Beza's flagship economic zone faces water uncertainty as Tk10,553cr pipeline plan stalls

Highlights:

• Beza's flagship economic zone faces mounting water supply uncertainty
• Meghna pipeline project stalled by financing and tariff disputes
• Proposed water tariff nearly quadruples current industrial water costs
• Water demand expected to exceed one billion litres daily by 2040
• Alternative water projects face delays, salinity and environmental challenges
• Beza discourages water-intensive industries while pursuing new water sources

The Bangladesh Economic Zones Authority is struggling to secure a sustainable water supply for its flagship National Special Economic Zone in Mirsarai, Chattogram, as uncertainty surrounds a project to bring water through a 150km pipeline from the Meghna River.

The project has stalled after a South Korean firm, which offered to build the Tk10,500 crore pipeline project four years ago, has backtracked, citing financial problems, leaving the feasibility study incomplete, according to Beza officials.

The project has also been held back by a dispute over the proposed tariff. Since approval, several meetings between the authorities and investors could not agree on the price of pipeline water. The latest meeting in June last year also ended without a breakthrough.

Infograph: TBS

The consultant initially proposed Tk91 per 1,000 litres. Including transmission and other costs, the price would rise to about Tk120 per 1,000 litres. Industrial users have rejected the proposal, saying they are unwilling to pay nearly four times the current tariff of Tk32.

"Industries will not buy water at such a high price. That is why the project has stalled," Ahsan Ullah, director of the National Special Economic Zone, told The Business Standard. "We have asked stakeholders to explore ways to reduce the tariff so the project can move forward."

Project's future uncertain

Approved in 2022, the project was designed to supply 900 million litres of water a day from the Padma-Meghna-Dakatia estuary in Chandpur to the industrial zone, where daily demand is projected to reach 1 billion litres. The first phase was scheduled for completion in 2027.

Under the financing plan, the Bangladesh government was to contribute Tk1,600 crore, while Tk8,953 crore would come from private investment. South Korea's Korea Overseas Infrastructure and Urban Development Corporation (KIND) was the proposed private partner, with the Export-Import Bank of Korea (KEXIM) expected to finance the project.

Officials at Chattogram Wasa, which was assigned to the feasibility study, said the project's future is uncertain as transporting water over such a long distance would be expensive.

Even after the government offered a 35% Viability Gap Fund (VGF) grant to make the project commercially viable, the proposed water tariff remained higher than the prevailing rate.

Rising water demand

The NSEZ, spanning Sitakunda and Mirsarai and Sonagazi in Feni, was originally planned over 33,805 acres. Beza has since scaled down the development area to about 21,000 acres, to be implemented in three phases covering 7,000 acres, 10,000 acres and 4,000 acres.

At present, 16 factories are operating in Beza-managed economic zones, while another 12 have started production in the Bepza Economic Zone. More than 20 additional industrial units are under construction across the wider industrial hub.

The zone currently consumes about 3 million litres of groundwater a day. However, according to the industrial city's master plan, raw water demand is projected to rise to 516 million litres a day in 2030, 730 million litres in 2035, and more than 1 billion litres by 2040.

Alternative plans

To meet future demand, Beza had planned to secure 919 million litres of water a day from multiple sources, including the Feni-Muhuri-Silonia river system, the Little Feni River, rainwater harvesting, water treatment plants, seawater desalination and the Halda River.

However, the proposal to draw water from the Halda River was abandoned following objections from environmental groups, despite it being the nearest major freshwater source.

To address needs, Beza installed 38 deep tube wells, but only 12 remain operational because pump operators were not appointed and many wells were installed in remote locations.

The authority is also implementing a 50-million-litre-a-day water treatment plant using water from the Feni-Muhuri-Silonia river system. Approved in November 2019 at an initial cost of nearly Tk632 crore, the project missed its original deadline and its estimated cost has risen by Tk129 crore to Tk761 crore. Beza now expects it to be completed next year.

Meanwhile, the Feni River becomes highly saline during the dry season, while groundwater in Mirsarai is affected by salinity, arsenic and microbial contamination.

Beza is also studying the feasibility of a 30-million-litre seawater desalination plant in the Sandwip Channel, although desalination remains a costly option.

Water-intensive industries discouraged

Beza has also adopted a policy of discouraging water-intensive industries from setting up operations and is seeking private investment to build additional water treatment facilities.

"For now, we're meeting demand with groundwater from tube wells," Ahsan Ullah said. 

"Water demand will increase as more factories begin operations. The 50MLD water treatment plant is expected to be completed next year, while the government is also exploring alternative water sources," he added.