; formulating institutional arrangements; and ensuring meaningful public consultation and information disclosure procedures. To ensure that social concerns are adequately addressed, specific social analyses will include: (i) Socio-economic analysis; (ii) Stakeholder analysis and (iii) Involuntary resettlement (including temporary or permanent relocation and compensation for loss of assets). The assessment will identify and estimate impacts, risks and opportunities and suggest measures to avoiding or minimizing, mitigating and managing, and compensating adverse social impacts.

4.13 Resettlement Planning

Resettlement will be ensured by Chittagong Port Authority for affected communities. Involuntary resettlement may be involved in the process of acquiring land by the Chittagong Port Authority (by involuntary acquisition, direct purchase or inter-ministerial transfer) for leasing out to the selected communities. The SIA will be carried out for planned sites to identify social safeguard compliance issues with regard to ADB SPS 2009 on Involuntary Resettlement. Based on findings, the CPA will prepare RP for the Master plan with assistance from project consultants.

If the project has no adverse impact, due diligences report will be included confirming the same and also stating reasons for the same. The SMF or RP will be shared with ADB for review and clearance prior to the contract bidding and implemented before award of civil works contracts. ADB will periodically review and do random checks for the documents.

A full resettlement plan shall include a statement of involuntary resettlement objectives and strategy, with:  Description of the planning with measures taken to minimize adverse impacts;

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 Findings of the socioeconomic survey and social and gender analysis including summary of public consultations held, cut-off date;  Survey Maps showing land requirements, proposed location  Land requirements and action plan for obtaining land (LA/Land Purchase/Voluntary Donation Plan;  Legal and policy framework, including eligibility criteria and cut off date for the Master plan(cross referring to SMF)  Entitlements Matrix, proposed resettlement measures for the affected PAP categories  Participation, Consultation, Grievance Redress Mechanisms for resolution of complaints and conflicts with appeals procedures;  Relocation Planning (If some householders are displaced) with information on resettlement site, if available;  Income restoration and livelihood support measures including access to training, temporary employment, and credit;  Post resettlement support, if any required (shelter, infrastructure, and social services);  Organizational responsibilities for implementing, monitoring and evaluation;  Cost estimate for implementing RP; and  Implementation schedule, showing how activities will be scheduled with time-bound actions in coordination with the civil works.

The RP will include key details such as: the list of affected households, their impact category, magnitude of loss or damage to land and/or assets suffered by them (based on census survey); the entitlements matrix, cut-off date, detail information on specific entitlements of the implementation schedule including the payment of compensation and resettlement assistance, budget, and site hand over for the civil work. Like the full RP shall ensure that adequate compensation, rehabilitation, and relocation arrangements are planned and budgeted.

4.14 Eligibility and Entitlements

An Entitlement Matrix has been developed as per this framework following the Table that will outline various types of losses resulting from the project impact and provide for compensation and resettlement and rehabilitation assistance for various categories of affected people. The matrix lists types of impacts and losses, application guidelines, and entitlements. The matrix will apply to all proposed

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 122 Strategic Master Plan for Chittagong Port – Final Report, Part 3 master plan development entailing relocation and resettlement impacts irrespective of the size and extent of impact. RP will be updated, if additional resettlement impacts are identified in any stage of plan implementation.

The entitlement matrix has been prepared in accordance with the GoB laws and in compliance with the ADB safeguard policies. Following the finalization of the design, the detailed survey of the affected land and/or non-land assets and detailed census survey of the affected families will be carried out to record the actual impacts. As a part of the land acquisition, replacement cost surveys (or asset valuation) will be carried out, which will form the basis for determining the compensation for the affected land and assets.

This valuation can also be used to inform the negotiation of land value between plot owner as per the laws on land acquisition and the community, or when land is to be directly purchased. All involuntary land acquisition (other than exceptional voluntary land donation) will be compensated at replacement cost. Moreover, the affected persons will be assisted to re-establish their living standards (affected shelter and incomes) to a level equal to or better than their living condition prior to the sub-project. The members of the PMU will be representatives from District Committee, consultants and CPA at the division and the Deputy Commissioner of the district. The CPA is required to pay the difference to the land losers where the replacement cost is lower than the market value. In cases of disputes such as where land records are not updated and/or where the affected people are unable to produce the desired documents or absentee land owners, then the compensation amount will be deposited in the account of the concerned CPA member till the case is disposed.

Table 25: Eligibility and Entitlement Matrix

Loss Item 1: Loss of Land Persons Entitlements Application Additional Entitled Guidelines Services Monetary Amounts Legal owner/ • Replacement • RC will be • Legal owners  As titleholders as cost (RC) of recommended will be assisted determined identified by land. by RSC that will by CPA by PAVC Deputy • Dislocation include current through Commissioner allowance (DA) market price IA/project (DC) to land owners. and the consultant to transaction cost organize legal

(stamp duty documents in and registration support of their cost). ownership. • DC will pay • IA/Project cash consultant will

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Loss Item 1: Loss of Land Persons Entitlements Application Additional Entitled Guidelines Services Monetary Amounts compensation identify loss under law and (CCL) for the entitlement of land. female owners • If RC is higher and co-sharers than CCL, the through share difference (top- determination up) will be paid at the field by upon receipt of CHITTAGONG payment data PORT from DC office. AUTHORITY . • The DA will also be paid by CHITTAGONG PORT AUTHORITY directly to the PAPs.

Loss Item 2: Loss of structures with title to land Persons Entitlements Application Additional Monetary Entitled Guidelines Services Amounts Legal RC of structure as Applicable to all Assistance in As determined owner/ determined by structures relocation and by PAVC titleholders PAVC. located on the reconstruction. as site boundary at Transfer Grant identified (TG) of affected cut-off dates. by DC structure @ 12.5% RSC will of structure value. recommend the 12.5% of structure value. Reconstruction RC of the Grant (RG) of structures. affected structure DC will pay CCL 12.5% of @ 12.5% of for structure and structure value. structure value. if CCL is less Special Allowance than RC, CHITTAGONG (SA) for each residential PORT households AUTHORITY BDT 10000 per headed by a will pay the Household destitute female, a difference (top- disabled, an up) directly with elderly (over 60) the assistance persons or a very from IA. poor (below CHITTAGONG

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poverty line) PORT households whose AUTHORITY annual income is will provide up to BDT 90,000 other (ninety thousand) resettlement amounting to BDT assistance (TG 10000 per and RG and Household. SA) directly. Owner will be The SA will be allowed to take equivalent to away all one month’s salvageable income at the materials free of rate of daily cost within wage rate in the CHITTAGONG locality. PORT AUTHORITY declared deadline.

Loss Item 3: Loss of structures without title to land Persons Entitlements Application Additional Monetary Entitled Guidelines Services Amounts • Socially RC of structure Applicable to Assistance in As determined by recognized as determined all structures relocation and PAVC owners of by PAVC. located on the reconstruction. structures built site boundary Transfer Grant within the site (TG) of affected at cut-off 12.5% of boundary as structure @ dates. structure value. identified 12.5% of RSC will during census structure value. recommend and verified by Reconstruction the RC of the RSC Grant (RG) of structures. 12.5% of affected CHITTAGONG structure value. structure @ PORT 12.5% of AUTHORITY BDT 10000 per structure value. will provide Household SA for each other residential resettlement households assistance headed by a (TG and RG destitute and SA) female, a directly. disabled, an The SA will be elderly (over equivalent to 60) persons or one month’s a very poor income at the (below poverty rate of daily line) wage rate in households the locality. whose annual income is up to

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Loss Item 3: Loss of structures without title to land Persons Entitlements Application Additional Monetary Entitled Guidelines Services Amounts BDT 90,000 (ninety thousand) amounting to BDT 10000 per Household.. Owner will be allowed to take all salvageable materials free of cost within CHITTAGONG PORT AUTHORITY declared deadline.

Loss Item 4: Loss of community properties on private or public lands Persons Entitlements Application Additional Monetary Entitled Guidelines Services Amounts • Legal RC of structure • Applicable to Assistance in As determined owners as determined all community relocation and by PAVC identified by by PAVC. properties reconstruction. 12.5% of DC in the Transfer Grant located within structure value. process of the site (TG) of affected CCL payment. structure @ boundary at

• Socially 12.5% of cut-off dates. recognized structure value. 12.5% of structure value. owners of Reconstruction structures built Grant (RG) of on the ROW affected as identified structure @ by PAVC 12.5% of structure value. Or • CHITTAGONG PORT AUTHORITY will replace the community property at alternative site with the project cost • Owner will be

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allowed to take all salvageable materials free of cost within CHITTAGONG PORT AUTHORITY declared deadline.

Loss Item 5: Loss of trees with title to land and owner of trees on public land or lessees Persons Entitlements Application Additional Monetary Entitled Guidelines Services Amounts Legal owner/ • RC of trees • Applicable to CHITTAGONG Determined by titleholders as determined by all trees and PORT RSC identified by RSC. plants located AUTHORITY DC • Value of fruits within site /URC will • Socially @ 30% of boundary at explain recognized timber value for cut-off dates. policies owners of each grown up • DC will pay regarding trees grown trees. CCL as compensation for the trees of on public or • Owner of the applicable for different other land, as tree will be trees/plants. categories and identified by allowed to fell • If CCL is less size and make PAVC. and take the than RC or the PAPs • Owners of trees free of there is no aware that trees such as cost within the CCL (for they could Forest CHITTAGONG socially take the timber Department, PORT recognized and fruits free Zilla Parishad, AUTHORITY owners), the of cost. Society, declared difference or Union deadline. RC of different Parishad, species of Lessee on trees will public land directly be paid by CHITTAGONG PORT AUTHORITY with assistance from IA. • RSC will recommend RC of trees and fruits.

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Loss Item 6: Loss of standing crops/fish stock with title to land Persons Entitlements Application Additional Monetary Entitled Guidelines Services Amounts Owner • RC of • Applicable CHITTAGONG As assessed cultivators as standing for all PORT by DC. identified in crops/fish stock crops/fish AUTHORITY joint as assessed by stock standing /URC will verification by DC. on land/pond assist PAPsin DC, • Owners will within site the process of CHITTAGONG be allowed to boundary at claiming PORT take crops and the time of compensation AUTHORITY fish stock dispossession. from DC and RSC. within • DC will pay offices for CHITTAGONG CCL for organizing PORT crops/fish necessary AUTHORITY stock. documents. declared • deadline. CHITTAGONG PORT AUTHORITY will pay the difference directly to the PAPs, if CCL is less than RC. • RSC will recommend RC of crops/fish stock at take away.

