Bangladesh has signed a USD 335.78 million concessional loan agreement with China to expand and modernise its southwestern Mongla Port, located about 80 km west of the Indian border, according to a media report on Monday.
The agreement will finance the construction of two container terminals and dedicated cargo-handling yards at Mongla, Bangladesh's second-largest seaport after Chattogram, as Dhaka seeks to expand the port's capacity and infrastructure.
The loan agreement for Renminbi Yuan 2.404 billion or Bangladeshi taka 3,592.8975 crores (USD 335.78 million approx.) was signed between the Bangladesh government and the Export-Import Bank of China on Saturday, the state-run BSS news agency reported.
China will provide the loan at a concessional interest rate of 2 per cent, with a 20-year repayment period, including a five-year grace period, according to a statement by the Finance Ministry's Economic Relations Division (ERD).
The ERD signed the agreement with China's EXIM Bank on behalf of the two sides for the "Expansion and Modernisation of Mongla Port Facilities" project, the statement said.
The development comes a year after the Muhammad Yunus-led interim government cancelled an Indian Economic Zone project planned on 110 acres of land near Mongla Port, saying the Indian government-nominated developer had failed to begin physical construction within the stipulated timeframe.
The land had been earmarked for India under a 2015 bilateral agreement, and the Indian government later appointed Hiranandani Group subsidiary Evita Constructions to develop the site.
The loan agreement follows an understanding reached between Bangladesh and China during Prime Minister Tarique Rahman's visit to Beijing in June.
Mongla Port is located on the east bank of the Pasur River, 71 nautical miles upstream from the Bay of Bengal.
India has previously flagged concerns over China's expanding footprint in Bangladesh, with projects in strategically significant areas drawing particular attention because of their proximity to Indian territory.
Teesta project
China has sought to play down India’s concerns over its growing involvement in Bangladesh’s Teesta River project, insisting that the cooperation is aimed at improving livelihoods and is “not directed against any third party". The clarification came after India expressed concerns over reports that China could play a major role in developing infrastructure along one of Bangladesh’s most strategically significant rivers.
The Chinese response has once again brought the spotlight back on the Teesta, not merely as a river shared by India and Bangladesh, but as a key piece in the wider geopolitical contest unfolding in South Asia.
For India, the issue extends far beyond water management. It touches on regional influence, border security, China’s expanding footprint in India’s neighbourhood, and the future of New Delhi’s ties with Dhaka at a time when Bangladesh’s foreign policy appears to be undergoing a shift.
China has for several years shown interest in financing and executing the Teesta River Comprehensive Management and Restoration Project in Bangladesh.
Unlike the water-sharing dispute, which can only be resolved through negotiations between India and Bangladesh, the Chinese proposal focuses on infrastructure development within Bangladeshi territory.
India and Bangladesh have been negotiating a Teesta water-sharing treaty for more than a decade.
A draft agreement was nearly finalised in 2011 during then Prime Minister Manmohan Singh’s visit to Dhaka. However, the deal collapsed after the Bengal government opposed the proposed sharing formula, arguing that it would adversely affect irrigation and drinking water needs in northern parts of the state.
Since water is a state subject under India’s constitutional framework, the Centre has struggled to secure political consensus. As a result, despite repeated discussions between New Delhi and Dhaka, no formal treaty has been signed.
The unresolved dispute has remained one of the few major irritants in otherwise strong India-Bangladesh relations.