Brief of Sitakunda Terminal

Bangladesh has planned to construct an Economic Zone in the Feni-Mirasarai area, some 60-80 km north of
Chittagong. In order to improve the supply chain efficiency for production, distri- bution and trade it is considered
important that a Port/Terminal is established with adequate port facilities near the Economic Zone. The proposed
location of this new Sitakunda Terminal is in the Sandwip Channel, in and around Sitakunda Upazila near Mirasarai,
and opposite of the Sandwip Island.

The market is expected to be predominantly captive. By year 2025 container traffic is already expected to reach 2.6
million TEU per year, assuming operations start in year 2021.

Vessels with larger capacity can call the Terminal in partly loaded condition, provided that the draught does not
exceed 9.5m. Hence, there are no general limitations for the LOA of the vessels. The platform in the future Sitakunda
Terminal will have a length of 1,980m corresponding to 10 berths for 1,300 TEU vessels with LOA=165m. Since cargo
handling can be performed efficiently with two cranes working simultaneously on a 1,300 TEU vessel, it is proposed to
install 20 STS cranes with a 100 ft. span. Sitakunda Terminal with this can handle maximum 2.7 million TEU per year.

Loaded container groups in the container yard will have a width of seven stacks and a maximum height of five
containers. The stacking height of one over five containers is selected as it provides the best compromise between
storage capacity and operational efficiency. The stacks are operated by diesel powered Rubber Tire Gantry (RTG)
cranes and MTS. A total of 42 RTG cranes are required to operate the container yard. An overview of the Sitakunda
Terminal is shown in the figure below.

Figure 2-1: Overview of Sitakunda Terminal.

 The jetty connecting the container yard and the container terminal is 2.6km long with four lanes; 2 lanes in each
direction. The quay will be located where the water depths are sufficient without or with little dredging. The deck
level of the platform is suggested to +8.5m MSL to prevent total flooding of the platform and minimize risk of
damage to quay cranes during extreme weather conditions. The quay structure consists of a deck with a suitable
pavement for the heavy loads and is founded on steel piles. Top level of the deck is located in +8.5m MSL and is
estimated to have a height of 1m. The steel piles all have a diameter of 1 meter and are driven to level -46m MSL.
The proposed route of the entrance fairway begins from the area around the mouth of the Karna- phuli River and
follows the coastline in the deeper waters all the way up to future Sitakunda Ter- minal. Outer anchorage is likely
to take place near the mouth of the Karnaphuli River, which yield a length of the fairway in the range of 40-55km,
depending on the outer anchorage position. A water depth of 11.5m MSL in the entrance fairway and 13.5m MSL at
the berths necessitate initial dredging volumes of 10,400m3. The main dredging area is in the harbour basin and at
the berths (80%) while initial dredging is only required in two parts of the channel. The total estimate of the capital
expenditures for the future Sitakunda Terminal amounts to 1,742,446,000 USD. It includes the total costs related to
infrastructure, superstructure and equipment which all takes additional works and unforeseeable expenses into
consideration. Based on the typical life span of the various equipment and the initial pavement, the expenses
covering
CAPEX estimate for Sitakunda Terminal.
Total Cost (USD)
Infrastructure – Initial investments 1,203,082,000
Infrastructure – Replacements 9,469,000
Superstructure 35,073,000
Equipment – Initial investments 432,800,000
Equipment - Replacements 62,022,000
CAPEX TOTAL (rounded) 1,742,446,000

Table below provides an overview of the annual operating costs for Sitakunda Terminal. The total operating costs,
when the terminal is fully operational, will be approximately 44,592,000 USD per year and a non-recurrent cost of
353,000 USD is encountered.
OPEX estimate for Sitakunda Terminal – Annual operating costs.
Total Cost (USD)
Personnel 7,381,000
Energy and Operations 12,122,000
Maintenance and Repair 20,237,000
General Costs (Recurrent) 4,852,000
General Costs (Non-recurrent) 353,000
OPEX TOTAL (rounded) (excl. non-recurrent costs) 44,592,000

The investment plan summarizes the development of the total capital and operating expenditures at
Sitakunda Terminal throughout a forecasting period of 20 years.

More detailed elaborations of the CAPEX and OPEX estimates are included in the following.

Table 2-6: Sitakunda Terminal infrastructure investment costs.

