Dhaka, Bangladesh (BBN) – Bangladesh and India will sign a Letter of Exchange (LoE) during Prime Minister Manmohan Singh’s upcoming visit to Dhaka, paving the way for Indian use of the Chittagong and Mongla seaports, officials said.

After the LoE, the two nations will sign modalities on the use of Bangladeshi ports by India before a March 31, 2012 deadline, Shipping Secretary of Bangladesh Abdul Mannan Howlader said on Sunday.

“In the Letter of Exchange Bangladesh will in principle agree to let India use Chittagong and Mongla ports to carry out export import activities mainly for its seven sister states,” was quoted by the Financial Express (FE), a local newspaper, as saying.

He said foreign ministers of the two countries would ink deal the LoE. But the shipping officials will later negotiate the modalities and then sign instruments before the deadline.

Foreign Minister of Bangladesh Dipu Moni told a press briefing that the two nations won’t sign any blanket transit deal during Manmohan Singh’s September 6-7 visit, instead they would ink a broad-based LoE based on the deals made in 1972 and 1980.

She said the LoE will lay the ground for a number of legal instruments and modalities that the two nations will have to sign in order to allow India to use Bangladeshi seaports, fix the usage tariff, modes of transportation and routes.

India wants to use the Chittagong port to carry goods to its seven north-eastern states, known as Seven Sisters in India. The states are Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.

It also wants to use the ports for exporting goods from theses states. Assam is home to the world’s largest tea growing region and the country’s major oil producer. Other states are rich in minerals.

Landlocked Nepal and Bhutan are also interested to use the Chittagong and Mongla ports as parts of their efforts to cut sole dependence on India to carry out foreign trade.

The ministry of shipping (MoS) earlier formed a six-member committee headed by its joint secretary Abdul Quddus to examine whether the country’s two seaports are ready for Indian use.

The committee found that the facilities are adequate to take the extra load in case India and two landlocked nations start using the port immediately, the newspaper reported.

Chittagong port, one of the biggest in the South Asian region, has now a capacity to handle an aggregate volume of 1.6 million TEU (twenty feet equivalent units) containers.

In the 2010-11 financial year ended in June, the port handled 1.47 million TEUs, officials said, adding 70 per cent of the terminals and yards were utilised during the year.

Mongla Port has the capacity to handle 50,000 TEU containers a year, but only 20,000 TEU of sea-borne cargoes were handled last year.

BBN/SSR/SI-05Sept11-10:48 am (BST)