Loss Item 7: Loss of leased or mortgaged land Persons Entitlements Application Additional Entitled Guidelines Services Monetary Amounts

Leaseholder • RC of • With legal  Assessed by with legal crops/fish stock agreement: • IA will assist DC. papers as assessed by Legal owner in ensuring DC. and that the lessee • DA will be mortgagee/ receives all paid to the leaseholder eligible actual cultivator will be paid payments. CCL by DC in of the acquired • IA will accordance land by mediate refund

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CHITTAGONG with the law. of outstanding PORT • With lease money AUTHORITY . customary by the owner • The cultivator tenancy to the lessees. will be allowed agreements, to take the including crops/fish socially- within the recognized CHITTAGONG verbal PORT agreements: AUTHORITY • declared CHITTAGONG deadline PORT AUTHORITY will ensure RC of crops to the cultivator with direct payment of the difference, if CCL is less than RC.

Loss Item 8: Loss of income from dismantled commercial and industrial premises Persons Entitlements Application Additional Monetary Entitled Guidelines Services Amounts Any proprietor • An amount CHITTAGONG Vulnerable BDT or equivalent to PORT PAPs will be 50,000(fifty businessman three months’ AUTHORITY brought under thousand) per or artisan net income will directly income month for operating in based on three pay the generating large scale premises, at years average entitlement to program. business the time of income but not the eligible enterprises. issuance of exceeding BDT PAP. Notice u/s 3 50,000(fifty and/or as per thousand) per census. month for large scale business Small and enterprises. medium scale • An amount business equivalent to operators as three months’ per census net income but not against the exceeding small and BDT 24,000 medium scale business operators as per BDT 5,000 census but not (five

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exceeding BDT thousand) for 24,000 (twenty tenants. four thousand) in total. • One time moving assistance of BDT 5,000 (five thousand) for tenants.

Loss Item 9: Loss of income (wage earners in agricultural, small business and industry excluding owners or employers) Entitlements Application Additional Monetary Guidelines Services Amounts • Grant to cover • PAP must • Vulnerable 300/day for 90 temporary loss have been an PAPs will be days of wage income employee of brought under (wage grant - landowner or income and WG) @ business livelihood 300/day for 90 located in the regenerating days if lost due acquired lands program. to the project for at least • Involvement interventions. twelve of qualified months, as PAPs in identified by construction Joint work. Verification • Involvement and/or of qualified Census. PAPs in tree • The needs of plantation and vulnerable social groups will be forestation. assessed. • The WG will be paid by CHITTAGONG PORT AUTHORITY directly to the eligible PAP. Persons Entitled Regular wage earners affected by the acquisition as identified by census.

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Loss Item 10: Loss of income from rented-out and access to rented-in residential and commercial premises Persons Entitled Entitlements Application Additional Monetary Guidelines Services Amounts • Legal owner/ • Rental • The owner of Vulnerable 3 months’ titleholders of allowance (RA) rented out PAPs will be rent but not the rented-out for both premises will brought exceeding premises as residential and be entitled for under BDT 7,500 identified in commercial dislocation income and Census. rented-out allowance for livelihood

• premises to each unit of regenerating

Household/pers owner of the premises program. on rented-in any structure for the rented out to one month’s such structure amount separate rent but not as identified in equivalent to 3 households or exceeding Census. months’ rent but persons. BDT 5,000 not exceeding • In case of BDT 7,500 any advance (seven thousand deposited by five hundred). the tenant, an • Alternative agreement on housing non-claim or allowance (AHA) outstanding for both balance residential and should be commercial certified by the rented-in local premises to government eligible PAPs representative (rentees) for the between amount owner and equivalent to one tenant. month’s rent but The RA and not exceeding AHA will be BDT 5,000 (five paid by thousand). CHITTAGONG • Additional PORT structures AUTHORITY erected by tenant directly to the will be identified eligible PAPs. by the RSC and compensated as Item No. 3. • Right to salvage materials from demolished structure erected by tenant.

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Loss Item 11: Loss of Tube-well Persons Entitlements Application Additional Monetary Entitled Guidelines Services Amounts Legal owner/ Compensation to DC will pay CHITTAGONG Determined titleholders as be determined CCL and PORT by RSC but identified by DC by the RSC but CHITTAGONG AUTHORITY not over BDT Socially not over BDT PORT will provide 10000/tube recognized 10000/tube well. AUTHORITY guidance in well. owners of Salvageable will pay top-up installation of affected tube- materials will be if RC is higher arsenic free well within the allowed to take than CCL and tube-well at site boundary away free of full RC if DC alternative as identified cost. does not site. during census. recognize the loss.

Salvageable materials will be given back after payment of CCL for the tube well.

Loss Item 12: Loss of Toilet Persons Entitled Entitlements Application Additional Monetary Guidelines Services Amounts Legal owner/ Compensation DC will pay CHITTAGONG Determined titleholders as to be CCL and PORT by RSC but identified by DC determined by CHITTAGONG AUTHORITY not over Socially the RSC. but PORT will provide BDT recognized not over BDT AUTHORITY guidance in 10000/toilet owners of 10000/toilet. will pay top-up installation of . structures if RC is higher the toilet at than CCL and relocated/altern identified during Salvageable full RC if DC ative site. census. materials will does not be allowed to recognize the take away free loss. of cost.

Salvageable materials will be given back after payment of CCL for the tube well.

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Loss Item 13: Disconnection of utilities (gas, electricity, telephone, water, sewage, etc) Persons Entitled Entitlements Application Additional Monetary Guidelines Services Amounts Legal owner/ New CHITTAGONG CHITTAGONG titleholders as connection PORT PORT identified by DC assistance as AUTHORITY will AUTHORITY determined by make payment of will provide RSC the assistance for compensation reinstallation money directly to of the utilities the PAPs

Loss Item 14: Loss of government agency provided residence Persons Entitled Entitlements Application Additional Monetary Guidelines Services Amounts Households/persons Shifting to Applicable to all CHITTAGONG residing in housing of government PORT government agency equal or better employees AUTHORITY assigned housing as condition residing in will identify the identified by the provided by the government government Accommodation government assigned employee and Board and agency housing within corresponding Administration Unit Shifting cost site boundary on assigned covered by the cut off dates structure from government respective office. agency Shifting cost will be covered by Right to salvage the government materials from agency under the demolished regulation of structure government. erected/extended by the RSC will identify government and employee. recommend the additional infrastructure erected/extended by the government employee.

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Loss Item 15: Unforeseen adverse impacts Persons Entitled Entitlements Application Additional Monetary Guidelines Services Amounts Households/ persons Entitlements will The As appropriate affected by any be determined as unforeseen unforeseen impact per the impacts will be identified during RP resettlement identified implementation policy framework through special survey by CHITTAGONG PORT AUTHORITY as per request from impacted population. The entitlements will be approved by CHITTAGONG PORT AUTHORITY and ADB.

4.15 Compensation Payment Procedure

CPA will ensure that the properties (land, structure and non-structure assets) to be affected by the project will be compensated at their full replacement cost determined by Joint Verification Committee (JVC) as per structure and mandate outlined in the Master plan. The payment of compensation and other assistance, target replacement of productive assets and restoration of loss of income and workdays by the relocated households, especially to the vulnerable household’s, compensation and other cash assistance will be paid through ADB bills (cheques) payable in ADB accounts opened by the affected persons eligible for compensation and assistance under RP. The ADB account will be in the joint name of husband and wife as the case may be.

Compensation under law (CUL) and that as per provision in the RP will be paid through two different channels. CUL will be paid by Deputy Commissioner mandated for acquisition of land for the CPA while CPA will directly pay the remaining as per requirement of the RPs directly to the project affected persons. CPA will advise through the project consultant, assist and monitor the affected persons receiving compensation and other cash assistance for better use of the money.

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4.16 Eligibility and Cut-Off Date

The cut-off date of compensation eligibility for title holders is decided according to the Acquisition and Requisition of Immovable Property Ordinance, 1982 and for non-titleholders; it is the start date of the census survey. Those who encroach into the Master plan area after the cut-off date will not be eligible for compensation or any other assistance for relocation and resettlement.

4.17 Best Practice Measures

In addition to the national policy and ADB safeguard guidelines, best practice measures of recent comparable projects should also be taken into account to provide best viable resolutions in social safeguard issues of the master plan. In addition to that, short research can be conducted involving previous project beneficiaries to understand the benefits and shortfalls of similar projects.

In this regard, two examples of similar projects in the area are provided below:  New Muhuri Container Terminal Project (2003-2004): The project involved involuntary resettlement and considering all possible scopes, the project resettled 200 affected HHs in 22 acres land. Majority of the land was used for community development as field, schools, grave yard, connecting roads etc.  Civil Aviation Project (1998-1999): This project has been also recommended by the Port Master Plan project area residents and leaders. The land and connecting roads were developed by the project and the APs received land in exchange for land as per their ownership of land in the project area. Their structures have been constructed by the APs themselves according to their ability. Even soil from their predecessors’ graveyards has been transplanted by this JICA project.

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School compound and community mosque at the Civil aviation project site;

Community Correspondence

The community residing in Block C has a complex history and social bonding with the surrounding. Although the project site is limited to Block C, but residents that had been evacuated from Block B (2005) have also taken shelter in this territory as many of their keen members are also residing in this place. Many of them have relatives in Block A. Therefore, during consultation meetings, the participants repeatedly mentioned that as they are city dwellers, they can accept rearrangements, but they cannot leave the city area as in will affect their income and livelihood. They suggested that there is approximately 57 acres of land in Block A and most of the residents are more or less related to them. So, if the residents of all three Blocks are resettled in Block A, where they have their mosque, school, grave yard and the polder has been strengthened with CC Blocks, then it will be the best measure to all.

The school compound and Mosque and the CC blocked polder at the back of Block A

4.18 Grievance Redress Mechanism

Background and Purpose

Displacement due to infrastructural development will induce social and environmental concerns. It is very likely that communities will have questions and complaints and in some cases suggestions on alternative options for location and design for their resettlements. The affected persons for project purpose may have issues of inclusion and participation and recognition of losses and the compensation process applied for them. The current legislative framework has limitations in addressing such claims and complaints and there is no mechanism to hear and redress grievances of beneficiaries and non-titled persons affected by

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 136 Strategic Master Plan for Chittagong Port – Final Report, Part 3 project interventions. Considering the context, the project will establish a grievance response mechanism (GRM) to answer to queries, receive suggestions and address complaints and grievances about any irregularities in application of the guidelines adopted in this framework for inclusive project design, and assessment and mitigation of social and environmental impacts. Based on consensus, the procedure will help to resolve issues/conflicts amicably and quickly, saving the aggrieved persons from having to resort to expensive, time- consuming legal action. The procedure will however not pre-empt a person’s right to go to the courts of law.