Initial Investment Cost Replacement Cost

Infrastructure (USD) (USD)
Terrain Elevation (Container Yard) 18,046,758 -
Breakwater 474,371,000 -
Dredging 66,900 -
Quay Structure 343,575,700 -
Quay Equipment 2,505,000 -
Pavements 54,981,655 7,235,835
Foundations 12,487,644 -
Road Connections 13,320,750 -
Construction Site 45,967,770 361,792
 28 of
37

Additional Works 96,532,317 759,763

Unforeseen Expenses 106,185,548 835,739
Design 35,041,231 275,794
TOTAL (rounded) 1,203,082,000 9,468,922

Table 2-8: Sitakunda Terminal initial equipment investment costs. Replacement costs are included as-
suming a project lifetime of 20 years.

Life
Equipment Span Unit Price Initial Investment Replacement
(Years) (USD) Costs (USD) Costs (USD)
STS Crane 20 11,650,000 233,000,000 -
STS Rails and Related Sys- 20 1,200 2,101,600 -
tems
RTG 20 1,750,000 73,500,000 -
Multi Trailer 15 43,500 23,925,000 23,925,000
Trucks 15 187,000 20,570,000 20,570,000
Empty Container Handler 10 292,000 2,920,000 2,920,000
IT and Terminal Operation 10 1,285,500 1,285,500 1,285,500
System
Fuel Tank, Capacity 45m3 20 58,500 175,700 -
Service Cars 10 76,000 228,000 228,000
Fuelling Truck 10 87,500 175,000 175,000
Gate/Security Arrangement 15 1,169,000 1,169,000 1,169,000
Fence 20 300 1,200,000 -
Various Transport Equipment 10 350,500 350,500 350,500
Buoys 10 46,500 139,500 139,500
Light Tower High (incl. light) 30 128,500 128,500 -
Light Tower Low (incl. light) 30 70,000 70,000 -
Minibus/Bus 20 Persons 10 47,000 470,000 470,000
Bus 10 76,000 532,000 532,000
Spare Parts Inventory 10 3,506,000 3,506,000 3,506,000
Pilot Boats 20 1,052,000 2,104,000 -
Mooring Boats 20 584,500 1,169,000 -
Tug Boats 30 11,104,500 22,209,000 -
Building Equipment (IT equip- 10 877,000 877,000 877,000
ment etc.)
Additional Works - - 11,754,153 1,684,425
Unforeseen Expenses - - 26,231,352 3,759,075
Design - - 3,008,534 431,137
TOTAL (rounded) 432,800,000 62,022,000

2.12.3 Investment Plan and Construction Schedule

Construction is expected to be initiated in the beginning of 2019 and will be completed in two phases. 5 of
the 10 berths are assumed to be inaugurated in 2021 with half of the breakwater being completed as well
to provide wave tranquillity at the berths. In 2022 it is expected that all
10 berths are in operation and the construction of the breakwater is completed
2.13 Financial and Economic Assessment
Key assumptions for the calculation of the financial feasibility are the following:

Table 2-14: Major input parameters for financial analysis

Input Parameter Level

Time horizon 22 years
SYP inflation rate (2018 monthly 5.8% annually
Interest rate (medium bank lending 10.0% annually
Preferred discount rate 15%
Design life of project infrastructure > 30 years
Corporate income-tax rate 35.0% annually
Container vessel size 16,100 dwt
Container operation tariff increase 50%
 29 of
37

For calculation of the economic feasibility, the Consultant used the following key assumptions:

Table 2-15: Major assumptions for benefit calculation of economic analysis

Cargo destined for domestic consumption 50% of total cargo hauled by land
Average price decrease for domestic consumers 1%
Average value of container contents 50,000 US$ per TEU
Value-added through "just-in-time” delivery 2% of value per TEU
1,300 TEU container-vessel operating costs US$ 15,000 per day
Berth occupancy at Bay Terminal in "without-Project" case 80%
Reduction of average dwell time compared to Bay Terminal 1 day
Return on equity FIRR, FNPV (15%)

A Build-Operate-Transfer (BOT) contract would offer the main advantage that CPA would have limited
commercial risk, and that the concessionaire would be doing his utmost effort to offer a satisfactory
service. A concession contract would be used whenever the terminal needs huge funds to be prepared
and ready to put in service.

