Assessing the economic feasibility of

waterway development in Bangladesh

and India
ESC 102883 REG
PRESENTATION
HUUB VRENKEN, ADBMANILA, 12 MARCH 2013

Presentation overview

National Waterway 5 (NW5) India

NW5 Stretches + proposed investments

Basis of assessment: Inland Waterways Authority of India, 2010: Detailed Project Report for Development of
inland water transport along ECC and Brahmani/Kharsua river system

Stretch I: (river) Talcher Mangagadi (USD 321 mln) to accommodate barges of 500 DWT
5 barrages including navigation locks (USD 256 mln), raising banks (USD 39 mln), dredging (USD 12 mln),
other (USD 13 mln)
Stretch II: (river) Paradip Dhamra (USD 33 mln) to accommodate barges of 500 DWT
2 navigation locks (USD 6 mln), Dredging (USD 18 mln), Terminals (USD 4 mln) , others (USD 5 mln)
Stretch III: East Coast Canal
Variant A, 32m wide for 300 DWT (USD 314 mln): dredging (USD 204 mln), navigation locks (USD 59 mln),
bridges (USD 17 mln), others (USD 34 mln)
Variant B, 45m wide for 500 DWT (USD 433 mln): dredging (USD 286 mln), navigation locks (USD 83 mln),
bridges (USD 17 mln), others (USD 47 mln)

All can be considered as greenfield development

Project Packaging should be: River stretches (I+II) either or not with variant of developing canal stretch (III)

Economic assessment NW5

The DPR provides:
detailed description of all technical measures taken;
traffic projections and forecasts;
analysis of economic and financial feasibility;

DPR concludes that investment will be highly feasible: EIRRs between 32% (river improvement
alone) and 13% (river + 32m canal)
Report however has methodological flaws.
90% of DPRs benefits appears to originate from leading to drastic overstating of economic benefits.
Acclaimed benefits due savings of fuel, of reduced CO2 and other pollution

If adjusted for these flaws, benefits appear to be less than costs of operations and maintenance,
no return on investment

Assessment other issues NW5

Environmental issues are not considered
intrusive project of which significant external impacts can be expected. These impacts can be positive and
negative. EIA would be needed.

Socio-economic issues:

+ employment in coal mines and multiplier effect (I/O-matrix)

- land acquisition understated and need for resettlement ignored

Technical issue: capacity of waterway is insufficient for projected demand

Further issues

narrow scope: IWT infra for coal (90% of projected cargo) and poor notion of other commodities
poor involvement of main stakeholders: coal mine and ports
no assessment of (developments in) competing modes / competing routes
sustainable transport for non-sustainable power generation

Overall conclusion: advise to ADB is not to engage in developing NW5

Protocol routes in Bangladesh

Sections under consideration:
Rajshahi to Chandpur (West route)
Chilmari to Chandpur (North route, part of
SAARC IWT corridors 1)
Mongla-Ghasiakhali channel (South route,
part of SAARC IWT corridors 1 and 2)
Mission was to assess these India-Bangladesh
Protocol routes. The related IWT routes
however mainly serve domestic transport.
International dimension is from IWT-business
viewpoint not very interesting.

Bangladesh network IWT

Bangladesh waterway network:
Class I waterways (navigable for <2000 DWT vessels) connect seaport with many important
economic regions, including Dhaka. This can be maintained at relative low costs.
Missing link is Mongla-Ghasiakhali waterway that connects these class I waterways with Mongla
seaport.
An extensive network of more shallow waterways (classes II, III and IV). Reports highlight extensive
problems in those parts and their resolving and maintaining would require immense resources.

There is need for reclassification and prioritization. This should be based on assessment
of
the potential benefits of the waterway (traffic volumes, significance in local/regional access)
of the costs of maintaining sufficient quality waterway.
Inherent costs and benefits of maintaining the water level (water resources, environmental issues)

IWT-sector of Bangladesh: characteristics

Economic features of the IWT-sector (for freight)
It is highly traditional, e.g. mainly using manual transshipment.
Because of long port dwell times and (possibly) also long idle times it has low productivity. Typical is
that only 10% of a round trip time is for the actual moving of cargo.
It has much government interference with little room for private and local initiative.
Despite its inefficiency it has low tariffs.
The low productivity is a short-run hindrance in attracting new cargo and the low rate of modernization
is a long-run threat to competitiveness against road.
Low productivity is synonymous to underemployment and low returns of investment.

Recent introduction of container transport, which was problematic.

IWT can have a role in multimodal chains, for which it needs an open attitude towards
cooperation with road sector.
About 1 million barges are country boats, mainly operating in the informal sector.

Possible ADB-engagement in IWTBangladesh (1)

ADB can support studies for IWT-infrastructure reclassification
traffic studies, particularly for deciding on ambitions for lower-class waterways
hydrographic surveys for assessing investment and maintenance costs of maintaining waterway class

Projects of improvement on protocol routes. Their scope however is wider than navigation only
and would normally reside under Water Resource Management organizations and budgets. It
concerns:
Construction of barrage in Rashaji-Chandpur route for which pre-feasibility and feasibility study were
recently conducted.
(pre-)feasibility studies for improvements of stretches in the Chilmari Chandpur route and for the
Mongla-Ghasiakhali channel

Possible ADB-engagement in IWTBangladesh (2)

Support study for the establishment of multimodal (iwt-road) node in Baghabari. Its location is
promising but there are many issues to be resolved:
- demand for transport and for logistics services;
- need for arrangements in India-Bangladesh protocol, if transit node;
- business model (initiators and form of cooperation) and business case.

Projects to enhance IWT-sectors productivity for long-run sustainability and for higher returns on
investment.
Through knowledge sharing, dialogue or technical assistance.

Projects to enhance use of innovation in IWT.

Appropriate technology: development and diffusion of more energy efficient country boat engines;
New concepts: sailing clinics or other medical services providers for remote areas;

Promote Recognition of IWT in rural development plans.

Promote use of non-economic criteria. IWT particularly by small vessels - often serves alleviation of
poverty, implying relatively low economic returns.