Complaints and Grievance Mechanism

The complaint and grievance mechanism will be available to allow an affected people appealing any disagreeable decision, practice or activity arising from land and assets, and from construction related activities. APs will be fully informed of their rights and of the procedures for addressing complaints whether verbally or in writing during consultation, survey, and time of compensation. The project planning and implementation will be cautious enough to prevent grievances through advance counselling and technical assistance to the APs in the land acquisition and compensation collection process. This will be ensured through careful land acquisition and resettlement (LAR) design and implementation, by ensuring full participation and consultation with the APs, and by establishing extensive communication and coordination between the affected communities, the CPA, and local governments in general.

4.19 Grievances Redress Committees

Grievance Redress Committees (GRCs) will be established at two levels: (i) Union/Municipal level and (ii) Project Level. At the Community level, GRCs will be formed with representatives from CPA, local elected representatives from the Local Government Institutions (LGI), Affected Persons representatives (women representative in case of women APs), and RP implementing agency. GRC decisions will be on a majority basis and will be publicized among the local communities. Where the complaining parties are not satisfied with the GRC decisions, they can go the Project Officer (CPA level) for resolution. If the disputant is still unhappy, he/she can file cases in the court. GRC will be established at the community level at Union Parishad/ Municipality through a gazette notification from the Ministry of Shipping.

The member secretary of GRCs will be regularly available and accessible for APs to address concerns and grievances. Female U/P member and the female APs will

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Scope and Jurisdiction of GRC

The scope of work and jurisdiction of GRC are:  The GRC shall review, consider and resolve grievances, related to social/resettlement and environmental mitigations during implementation, received by the committee.  Any grievances presented to the GRC should ideally be resolved on the first day of hearing or within a period of one month, in cases of complicated cases requiring additional investigations. Grievances of indirectly affected persons and/or persons affected during project implementation will also be reviewed by GRC.  The GRC will not engage in any review of the legal standing of an “awardees” other than in direct losses or distribution of shares of acquired property among the legal owners and associated compensation or entitlement issues.  GRC decisions should ideally be arrived at through consensus, failing which resolution will be based on majority vote. Any decision made by the GRC must be within the purview of social, resettlement and environmental policy framework.  The GRC will not deal with any matters pending in the court of law. But if the parties agree on through a written appeal, GRC can mediate. The parties will withdraw the litigation.  A minimum three (3) members shall form the quorum for the meeting of the GRC.  The Legal Adviser will not play role as member but will put his lawful advice/ suggestion during GRC sessions

Grievance Redress Monitoring

The Project Manager of PMU will keep records of all the grievances and their redress in monthly cumulative formats, which will be provided by the INGO and to be signed by the convener of the Grievance Redress Committee. The format will contain information on the number of grievances received with nature, resolved, and the number of unresolved grievances.

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4.20 Monitoring and Evaluation

The new port master plan is a 30 year development process, monitoring and evaluation during project implementation is an important step to attain long term goals through the project. Monitoring and evaluation (M&E) is an integral part of any project. Monitoring is a periodic assessment of planned activities providing midway inputs facilitates changes and gives necessary feedback of activities and the directions on which they are going, whereas evaluation is a summing up activity at the end of the project assessing whether the ac5tiviteis have actually achieve their intended goals and purposes. The project M&E mechanism will measure Master plan performance and fulfilment of the objectives of inclusion, participation, transparency, social accountability and social safeguard compliance. The Master plan will be implemented by the IA and CPA will supervise through project based supervision staff and project consultant.

M&E of social development and safeguard activities in Master plan cycle will consist of a range of steps related to inclusive and participatory planning and design, land taking, preparation and implementation social development and safeguards plans. The PMU will adopt a participatory monitoring strategy and resort to both internal monitoring and external review and evaluation involving project consultants, CPA, and Local government institutions.

Internal Monitoring

CPA will carry out internal monitoring with assistance from the project consultant and the Social Safeguard Specialist. The PD of the CPA will be responsible for internal monitoring of the social management actions and preparation and implementation of SMF/RP. The Safeguard Specialist will develop monitoring formats which will be filled in by the field level CPA staff. The assigned CPA staff will be thoroughly briefed about the SMF and any social development and safeguard planning documents and the ADB’s Policy on social safeguards. The Safeguard Specialist will visit the Master plan areas routinely at both planning and implementation stages. The internal monitoring will broadly involve:  Administrative monitoring: daily planning, implementation, trouble shooting, feedback and trouble shooting, progress and performance.  Social management issues: inclusion, participation, transparency, accountability and social safeguard compliance.

External Monitoring

External review and evaluation will be carried out to assess how effectively and efficiently social development and social safeguards issues have been identified

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 139 and mitigation measures planned and implemented. An independent consultant (individual expert or an organization) will be employed by both CPA for carrying out independent review and evaluation. The external review and evaluation will specifically assess  Whether the broader social development objectives of the Master plan are met, what difficulties there are and suggest corrective measures.  Whether the Master plan impacts on key social, economic and environmental indicators show positive trend, what difficulties are there and suggest corrective measures.  Whether the project strategy of inclusiveness, participation, transparency, social accountability and equity are followed specifically in rehabilitation and improvement of urban infrastructures.

The independent evaluation consultant will develop a baseline in the beginning of project implementation in the Master plan areas under the project funding. A mid- term review will be carried out by the consultant halfway of the project implementation period. An end term evaluation will be carried out for Master pans funded through the project.

Monitoring Strategy

Monitoring in the project will be done in a participatory manner and will be a bottom up process. The participants in monitoring and evaluation particularly in reporting the grassroots level activities on social management in Master plan and implementation will be the beneficiary communities including the members of the CHSs and other stakeholders. Self-monitoring by communities through CHS will be a main input to both internal and external monitoring.

A set of measurable social development and safeguard compliance indicators will be developed by CPA for collection of information on changes from the Master plan areas. These indicators will be identified in consultation with the communities and fine-tuned by the URC. The project consultant will facilitate the process of identification of indicators on process, output and impacts of the project interventions in selected communities.

4.21 Reporting

The Chittagong Port Authority will provide monthly progress reports to the PMU on progress and achievements in social management and resettlement of project affected persons. The PMU will provide ADB with the following information for

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 140 Strategic Master Plan for Chittagong Port – Final Report, Part 3 review of performance and compliance with the SMF and the ADB’s SPS 2009 and other requirements.  Quarterly Progress Report indicating progress on social development issues, and social safeguards including land acquisition and implementation of any impact mitigation plans (with and without land acquisition) adopted by the individual CHS;  Community wise updates on compensation payment for land acquisition (where Chittagong Port Authority decides to acquire) and other impacts as and when the ADB requests them for work-package clearance and disbursement; and  Updates for formal supervision missions, if the report produced for the current quarter is deemed not sufficiently informative.

The independent social review and evaluation consultant will produce a baseline, a mid-term review and an end-term evaluation report.

4.22 Conclusion and Recommendation

The Chittagong Port Strategic Master Plan will require displacement of the residential, commercial and community properties which will eventually have impact on income and livelihood of the people living/dealing in the proposed site particularly at Laldia and Bay Terminal area. People have been living in Laldia area for decades with or without legal ownership of the property. But most of them were displaced from their place of origin few decades ago and relocated in the project site. They are still in favour of the project although they have lots of complaints/grievances over the Government rule applied on them in several times especially regarding their displacement. They want necessary support in case of relocation in anywhere in the surrounding area so that they can continue their present means of livelihood. Ensuring about their relocation in a suitable location may ease implementation of the project.

Chittagong Port Authority (CPA) has to find alternatives for their relocation. Other development projects’ policy in the region e.g. Chittagong City Outer Ring Road Project may be followed in case of arranging relocation and resettlement of the displaced households. A full resettlement plan will need to be prepared during next phase of the project to address all issues relating to compensation, relocation and livelihood restoration. One single resettlement plan will be enough for Laldia and Bay terminal area. In depth impact assessment will also need to be done in next phase of the project.

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5. ECONOMIC ASSESSMENT OF THE CHITTAGONG PORT MASTER PLAN

Chittagong Port is a key facilitator of international maritime gateway trade in and out of Bangladesh and has a crucial impact on the national and regional economies. This chapter considers the socio economic environment in which the port operates and explains the nature of the port’s contribution to that context. In particular, it looks at how further development of the port can benefit the nation and economic robustness for further investment.

5.1 Background

The Master Plan sets the long-term development strategy for the port, which will the basis for the future levels of traffic via the port. The development includes proposals to deliver new capacity, reconfiguration of existing facilities, intensification of land use within the port and other engineering options. The plan also considers other ancillary facilities which will increase the intensity of port use. Chittagong port is under national government authority and needs to maximise net social benefit from the investments. The Terms of Reference suggests assessing the economic viability of proposed infrastructure developments based on the preliminary cost estimates. Therefore, CPA is responsible for finding the minimum possible overall cost for handling of goods and possible measures to protect its users. From the standpoint of CPA, the port users can be divided into two: (a) Direct users; and (b) Indirect users. Ship owners are direct users of the port but they are not final users. The final users are those who really pay for the port services. Bangladesh’s producers and consumers are, therefore final users of Chittagong port. So, the economic analysis estimates the effects of reduced delays and increased inefficiency owning to the proposed expansion and development programme and also to maximise the use of the port estate.

Measuring the benefits of an investment made in a port results in certain and practical problems. This arises because the benefits are not circumscribed within the port but are passed on to various other sector and interest groups. A port investment may, depending on the situation, ease congestion, increase productivity, reduce ship’s waiting time, cargo-handling cost and finally reduce overall transport costs. In addition, the intensification of activity within the existing port estate and the development of additional terminals facilities over the period of the master plan will bring about new opportunities for employment creation in both the construction and operation of the port facilities. The precise

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 143 scale of such opportunities is not determined in the plan, as the number of jobs created will depend on the nature and scale of any development proposal.

5.2 Economic Scan of the Master Plan

By contrast, if the Chittagong Port failed to respond to the proposed wider port sector developments and, in particular, the ongoing trend towards increased containerisation and the use of larger container vessels, this would place it at an operational and competitive disadvantages related to vessel waiting time, vessel service time, user charges and lower shipping rates. The disadvantages, increase of vessel waiting time, vessel service time, increase of user charges and shipping rates which will incur regional as well as national economic growth potentials. In this context, the master plan considers wider economic development and linkages with port development/expansion programmes. If cargo throughput exceeds the existing port capacity, the economy is likely to be penalised through higher shipping rates and the imposition of a rate surcharge due to port congestion. International trade of Bangladesh would be affected and competitiveness of exports may be diminished significantly. Local prices of imported commodities would increase leading to higher inflation rates. This is avoidable if sufficient port capacity is enhanced.