Table 2-16: Container terminal revenues (current US$ million)

2021 2025 2030 2035 2040

Vessel Dues & Charges
Port dues 3.3 10.5 13.8 18.4 24.3
Berth occupancy dues 0.4 1.3 1.7 2.3 3.0
Pilotage services 1.0 3.1 4.1 5.4 7.2
Towing services 1.1 3.4 4.5 6.0 7.9
Mooring/unmooring 0.1 0.5 0.6 0.8 1.1
 30 of
37

Container Charges
Discharged Containers
han- dled 36.8 117.6 155.9 206.6 273.9
Loaded Containers 48.7 154.8 205.2 272.0 360.6
Full Containers stored 15.6 49.9 66.2 87.7 116.3
Empty Containers stored 7.1 22.2 29.4 39.0 51.7
Total Revenues 114.1 363.3 481.4 638.2 846.0

Above-listed revenues from Sitakunda Terminal comprise only calculable revenues to CPA, whereas
additional operating revenues (form shifting containers, hiring equipment, etc.) are not included. The
Consultant therefore sees a potential for rather higher revenues.

2.13.3 Financial Feasibility

The financial model takes into consideration only calculable revenues to CPA from Sitakunda Ter- minal;
additional operating revenues (from shifting containers, hiring equipment, etc.) are not included. No
corporate profit-tax liability has been assumed for CPA. In case a private operator will operate Sitakunda
Terminal, a corporate-income tax rate of 35.0% with certain rebates simi- lar to any economic-zone
developer would be applied. A BOT-operator would then be exempted from paying corporate-income at
the rate of 100% for the 1st 10 years, 70% for the 11th year
and 30% for the 12th year effecting from the commencement of his commercial operation.

The Consultant calculated the pre-tax FIRR as 11.52% which lies slightly below the preferred dis- count
rate of 15%. Considering that the water-side tariff has not been calculated to increase, and that revenues
from additional services have not been included, this FIRR demonstrates the finan- cial viability of the
Project. When applying the preferred discount rate of 15%, the pre-tax FNPV stands at US$ -307.0 million
and the after-tax FNPV at US$ -411.7 million. Residual value at the end of the Project period amounts to
about US$ 1,427 million. The pre-tax benefit/cost ratio (ra- tio between net present values of expenses
and revenues) stands at 0.86, whereas the after-tax BCR stands at 0.79.

Table 2-17: Sitakunda Terminal financial evaluation summary

CPA operated Privately operated

Indicator / Scenario Base Optimistic Pessimistic Base Optimistic Pessimistic
FIRR Financial Internal
Rate of Return (%) 11.52 12.10% 11.03% 9.74% 10.36% 9.27%
FNPV Financial Net
Present (307.0) (263.9) (335.8) (411.7) (358.9) (467.5)
BCR Benefit/Cost Ratio 0.86 0.94 0.83 0.79 0.85 0.73

2.13.4 Economic Feasibility

Using the estimated economic costs and direct and indirect benefits, the EIRR is 18.91% which stands above
the preferred discount rate of 15%. Inclusion of additional services would still raise this EIRR, although only
slightly.

Table 2-19: Sitakunda Terminal economic evaluation summary.

Indicator Base
EIRR Economic Internal Rate of Return (%) 18.91%
ENPV Economic Net Present Value (US$
million, i=15%) 272.2
BCR Benefit/Cost Ratio 4.62

Consequently, the ENPV will be positive with US$ 272.2 million, and the benefit/cost ratio will stand at
4.62, proving the economic viability of Sitakunda Terminal. The Consultant subjected uncertainties to
sensitivity calculations to test the effect of changes in their levels on the EIRR,
ENPV and BCR indicators.
31 of
37
32 of
37

Changed
Variable
 33 of
37

2.16.1 Scope of Land Acquisition

For the Corridor 1, loss was estimated to 206 decimals (0.833 ha) of agricultural land, 467 deci- mals (1.889
ha) of homestead land, 268,101 sqft. of structures and 6377 trees, while for Corri- dor 2, loss was
estimated to 621 decimals (2.512 ha) of agricultural land, 691 decimals (2.794 ha) of homestead land,
18,327 sqft. of structures and 1,680 tree