Chittagong Port plays an important role not for the national economy, but also for the Chittagong Region population and economic base. The traffic analysis highlights the fact that almost 30% of the port’s customers are located in the area of Chittagong, the second largest city in the country. Broadly, Chittagong is known as port city and it consists of key strategic national industry cluster which has an economic standpoint from a number of perspectives. The importance of the port can also be visualised in the extent of import and export activity associated with cargo and manufacturing. The main export commodities of the port are jute, jute goods, tea, readymade garments (RMG), leather, frozen fish, shrimps and others. The main import commodities comprise food grains, sugar, fertilizers, cement, crude oil, and petroleum. The port also has extensive linkages with the manufacturing sector, which is a major source of employment in Chittagong areas. It is observed that the linkage between the city’s manufacturing businesses and the port is expanding steadily. In addition, most major national and chain companies that focus on fast moving consumer goods have created substantial primary, secondary or staging dispatch facilities in Chittagong, relating linkages with packing, transportation and allied and supporting industries.

Reports say that about 8,000 jobs in establishments which support the port activity and also direct port-ancillary sector could actually touch than triple of the number. These ranges from cargo terminal operators, clearing and forwarding contractors,

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 144 Strategic Master Plan for Chittagong Port – Final Report, Part 3 transportation companies, freight services and warehousing establishments, ship liners and agencies, cargo agents and so on. The majority of these firms are located in areas that are in close proximity to the port. It could be assumed that the port expansion activities and future traffic growth will increase the employment number from construction to operation and maintenance. Of course, the impact of the employment is not limited exclusively to Chittagong Port only, but also significant in terms of the national economy.

It has been shown in the Chittagong PMP, Final Report, Part 1 that the Strategic Master Plan for Chittagong Port is to explore the capacity of the port to handle 5.4 million TEU by 2040 and onwards. The forecast shows that the projected container demand for Chittagong Port will increase from 1.6 million TEU in 2014 to 2.7 million TEU by 2020, 4.4 million TEU by 2025, 5.1 million TEU by 2030 and 5.4 million TEU in 2040. It is relevant to mention here that the containers often represent higher value goods than that of non-containerised cargo. Though it is often said that the capacity proceeds demand, but in reality the demand for container handling tends to grow faster and supply process tend to take longer time than anticipated, resulting in congestion and an increased be waiting time for vessels, which consequently dives up costs. However, construction of Bay Container Terminal (BCT) will enable larger ships than existing one.

With the work planned in the master plan for BCT in 2023, KCT1 in 2019 and MPT in 2024, as well as other improvements and the move to larger vessels at BCT, port capacity could be expanded to maximum 5.4 million TEUs. The bulk of capital would be directed towards reconstructing, upgrading, expanding the existing port infrastructure and procurements of handling equipment in order to cater the handling of vessels and cargo handling. However, the development of the proposed new container terminals will enable improved port efficiency and hence the ability to achieve these volumes of container handling. Investment can also be injected to new technology in terms of the operating environment and human capital during next years. The aim of these expenditures is to improve efficiency in port operations. Therefore, implementation of specific initiatives to grow volumes and use capacity as it comes on stream, while improving operational efficiencies and growing personnel, is an important aspect of the overall market demand strategy in the master plan.

The expansion of Chittagong Port facilities is necessary and cost effective which could be shown in the financial viability for the economy. Presently, Chittagong Port has a natural potential hinterland connectivity and there is hardly any other proximity in the region. Without intervention, the country may face a crisis in freight volume and transportation capacity which would be similar to the recent energy sector crises, with demand volume outstripping supply. Such scenario

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 145 would result in ripple effects across the economy, accompanied by job crises and be a serious limiting factor for Bangladesh’s economic development.

National competitiveness in international markets is strongly depending on the costs and efficiency of its maritime supply chains for the export and import of commodities and raw materials. The supply chain is made up of multiple modal links which are managed to achieve ‘just-in-time’ delivery as an essential requirement of their cost efficiency. Barriers or challenges to the expansion of the port and the consequent disruption in the functioning of the chains will have enormous effect on both the local and national economies. The Chittagong Port is well located in relation to the economic activity in the Chittagong Region as well as Dhaka Region and has infrastructure linkages with Northeast states/provinces of neighbouring countries. Therefore it has become necessary to have substantial investment, not only in the port, but also in Dhaka – Chittagong transport corridor (rail, road and waterway) that enable cargo to move seamlessly and rapidly through the port terminals.

The transport sector in Bangladesh is one of the major generators of carbon footprint. Therefore, the transport sector, particularly, Dhaka – Chittagong Transport Corridor needs to play a key role in reducing its carbon footprint which could be a possible paradigm shift from road to rail and waterway. The large reliance on road-based transport not only produces a huge carbon footprint, but also gives rise to an greater cost in terms of the burden of road accidents cause huge loss of human life, as well as high cost of medical care. Dhaka – Chittagong road corridor is one of the major accident prone national highways in the country. In carbon footprint context, it demands increasing dependency on rail and inland waterways, creating better efficiencies in movement and process, introducing energy efficiency in buildings and machinery.

The variety and volume of goods handled at the port has often created demand for space and the need to space-prioritise – particularly for high value goods – and move towards space efficiency. But enhancing capacity through efficiency and management is a bit more complex than simply to develop large-scale infrastructure. It includes an integrated approach where optimal handling facilities are provided for , to accommodate vessels and their movements, cargo handling facilities and equipment, internal infrastructure for the transferring of cargo including rail yards and, also trucking facilities. Further it requires infrastructure outside the port that allows for smooth flow, hubs that allow de- stuffing/reconfiguration and modal change and port processes, as well as the relevant skills and human resources. The Master Plan suggests the construction of Bay Container Terminal (BCT) to handle the increased cargo over time which will

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 146 Strategic Master Plan for Chittagong Port – Final Report, Part 3 attract larger ships. Increase of ships size means increase of handling rate of STS Gantry cranes and an overall improvement of productivity.

Port and related industries have a large potential to address the problem of youth unemployment that the country has been experiences. In Bangladesh, among all categories of unemployment people, the youth have the highest levels of unemployment. Highly educated and skilled youth are the most important category of employment for the country and they represent the future of Bangladesh. The loss of a educated workforce has a direct impact on the economic growth in the country. The expansion of the port and development of the BCT, KCT1 and MPT will have triple the number of jobs and opportunities in port and related industries over the next 10 to 15 years.

It is clear that the port expansion could be a prioritised interest of Bangladesh as well as Chittagong Region. The implementation of proposed projects/components under the Master Plan will increase the operational and competitive advantage over the present and remove future bottlenecks of the port. The smooth implementation of the plan will reduce vessel waiting time, vessel service time, and user charges; and could be accomplished by attractive shipping rates. The implementation of the Master Plan will increase regional as well as national economic growth. In addition, the expansion programmes will create thousands of job opportunities in the port facilities as well as in the related industries and business.

5.3 Scope and Approach of Economic Analysis

The economic analysis of the selected capital investment projects under the Master plan is intended to enable Bangladesh government to optimise the allocation of scare financial and other resources and maximise project benefits to improve the national income and income of project stakeholders. The TOR of the Master Plan suggests preparing preliminary cost estimates for various improvement measures and addressing the economic viability during the next 25 to 30 years. Therefore, the Master Plan reveals generated benefits for the economy to offset the economic cost incurred and applied scope and approach of economic analysis followed in the Cost-Benefit Analysis for Development: A Practical Guide by the Asian Development Bank (2013) for evaluation purposes.

5.3.1 Approach and Methodology

The economic analysis is undertaken for comparing the economic costs to be incurred, i.e. investment/capital, and operational and maintenance costs and the benefits to be derived from the selected projects or components under the “with”

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 147 and “without” project scenario. The “without” suggested projects in the master plan scenario assumes the continued operation of Chittagong Port with physical improvements limited to present capacity expansion plans and maintenance work (assumed that existing port operations, repair and maintenance practices are to be continued) and at current operating levels, impact on port users and benefit streams. The “with” the master plan scenario assumes that the implementation, incurring investment/capital costs for construction, lower levels of repair and maintenance expenditures because of new facility, international standards of port efficiency and productivity and incremental revenue generation at “willingness-to- pay prices”. The analysis time period considered is 30 years excluding construction/expansion period, with salvage values, if any, assumed for structures beyond the 30th year.

(a) Criteria for Economic Evaluation

The criteria is that the stream of the present value of project economic costs at the opportunity cost of capital, should be less than the present value of project benefits using the Economic Opportunity Cost of Capital (EOCC) as discount rate. The economic analysis considers three viability measures which are Economic Internal Rate of Return (EIRR), Economic Net Present Value (ENPV) and Benefit-Cost Ratio (BCR). For the master plan, a 12% discount is used for calculation of EIRR and ENPV.

The acceptability of the computed EIRR and ENPV depends on the “economic hurdle rate” or the prevailing estimate of the EOCC for Bangladesh at 12% set by the ADB and follows other donor agencies. In general, the following should hold true:  The EIRR should be ˃ EOCC; and  The ENPV should be ˃ 0 when the EOCC is used as the discount rate,

(b) Economic Discount Rate

For projects financed by multilateral lending institutions such as Asian Development Bank (ADB) and the World Bank (IDA), the hurdle rate (EOCC) for Bangladesh is 12%. The criteria for economic viability are then follows:  The computed EIRR should be ˃ 12%; and  The computed ENPV should be ˃ 0 at the 12% discount rate.

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The selected projects in the Plan are expected to generate benefits from operation and utilisation improvements such as improved vessel utilisation (decrease in ship waiting and service time), cargo handling efficiency and lower freight rates (BCT can accommodate larger ships). The mandatory compliance to the International Ship and Port Facility Security Code (ISPS) for ports handling foreign trade, results in benefits of enhanced port security and safety. The economic benefits of the selected projects include the following:  Vessel traffic benefits. The benefits could be reduction in vessel waiting and service times “with the implementation of the Master Plan projects”. These are expressed in savings in ship waiting time cost and savings in vessel service time cost;  Benefits from lower cargo handling rates. The increased cargo traffic will result in productivity improvements as the terminal operator seeks to move as much as possible lowering per unit handling costs;  Benefits to shippers in terms of savings in inventory costs. With faster vessel turn-around time and higher port productivity, both incoming and outgoing international cargo would be disposed by its consignees within a shorter time than earlier;  Employment benefits. Increased employment during construction, maintenance, operation, manufacturing and port related business;  Benefits from users charges. The port efficiency would increase the users benefits; and  Enhance competitiveness benefits. The implementation of the Plan would enhance competitiveness of Chittagong Port with lowering associated costs which has positive impact on GDP growth as well as Bangladesh economy.

(d) Quantification of Economic Costs

Financial costs converted to economic costs would require various adjustments to the costs and benefits. In particular, import duties and excise taxes, which are effectively transfer payments within the economy rather than real costs, would be subtracted from costs. The shadow price would be applied to foreign exchange, labour and capital where necessary. In practice, the economic costs vary from 0.67 (unskilled labour) to 1.0, therefore, the preliminary economic analysis considers 0.85 to convert financial cost into economic cost.

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5.4 Market Potential and Projected Container and General Cargo Handling

The Master Plan forecast of the development both for containers, general-cargo and bulk cargo handling up to year of 2043 (Chittagong Port PMP, Final Report, Part 1), envisaged that the long-term development of containerised imports was directly related to the economic development of the country. It was shown in the report that there was a direct correlation between growth of real GDP and the container throughput growth. However, the estimated projected container in BCT and KCT1 and general cargo traffic in New Multipurpose Terminal (MPT) are presented below:

Table 26: Estimated Annual TEU (‘000) at BCT and KCT1

2020 2023 2025 2030 2035 2040 2043 BCT 0 1,021 1,890 2,529 2,813 2,678 2,461 KCT1 770 801 809 851 894 894 847 Total 770 1,822 2,699 3,380 3,707 3,572 3,308 Source: HPC 2015

It could be assumed that after completion of dredging works of Karnaphuli River, a capacity of 1,000 TEU ships could be called by the Port. With the assumption, the containers ships call is presented in the following table.

Table 27: Estimated Containers Ships at BCT and KCT1

2020 2023 2025 2030 2035 2040 2043 BCT 0 1,021 1,890 2,529 2,813 2,678 2,461 KCT1 770 793 809 851 894 894 847 Total 770 1,822 2,699 3,380 3,707 3,572 3,308 Source: HPC 2015

The Master Plan also projected traffic for general cargo and bulk cargo at the New Multipurpose Terminal (MPT). It is reported that the projected import type and composition of cargoes the number of annual ships calling MPT is derived from the consideration of average lot sizes to be carried. Especially bulk vessels are already at present fully utilising the length restriction in the port. It has to be expected that this practice will also characterise the future, also in case the navigational restriction will allow for larger vessels. For this reason, also the lot sizes, cargo volumes per vessel are expected to grow. The corresponding number of expected annual ship calls is shown in the following table.

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Table 28: Estimated Annual Ship Arrivals at MPT

2024 2028 2033 2038 2043 General Cargo 197 148 104 73 51 Wood-Logs 60 60 60 59 57 Steel Products 242 247 254 257 261 Grain 19 20 22 24 26 Other Bulk 204 214 229 246 266 Vehicles 34 36 37 38 39 Sum 756 725 706 697 700 Source: HPC 2015

5.5 Adjustment of Estimate Financial Costs to Economic Cost

The capital costs were considered in financial terms of the selected investment options, as estimated during the assessment stages of the Master Plan. The economic costs analysis would require adjustments to the financial costs. In particular, import duties and taxes, which are effectively transfer payments within the economy rather than real costs, would be subtracted from costs. The shadow prices are applied to labour, foreign exchange and capital where necessary. For making of preliminary assessment as per TOR, the Master Plan has considered overall factor of 0.85 for making economic costs from financial investment costs. It is important to underline that all the selected projects are financially viable Therefore, the economic study gives a preliminary assessment, rather than detailed one, and however, detailing of economic analysis would require a detailed design of the proposed projects. The following sections and table describe the detail costs estimate of New Multipurpose Terminal (MPT), KCT1 and BCT.

Table 29: MPT, Civil Engineering Costs (in USD)

No. Description Financial Costs 1 Preliminary Works 1.1 Demolition of buildings and sheds 2,607,000 1.2 Demolition of quay wall 10,200,000 1.3 Clearance/Preparation of terminal area 2,850,000 Sum 15,657,000 2 Quay Wall 2.1 Quay Wall 118,000,000 Sum 3 Infrastructure 3.1 Pavement 19,000,000 3.2 Utilities 9,500,000 Sum 28,500,000 4 Superstructure

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No. Description Financial Costs Rearrangement of existing gate 2 and gate 4.1 300,000 area 4.2 Provision for buildings 1,500,000 4.4 Fencing 345,000 4.5 Sheds 2,750,000 4.6 Flat Storage 3,850,000 Sum 8,745,000 Subtotal 170,902,000 Engineering and 12% 20,508,240 supervision Mobilisation 8% 13,672,160 Contingencies 15% 25,635,300 Total (excl. VAT) 230,717,700

Source: Sellhorn 2015

The estimated total cost for developing MPT is US$ 230.7 million. For other proposed terminals the financial costs for KCT1 are US$ 291.0 million and for BCT US$ 979.0 million. Based on the financial costs estimation, the economic costs of MPT, KCT1 and BCT are US$ 196.1 million, 247.4 million and 832.2 million respectively.

5.6 Economic Evaluation

The Master Plan sets the short-term and long-term development strategy of the Port, which will influence the future levels of traffic that are handled at the port. The major development includes expansion of KCT1 and MPT, and new construction of BCT. Other development activities such as operational improvements will increase the intensity of port use. However, an economic evaluation of port expansion and development investment should be considered before any action is taken. This is a decision making process where profitability of the new investment is in question. The evaluation for such expansion and development programmes requires a calculation of the costs and benefits over the whole economic life of the programmes. The main cost component in a port development project are investment costs, operating costs and maintenance costs, whereas the benefits could be mainly savings in Vessel Waiting Costs, Savings in Cargo Surcharge and Savings in Service Time. A fundamental characteristic of these costs and benefits are that these are spread to other stakeholders in the trade rather than to the port authority. The economic costs of the projects are worked out in the prior section and the followings sections will make focus on estimated economic benefits (which are in terms of savings) from the interventions.

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5.6.1 Savings in Vessel Waiting Time

The following is a general formula for container ships with example for KCT1 in the “with and without project” situation in context of savings in vessel waiting time which could be computed as below.

VWTWOPi = (ECK/AVLFKTEU * AVWTK

VWTWPi = NCK/AVLFK * AVWTK

VWTSWPi = (VWTWOPi – VWTWPi) * AVWC

Where:

VWT = Vessel Waiting Time in day

VWTS = Vessel Waiting Time Savings in US$

EC = Estimated Container Capacity in TEU

AVLF = Average Load Factor of Container Ship in TEU

AVWT = Average Vessel Waiting Time in days

AVWC = Average Vessel Waiting Cost per day in US$

I = Year of forecast

WOP = Without Project Situation

WP = With Project Situation

NC = Net Container Traffic Diverted

K = KCT1

B = BCT

M = MPT

The volume of ship calls in Chittagong Port is shown in the traffic forecast chapter and economic analysis has been considered as it is. The Techno-Economic Feasibility Study of a Deep Sea Port in Bangladesh, 2009 estimated the vessel waiting time and the estimated AVWT was 1.83 days. The study also estimated vessel operating costs based on the vessel DWT. For vessels of 15,000 DWT corresponding to a 1,000 TEU vessel, the estimated vessel operating costs per day

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 153 was US$ 11,000 and for a Dry Bulk carrier of 15,000 DWT was US$ 8,000 for the Chittagong Port. The following table shows the savings in vessels waiting time at the concerned terminals. The following table shows the savings in vessels waiting time at BCT, KCT1 and MPT which is calculated from total number of ships multiplied by AVWT (1.83 days). The estimated number of ships is presented in the Table 27 and Table 28.

Table 30: Vessel Waiting Time Cost at BCT, KCT1 and MPT (days)

2020 2024 2028 2033 2038 2043 BCT 0 2,928 4,039 5,051 5,064 4,504 KCT1 1,409 1,466 1,524 1,603 1,658 1,552 MPT 0 1,383 1,327 1,292 1,276 1,281 Source: KS Consultants Limited

5.6.2 Savings in Vessel Service Time

The service/turnaround time at berth for vessels in the port is almost five days on average( 4.91 days), CPA Annual Report of 2012-2013, while the benchmark is about one day. The identified investment programme of the Master Plan would assume that the port productivity would be of world standard for vessels which is one day. Therefore, the port investment would likely save almost four days (3.91 days) in ship service time. This saving is accrued by the diverted ships from the using of BCT, KCT1 and MPT. The formula used for the estimation of savings in vessel service time is similar that of estimating savings in vessel waiting time. The result of the estimate is shown in the following table.

Table 31: Vessel Service Time Cost at BCT, KCT1 and MPT (days)

2020 2024 2028 2033 2038 2043 BCT 6,256 8,629 10,792 10,819 9,623 KCT1 3,011 3,101 3,257 3,425 3,542 3,316 MPT 0 2,956 2,835 2,760 2,725 2,737 Source: KS Consultants Limited

5.6.3 Savings from Vessel Sizes at BCT

It could be assumed that the BCT will have more than Karnaphuli River draft and to accommodate larger ships. Presently, the typical container vessel calling at Chittagong Port has a capacity of 1,000 TEUs or less with a DWT of about 15,000. The economies of scale for vessel size and vessel operating costs analysis depicts that there could be -5%-(-)15% decrease in container freight rates due to the increase in vessel size from 1,000 TEUs and to 2,000 TEUs vessels.

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Therefore, there is an opportunity for decreased freight rates at BCT and which could be assumed at least 5% only for container traffic.

5.6.4 Results of the Economic Evaluations

Using the estimated economic costs and benefits, the measures of selected projects worth are shown in the following table. The results show that the construction of BCT would have an EIRR of 15.64% and the net worth will be US$ 224.39 million. The expansion/remodelling of KCT1 and MPT also attract projects for implementation in context of economic benefits.

Table 32: Results of Economic Evaluations

EIRR NPV (million (%) US$) BCT 15.64 224.39 KCT1 16.79 81.27 MPT 15.75 42.02 Source: KS Consultants Limited

5.7 Distribution of Master Plan Benefits to the Society

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6. OVERVIEW OF POSSIBLE ORGANISATIONAL CHANGES AT CPA

6.1 Organisation of Chittagong Port Authority

6.1.1 Introduction

Port activities are vital catalysts for the generation of employment, income (pay roll), business revenues and tax contribution for communities. The growing importance of Chittagong Port as a natural outlet, led to the enactment of Port Commissioners Act, 1887 which was introduced on 25th April 1888 and the Commissioners for the Port of Chittagong started functioning. Four Jetties were built in the period between 1899 and 1910 by the Assam Bengal Railway. The Port was then administered jointly by Port Commissioners and the Port Railway. With the partition from India in 1947 the Railway and the Port Commissioners undertook a short and long term plan and during the decade of 1950 nine jetties including seven new and a number of Pontoon Berths and Moorings were constructed. Such rapid development necessitated the re-organisation of the Port Management and as a result, the Chittagong Port Trust was formed in July 1960 to simplify the port administration.

It was though experienced under the “Trust” system that the Port could not meet the challenge of modernisation and expansion. It was felt that more autonomy should be given to the Port Management for better administration and rapid development possibilities of the Port. Accordingly, Chittagong Port Authority was established with the Promulgation of the Chittagong Port Authority Ordinance (Ordinance No. L II of 1976) in September, 1976 and as per provision of this Ordinance, the Chittagong Port is a corporate body with Power subject to the provisions of the Ordinance. The general direction and management of the Port Authority and its affairs vest in a Board which may exercise all powers and do all acts and things which may be done by the Authority.

6.1.2 Current Organisation of Chittagong Port Authority

The CPA also has a high level “Advisory Committee” consisting of members of persons appointed by the Government in consultation with the Port Authority. The appointed members should advise the Authority in respect of such matters as may be referred to it by the Authority or by the Government.

The Advisory Committee consists of the following members

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Members Function

Minister of Ministry of Shipping Chairman

Secretary, Ministry of Shipping Member

Chairman, CPA Member

Commodore Commanding, Chittagong Member

Director General, Coast Guard Member

Director General Shipping Member

Representative of Bangladesh Shipping Member Corporation ( B.S.C)

Mayor, Chittagong City Corporations Member

Chairman Chittagong Development Authority Member

Members of the Parliamentary Committee of the Member Port

Commissioner of Customs, Chittagong Member

Representatives from Port Users like Shipping Representatives Agents Association. C&F Agents Association, Chittagong Chamber of Commerce, BGMEA, Local Members of Parliament,

The Advisory Committee arranges meetings when it is necessary to discuss and suggest which actions the port should take regarding different questions.

The Port Authority (CPA) has mainly the following functions12:  To manage, maintain, improve and develop the Port.  To provide and maintain adequate and efficient Port services and facilities in the Port or the approaches to the Port.  To regulate and control berthing and movement of vessels and navigation within the Port.

12 Chittagong Port Authority Ordinance (Ordinance No. L II of 1976)

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 To perform any other function assigned by the Government from time to time.  To execute the power of Authority in terms of providing required facilities for sufficient operation and service of the port. This includes berthing of vessels, cargo handling, storing and dispatch of goods and defining the applicable port tariff.  Regarding appointment of officers and staff the Ordinance provides for the Authority may, from time to time, appoint such officers and other employees as it may consider necessary for the performance of its function on such terms and conditions as may be prescribed by regulations.  The Ordinance also prescribes delegation of power to Chairman, members and other officers of CPA.”

The daily business is managed by the different Board Members of the respective departments together with the Chairman. CPA’s organisation shows that under the Chairman and the four Board Members, CPA is organised in 15 different departments. The four Members of the Board are the following:  Member Harbour & Marine  Member Engineering  Member Finance  Member Administration & Planning

The number of sanctioned manpower at CPA is 8,655 but currently the active manpower amounts to 5,784 employees. At present, a reorganisation of the manpower is under way due to the introduction of a modern equipment fleet13.

13 CPA Website 2015

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Figure 31: Chittagong Port Authority (CPA) – Organigram

Source: CPA. KS Consultants, 2015

In addition to the department structure above operates the Estate Branch under the Civil Engineering Department, the Training Institute operates under the Administration Department and the Computer Centre operates under Member Finance.

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6.2 Identified Problems of Organisation of Chittagong Port Authority

The Consultant has identified a number of challenges and problems with the current organisation. The main problems are listed below: 1) Chittagong Port is reputed to be a largely autonomous port although it is still subject to provisions emanating from the Bangladesh Government, through the Ministry of Shipping. This means that the port has lacked real authority to function as a commercial service oriented organisation and operates under the administrative control of the Ministry of Shipping.

2) CPA has lot of problems in efficient handling of ships and cargo, especially concerning handling of containers due to inadequate facilities with respect to too limited yard space, lack of cargo handling equipment, poor facilities for the hinterland transportation of containers, high dwell time of cargoes and congestion in the port area. The infrastructural and institutional facilities have not been developed to manage the large experienced growth in container volumes. The problems are partially an outcome of the inherent defects in the organisation structure of the CPA management which not has been adapted to this development. The most important identified challenges are listed below:

I. The port infrastructure must urgently be adapted to handle the forecast future cargo demand for containers, liquid bulk, dry bulk and general cargo. The required adaption and extension of port facilities have not followed the trade development (see also Chapter 3, 5 and 6 in the Final Report, Part 2),

II. Currently there are no organised training programmes for the officers and staff of CPA in order to develop their knowledge and be able to meet the future challenges, something which is important for a growing organisation,

III. There appears to be a lack of communication between management and workers within the different departments. Missing communication between departments is also apparent resulting in not achieving the desired efficiency of the port.

IV. There seems to be an imbalance between officers and staff distribution in CPA. There is a small proportion of officers who are responsible for a large workforce. On average the officer to worker ratio is around 1:35, whereas for an organisation of the size of CPA a more appropriate ratio would be between 1:14 to 1:20 or about double

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the present number of officers on roll. It is therefore recommended that the CPA undertake a phased program to recruit and/or promote new officers and specialists (class I or II) So as to bring their officers to staff ratio up to 1:20 over the next five years.

V. It is noted that although the CPA is termed as “autonomous” it is in fact, regulated through the Ministry and controlled by Governmental rules which severely restrict its capability to hire needed personnel. The Consultant had discussion with all the departments of CPA. It was a general complaint from all departments of CPA that they were understaffed. But the consultants had the impression that it is not the number of staff in the departments, but rather the work method and duplication of works that are causing the problems. The traditional paper based system of working and approval process with files result in an increase of the volume of work. The experienced “workload” can be optimised by transferring the process of approval from files to computer based systems. The major deficiencies and drawbacks in the departments as noted by the Consultant with recommendations for improvements on particular areas are noted below.

a. Deficiency in the Department of Planning The planning department has a vital and strategic role because of its responsibilities concerning analysing the current development and the port’s competitive position, as well as proposing development alternatives for the port to meet the future demands. The tasks require multi discipline skills including engineering knowledge, operation knowledge and technical knowledge, apart from economic, statistical and analytical knowledge. It is therefore proposed to strengthen the department accordingly.

b. Deficiency in the Engineering Department There are four Engineering Departments within CPA. Apart from the Civil Engineering Department, the departments seem to be properly manned. In the Civil Engineering Department 30% of the defined functions are vacant, resulting in problems to perform and supervise all the ongoing maintenance and development projects. The Chief Engineer function has been vacant for a long time. Additionally there seem to be problems with recruiting Junior Engineers as well which also are missing. It is recommended that the CPA management looks into the

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structure of the Civil Engineering Department in depth and takes necessary measures.

It is also proposed to establish a separate “Project Implementation Unit” consisting of engineers of different disciplines headed by a civil engineer of proper qualification to speed up the implementation of different projects.

c. Deficiency in the Traffic Department The present the Traffic Department seems to be overstaffed. This might be an effect of the fact that the required adaptions have not been implemented since the introduction of computerised documentation and clearance systems. These aspects should be carefully looked at with the aim to optimise the manpower at the department.

d. Deficiencies in the Estate Branch of CPA This section is responsible for the administration of estate related matters of CPA. CPA owns 2,304 acres of land of which 329.48 acres are in illegal possession (19% of the total land (incl. 594.21 acres that has been diluviated). The total land used by CPA amounts to 951.92 acres and need to be addressed accordingly. For proper administration of the land use plan including lease matters, lease collection of rents and handling legal affairs, the Estate Branch should be made into a fall fledged department with proper manning and authorities. Automation and computerisation of the land lease affairs including collection of rent will greatly enhance the efficiency of the department and substantially mitigate the risks of irregularities.

e. Deficiencies in the Training Institute The CPA Training Institute is run as a branch of the Administration Department of CPA. The institute is headed by a Manage Training with 5/6 officers and a number of staff under him. The Consultant has identified that it appeared that generally the age-old traditional courses run by the institute are not actually adapted to the demand of today and the future challenges. It is recommended that the Training Institute is strengthened and upgraded in respect of management and

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infrastructure facilities so that fully professional training programmes can be conducted on a continuous basis.

f. Problems relating to the Welfare Activities of CPA CPA has been maintaining and administering a long list of institutions under their Welfare activities programme. Examples are e.g. colleges, high schools, primary schools, mosques, churches, stadium, clubs and a hospital. All expenditures for these activities amount to approximately 25% of the annual expenditures of CPA. These activities have been adopted as the “Corporate Social Responsibilities” which actually should be the responsibility of the Government. It appears that the system will continue to prevail in view of the socio-economic culture of Bangladesh. A development where these activities are gradually being transferred to the Government or other institutions is important to achieve, since the complexity of the port activities will increase in the future and CPA needs to fully concentrate on providing these port services. This question is something that needs to be agreed with the Government.

6.3 Recommended Institutional Improvements

Current governance arrangements are marked by a public sector monopoly in the container segment. Bangladesh differs from the other three countries on the Indian sub-continent, all of which started to replace their state monopolies in container operations with international container terminal operators on the late 1990s. They have then continued to follow this approach which has guaranteed high productivity since then. In Bangladesh the corresponding arrangements have not been implemented and the current regulations are inappropriate for regulating and operating a modern port. A transition to a landlord port model would be in line with best practise worldwide and could be expected to deliver significant improvements in port performance.

In the figure below different important aspects for a port’s competitiveness are summarised. The government’s regulatory policies, both landside and maritime, should remove impediments to growing trade, such as inefficient border controls, too strict customs legislation and control policies and weakly defined strategies for development of the logistics industry.

The organisation of the port and its efficiency is another important factor where the optimal port management model should be chosen. Other factors are the

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 164 Strategic Master Plan for Chittagong Port – Final Report, Part 3 physical location of the port and its navigability including access channel depth and tidewater restrictions.

Efficient hinterland connections are another important condition where the port must work closely with the different responsible authorities an integrated manner.

Figure 32: Important Aspects Influencing a Port’s Competitiveness

Source: OECD, Wilmsmeier, 2013

In order to strengthen and improve CPA’s organisation and increase its operational efficiency, the following organisational improvements are proposed:

The port authority should be made a fully autonomous body with a large degree of flexibility and the right to make independent decisions regarding recruiting necessary manpower and developing investment and expenditure budgets including setting the port tariffs. These questions should be handled and decided by the Port Authority without referring all these matters to the government and wait for approval. A larger degree of autonomy would enable CPA to take decisions in a timely manner and help CPA to develop the port according to the market requirements. The following functions are defined by UNCTAD for a port authority:  Investment: Power to approve proposals for port investments in amounts above a certain figure. The criterion for approval would be that the proposal was broadly in accordance with a national plan, which the authority would maintain.

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 Financial policy: Power to set common financial objectives for ports (for example, required return on investment defined on a common basis), with a common policy on what infrastructure will be funded centrally versus locally, and advising the government on loan applications.  Tariff policy: Power to regulate rates and charges as required to protect the public interest.  Labour policy: Power to set common recruitment standards, a common wage structure, and common qualifications for promotion; and the power to approve common labour union procedures.  Licensing: When appropriate, power to establish principles for licensing of port employees or agents.  Information and research: Power to collect, collate, analyse and disseminate statistical information on port activity for general use, and to sponsor research into port matters as required.  Legal: Power to act as legal advisor to local port authorities.

A transition of CPA towards a Landlord Port with the functions and powers defined above is recommended. In the current organisation of CPA, the following short term improvements are proposed:

a) Department of Planning: The Department of Planning should be strengthened with employees with multi- disciplined skills with the knowledge of Engineering, Operation, Economics and Statistics. It is considered as important to strengthen the capacity of this department. b) Department of Civil Engineering: The vacant posts of the department should be filled up with immediate effect and recruitment at the entry level of officers should be made and ensured on regular basis. Furthermore, their timely promotion to higher positions should be ensured so that there is no vacuum at any level at any time in the department. c) Traffic Department: The manpower of the department should be optimised in view of the work load of the department, d) Estate Branch: The Estate Branch should be strengthened and developed into a department with proper authorities where collection of rent is administered properly. e) Training Institute:

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The Training Institute should be strengthened and upgraded in respect of management, budget and infrastructure facilities. f) Welfare Activities: The welfare activities of CPA and the expenditure on this head should be gradually shirked off from the responsibilities of CPA and CPA’s main focus should be on running the port services on professional and commercial basis.

6.4 Introduction to Port Models

Ports generate direct economic benefits (private goods) through their operations as well as additional indirect benefits (public goods) in the form of trade enhancement, second order increases in production volumes and collateral increases in trade-related services. These “economic multiplier effects” have been used by many ports to justify direct public sector investment. It is in this dual production of both public and private goods that complexities arise, which makes defining roles for and boundaries between the public and private sectors challenging in the ports industry.

A reassessment of the manner in which public and private interests are achieved in the port sector during the last years has resulted in a diminishing role for government in the port industry. The private sector plays an increasingly important role in providing funds for infrastructure, in addition to paying for superstructure and systems. This trend is clear. The total absence of public involvement in the port sector however, still remains an exception, limited primarily to situations in which surplus port capacity may exist in a national market and where competition for port services is already intense.

Basically, four main categories of ports have emerged over time which can be classified into the following four port models:  Public Service Port,  Tool Port,  Landlord Port,  Fully privatised port or private service port. These models differ according to: a) whether port services are provided by the public sector (the government), private sector or mixed ownership providers; b) their orientation (local, regional or global); c) who owns the superstructure and capital equipment; c) and who provides dock labour and management.

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Public service and tool ports mainly focus on the realisation of public interests. Landlord ports have a mixed character and aim to strike a balance between public (public port organisations) and private (port industry) interests. Fully privatised ports focus on private (shareholder) interests. A summarising overview on these port models and the corresponding distribution of responsibilities between public and private sectors is shown in Figure 33. Subsequently, each of these models is described in more detail below.

Figure 33: Summary of Port Models

Source: HPC, 2015

6.4.1 Public Service Port Model The public service port model is a predominately public administrative model, usually controlled by the Ministry of Transport. In this case, the public port organisations own and maintain the land and all the available assets (fixed and mobile) and perform all regulatory and port functions including vessel handling and stevedoring operations. The port organisation directly employs the labour that performs cargo-handling operations in the port, although in some cases cargo- handling services are performed by separate public entities, which can present unique management challenges. The Chairman of the public port organisation is usually a civil servant responsible for the port administration, who reports directly to the appropriate minister. Under this model, the same organisation has the responsibility for performing regulatory functions, developing infrastructure and superstructure, and executing operational activities. Generally, there is an absence of private sector involvement in port activities. As the development and operations of the facilities are the responsibility of only one entity, there is the potential for a streamlined and cohesive approach to

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 168 Strategic Master Plan for Chittagong Port – Final Report, Part 3 growth. However, there are various drawbacks that can be stressed in this model. There is a potential for inefficient port administration as a result of limited internal competition; there may also be little incentive for innovative management, and this may lead to services that are neither user-friendly nor market-oriented. Furthermore, the dependence of the authority on the government for funding may lead to a wasteful use of resources or under-investment. The incentives for efficient operations may not be fully functional and non-economic motivations may dominate. Besides, a transfer of know-how or technology from international operators is not possible in this model.

Table 33: Public Service Port Strengths and Weaknesses

Public Service Port Strength  Superstructure development and cargo handling operations are the responsibility of the same organization (unity of command) Weakness  There is less problem-solving capability and flexibility in case of labour problems, since the port administration also is the major employer of port labour  There is a lack of internal competition, leading to inefficiency  Wasteful use of resources and under-investment as a result of government interference and dependence on government budget  Operations are not user-oriented or market- oriented  Lack of innovation  Impossible transfer of technology from international operators Source: HPC, 2015

Tool Port Model In this model there is a division of operating responsibilities between the public and private sectors. The public port organisation owns, develops and maintains the port infrastructure and superstructure, including cargo-handling equipment such as quay cranes, forklift trucks and others. The operation of public port organisation’s equipment is usually performed by labour employed in the public entity, but other operations are performed by private cargo-handling firms, on board vessels as well as on the quay and apron. The private operators are usually small companies, and the fragmentation in responsibility for cargo handling can lead to conflict between small operators and between the stevedoring companies and port administrators. Strong stevedoring companies are seldom found in these ports.

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The approach avoids duplication in facilities provided because investment in infrastructure and equipment is provided by the public sector. However, this approach also runs the risk of under-investment. The above-mentioned division of tasks within the tool port system clearly identifies the essential problem with this type of port management model: split operational responsibilities. Whereas the public port organisation owns and operates the cargo handling equipment, the private cargo-handling firm usually signs the cargo-handling contract with the ship owner or cargo owner. The cargo- handling firm, however, is not able to fully control the cargo handling operations itself. To prevent conflicts between cargo-handling firms, some public port organisations allow operators to use their own equipment (at which point it is no longer a true tool port). The tool port has a number of similarities to the service port model, both in terms of its public orientation and the way the port is financed. Examples for this type of model are small ports in Spain, where the ports have their own ship-to-shore cranes, operated by their own personnel, and small private companies (mainly linked with consignees) provide yard equipment and operate it with their own manpower. These private operators work under authorisations granted by the Port Authority.

Table 34: Tool Port Strengths and Weaknesses

Tool Port Strength  Investments in port infrastructure and equipment are decided and provided by the public sector, thus avoiding duplication of facilities Weakness  The Port Administration and private enterprise jointly share the cargo handling services (operations are carried out simultaneously by two different agents), leading to conflicting situations  Because the private operators do not own major equipment, they tend to function as labour pools and do not develop into firms with strong balance sheets. This causes instability and limits its future expansion of their companies  Risk of under-investment  Lack of innovation  Maintenance of infrastructure is responsibility of the public sector but used by the private Source: HPC, 2015

Landlord Port Model The landlord model is the most common model of allocating public versus private sector responsibilities in the provision of port services. It is characterised by its

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants 170 Strategic Master Plan for Chittagong Port – Final Report, Part 3 mixed public-private orientation. In this model, the public port organisation retains ownership of the port land while the infrastructure is leased to private operators. The private companies provide and maintain their own superstructure, purchase and install their own equipment and employ the stevedoring labour. The responsibilities of the public port organisation as landlord include economic exploitation, the long-term development of the land and the maintenance of basic port infrastructure such as access roads, berths and wharves. Examples of major landlord ports are Rotterdam, Antwerp, Hamburg, New York, Barcelona, Gothenburg and, since 1996, Singapore. In the landlord port model, infrastructure is leased to private operating companies and/or to industries such as refineries, tank terminals and chemical plants. The lease to be paid to the public port organisation is usually a fixed sum per square meter per year, typically indexed to some measure of inflation. The level of lease amount may be related to the initial preparation and construction costs (e.g., land reclamation and quay wall construction). The level of lease may however also be determined by other means, e.g. by references to lease rates for land surrounding the port or other concepts. In landlord ports dock labour is employed by private terminal operators, although in some ports part of the labour may be provided through a port-wide labour pool system. In this approach, the entity that executes operations also owns the cargo- handling equipment; therefore, operational planning is likely to result in appropriate superstructure investment, efficiency and be more responsive to changing market conditions. This model also has risks, the greatest of which is the risk of excess capacity in infrastructure as more than one private operator may press for expansion. In addition, a duplication of marketing effort can occur as both terminal operators and the public port organisation visit potential customers. Therefore, better co-ordination of marketing and planning is required with this model.

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Table 35: Landlord Port Strengths and Weaknesses

Landlord Port Strength a. A single entity (the private sector) executes cargo- handling operations and owns and operates the cargo-handling equipment. The terminal operators are more loyal to the port and more likely to make needed investments as a consequence of their long-term contracts b. Private terminal handling companies generally are better able to cope with market requirements Weakness c. Risk of over-capacity as a result of pressure from various private operators d. Risk of misjudging the proper timing of capacity additions Source: HPC, 2015

Private Service Port (Fully privatised port) In this port model, the government no longer has an interest in port activities. All regulatory, capital and operating activities are provided by the private sector. Port land is also privately owned by the private sector. This model is used in a few ports where operations are flexible and with a strong market-orientation. It can be found in industrial private ports with only one user, who is usually the owner of the port. However, this approach may also result in monopolistic behaviour and the potential for abuse of the natural monopoly position that some ports may enjoy increases dramatically; the ability of the public sector to influence economic development is diminished as the public sector role is minimal. In cases where companies are not community-minded, public involvement in developing long- term economic policy and strategies is also lost. Fully privatised ports are few in number, and can be found mainly in the United Kingdom (Teesport, Liverpool, etc.) and New Zealand. In the absence of a port regulator in the UK, for example, privatised ports are essentially self-regulating.

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Table 36: Private Service Port Strengths and Weaknesses

Private Service Port Strength  Maximum flexibility with the respect to investments and port operations  No direct government interference  Ownership of port land enables market oriented port development and tariff policies.  In case of redevelopment, private operator probably realises a high price for the sale of port land.  The often strategic location of port land may enable the private operator to broaden its scope of activities. Weakness  Government may need to create a Port Regulator to control monopolistic behaviour  The Government (be it national, regional or local) loses its ability to execute a long term economic development policy with respect to the port business.  In case the necessity arises to re-develop the port area, Government has to spend considerable amounts of money to buy back the port land.  There is a risk of speculation with the port land by private owners. Source: HPC, 2015

6.5 Current Situation at Chittagong Port

The current organisational structure in Chittagong Port could be said to be close to a Tool Port Management Model, combined with a strong influence of the Ministry of Shipping in Dhaka. As described above, a transition to a landlord port model would be in line with best practise worldwide and could be expected to deliver significant improvements in port performance. It is therefore recommended that CPA should be transformed into a Landlord Port.

6.6 Concessions as PPP Setups for the Port Sector

By definition, a public-private partnership involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project. Therefore, neither the public nor the private service port can be regarded as appropriate models for Chittagong Port, as these models lead to either solely public or private responsibility for that port, but not to a public-private

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 173 partnership. Also the tool port model is not well suited for Chittagong Port, as the port is only operated by a mix of private and public entities, but solely funded by public authorities. Hence, the landlord port can be regarded as only suitable model for public-private partnerships in the port sector.

A great variety of PPP setups can be established under the landlord port model, which differs in the extent of private financing and operation of port activities. Most suited for public-private partnerships are concession arrangements, as they are characterised by mixed ownership and operation of ports. In more detail, a concession is a contract in which a public authority transfers operating rights for the port or a terminal to a private company, which then performs the port activities defined in the contract. The contract may include the rehabilitation and/or construction of port infrastructure by the private company. In this way, the public authority retains the ultimate ownership of the port and remains in charge for official duties (e.g. pilotage), but transfers substantial operational risks and financial burdens to private companies. Concession arrangements in the port sector typically have rather long contract periods of 10 – 50 years. Basically, two interrelated forms of concessions can be distinguished:  Lease Contracts: An operator enters into a long-term lease on port land and existing infrastructure such as quay walls and warehouses, and is usually responsible for the installation of required superstructure and equipment as well as staffing and operation. The operator retains the revenues earned with the leased port assets and in return pays a previously defined rental to the public port authority.  Concession Agreements: The concessionaire is obliged to construct and rehabilitate the required port infrastructure, to install the required superstructure and equipment, and to operate a facility or service for a contractually defined period. At the end of the contract period, the installed infra- and superstructure is often transferred to the public authority (i.e., BOT – Build, Operate and Transfer). Depending on the profitability of the port business, either the concessionaire pays the public authority for the concession rights (i.e., the concession is “positive”) or the public authority pays the concessionaire for providing the port services under the agreement (i.e., the concession is “negative”).

Lease Contracts

Basically, three different types of lease are in use today, which differ in the extent the lease payment depends on the traffic throughput of the leased facility: flat rate lease, mini-maxi lease and shared revenues lease.

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Flat rate leases give the lessee the right to use a port facility for specific period of time in exchange for periodic payments of fixed amount. This can be a fixed payment per year and square meter and/or quay wall metre. The lease rates differ with regard to the status of the port facility. Higher rates are usually paid for already paved land than for unpaved areas. The main advantage of the flat rate lease is that the lease payments are known to both parties in advance. This form of lease also provides the greatest incentive to the lessee to use the rented facility to capacity. Therefore, flat rate leases are particularly useful for ports whose primary objectives are the maximization of throughputs and benefits to the local economy.

In contrast to flat rate leases, mini-maxi leases give the lessee the right to use a port facility for specific period of time in exchange for a variable lease payment with a minimum and maximum payment depending on the traffic throughput recorded. The fixed minimum rate, which may not fully cover the interest and the amortisation of the lessor, is applicable until a certain minimum traffic volume is exceeded. If this volume is exceeded, a certain rate has to be paid for each unit of cargo throughput until a predefined maximum throughput level is reached. For cargo exceeding the maximum throughput level no further rent has to be paid. In this way the public authority and the private investor share the risks and rewards of the port operations, and the lessee still has the incentive to fully utilise the rented port facility.

A shared revenue lease also gives the lessee the right to use a port facility for specific period of time in exchange for a variable lease payment. However, differing from the mini-maxi lease, there only is a minimum payment regardless of the cargo throughput, but no maximum payment. Hence, the lessee has to pay a predefined rate for each tonnage exceeding the minimum throughput, i.e. all revenues of the port facility are shared between the public authority and the private investor. Both mini-maxi and shared revenues leases are particularly suited for PPP setups, as the operative risks are shared between public and private parties, thus constituting true partnerships between both parties.

Concession Agreements

During the last decades, relations between public port authorities and private port operators have become increasingly complex. Today, many governments want to reduce their financial involvement in port and use private funding for new port development including the construction basic infrastructure such as quay walls. This leads to an increased role of the private sector in port development and financing, which cannot be covered by simple and straightforward lease contracts. As a consequence, a more complex contractual relationship has been developed – a concession agreement. Depending on the specific situation, a concession

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 175 agreement may not only consist of a single contract, but of a combination of several contracts, including a leasehold agreement, a terminal access agreement, a port service agreement, a sponsor’s agreement, a design contract, a building contract, a financing agreement and a management contract.

Concession agreements are often used as a part of BOT scheme, which requires the concessionaire to initially build the required infrastructure, to operate the facility over the contract period and to transfer the facility with all installed assets back to the public authority at the end of the contract period. Often, so called special purpose companies (SPC) are set up by the concessionaire for construction and operation of the port facility. The public port authority may either hold a financial interest in the SPC or it may not. If the public authority decides not to participate in the SPC, then the only difference of the concession agreement to a simple lease contract is the higher share of investments that is borne by the private sector. In contrast, if the port authority decides to participate in the SPC as a shareholder, the difference between lease contracts and concession agreements is much more obvious, as not only investments are borne by the private company, but additionally also the public port authority is more directly involved in the port operations as compared to a lease contract. In this way, a concession agreement represents a real partnership between public and private parties, and can therefore be regarded as well-suited arrangement for PPP setups.

Definition of possible PPP Setups for Chittagong Port

The previous subsection has revealed that both lease contracts and concession agreements are useful tools for implementing public-private partnerships in the port sector. The use of either lease contracts or concession agreement depends on the project specific framework conditions.

For a possible PPP setup of Chittagong Port it has to be distinguished between the already existing port assets and the new to be constructed facilities i.e. the KCT 1 Container Terminal, the Bay Container Terminal and the Multipurpose Terminal.

Altogether, a PPP of the planned development projects can either be set up as a pure lease contract (i.e., lease of existing and new assets) or as a mixed lease- concession agreement (i.e., lease of existing assets but private construction of new assets). A summarising overview of these alternative PPP setups for the Chittagong Port projects is provided in the following table.

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Table 37: Summary of possible Alternative PPP Setups for Chittagong Port

Pure Lease Concession Setup mini-maxi mini-maxi lease lease Financing of public public Existing Infrastructure Assets Financing of other public public Assets Operation private private Setup mini-maxi concession lease Financing of public private New Infrastructure Assets Financing of other private private Assets Operation private private Source: HPC, 2015

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Annex 1 ANNEX 1: RAPID ENVIRONMENTAL ASSESSMENT (REA) CHECKLIST- CHITTAGONG PORT MASTER PLAN

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Screening Questions Yes No Remarks A. Project Siting Is the Project area adjacent to or within any of the following environmentally sensitive areas? Cultural heritage site √ The study area covers inside the existing perimeter of the Chittagong port as well as Protected Area √ outside, along the River

Karnaphuli and at the shore Wetland √ line of the Bay of Bengal.

Mangrove √

Estuarine √

Buffer zone of protected area √

Special area for protecting √ biodiversity

Potential Environmental Impacts Will the Project cause… encroachment on precious ecology √ resulting in loss or damage to fisheries and fragile coastal habitats such as coral reefs, mangroves, and sea grass beds? short-term increase in turbidity and √ sunlight penetration as well as changes in sediment pattern and flows at dredging site? removal and disturbance of aquatic √ flora and fauna at dredging site? deterioration of water quality due to √ silt runoff and sanitary wastes from worker-based camps and chemicals used in construction? alteration of bottom surface and √

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 modifications to bathymetry, causing changes in tidal bore, river circulation, species diversity, and salinity? changes in sediment pattern and √ littoral drift that may cause beach erosion of neighboring areas? modification of terrestrial habitat by √ upland disposal of dredged material or covering of potential archaeological sites with dredge spoil? short-term air quality degradation √ Minor due to dredging-related operations? noise and vibration due to blasting √ Minor and other civil works? risks and vulnerabilities related to √ Risk is temporary and occupational health and safety due associated with construction to physical, chemical, biological, phase. and radiological hazards during Construction workers will be project construction and operation? provided with proper occupational, health and safety gear. Safety officer will be appointed by contractor to lead implementation of occupational and community health and safety plan during construction phase. dislocation or involuntary √ 438 nos. HHs will be displaced resettlement of people? at Laldia Terminal site disproportionate impacts on the √ There is no indigenous people poor, women and children, affected in the project sites Indigenous Peoples or other vulnerable groups? other social concerns relating to √ inconveniences in living conditions in the project areas? social conflicts if construction √ depletes local fishery resources on which communities depend for

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 subsistence? poor sanitation and solid waste √ Appropriate waste disposal in construction camps and management shall be adopted work sites, and possible to prevent any such transmission of communicable conditions. Awareness plan for diseases from workers to local workers will be prepared to populations (such as STI's and educate them about HIV/AIDS)? communicable disease. social concerns relating to local √ inconveniences associated with port operation (e.g. increased volume of port traffic, greater risk of accidents, communicable disease transmission)? deterioration of water quality due to √ Mitigated by waste reception ship (e.g. ballast water, oil waste, facilities. lubricant and fuel spills, sewage) and waterfront industry discharges? increased noise and air pollution √ resulting from airborne emissions (e.g. gas, smoke, fumes) from maneuvering and berthing ships and the waterfront industry? large population increase during √ project construction and operation that causes increased burden on social infrastructure and services (such as water supply and sanitation systems)? social conflicts especially when √ Most of the workers will be workers from other areas are hired? hired locally risks to community health and √ Occupational and community safety due to the transport, storage, health and safety provisions and use and/or disposal of included in the EMP materials such as explosives, fuel and other chemicals during construction and operation? community safety risks due to both √ Community and occupational accidental and natural hazards, health and safety plan will especially where the structural from part of EMP

HPC Hamburg Port Consulting, Sellhorn Engineering, KS Consultants Strategic Master Plan for Chittagong Port – Final Report, Part 3 elements or components of the project are accessible to members of the affected community or where their failure could result in injury to the community throughout project construction, operation and decommissioning?

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