Ctg port makes hefty profits yet why its tariff was hiked
Port usage charges and fees to rise 41% on average from 15 Oct
Highlights
- The Chattogram Port Authority (CPA) has raised tariffs for the first time since 1986, despite rising profits from a weaker taka
- The tariff plan was prepared with input from IFC, raising concerns over conflict of interest
- Economists warn the move may benefit foreign operators like PSA and DP World
- As charges are dollar-based, traders say tariffs were already inflated by the exchange rate
- Business leaders fear the hike will raise trade costs and hurt competitiveness
On the surface, the Chattogram Port Authority's (CPA) recent tariff hike looks like a long-overdue adjustment. After all, the port's dollar-denominated rates have remained unchanged since 1986. But what the CPA doesn't highlight is that the sliding taka has already swelled its revenues many times over.
In 1986, one dollar fetched Tk27. Today it brings in around Tk122. Even without revising tariffs, CPA's taka earnings have multiplied more than fourfold. The port itself is hardly struggling: in FY2024-25, it posted a record profit of Tk2,913 crore.
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So, why raise tariffs now – just when the economy is faltering, businesses are under strain, and exporters are fighting to stay competitive?
IFC's imprint on tariff design
Documents obtained by TBS show the new tariff framework closely mirrors recommendations from the International Finance Corporation (IFC), the private-sector arm of the World Bank Group. Acting as the government's transaction adviser, the IFC helped design concession agreements for the Patenga and Laldia container terminals.
Its mandate: to make Chattogram Port attractive for private, including foreign, operators. Critics allege that the resulting tariff revision favours those foreign operators more than the CPA itself.
That criticism is amplified by IFC's dual role – as both policy adviser and a potential investor in Bangladesh's port projects. Economists warn this creates at least a perception of conflict of interest.
Former and present top CPA officials said the IFC has already lined up to finance PSA Singapore in developing the Bay Terminal, a $1.5 billion investment. Former CPA chairmen Mohammad Sohail and M Shahjahan publicly acknowledged that PSA would secure funding from the IFC.
"The Patenga Container Terminal agreement is being used as the benchmark for all future concessions. If IFC sets favourable conditions for operators there, those terms will cascade into the Bay Terminal and Matarbari projects, where it has financial stakes," Shahjahan told TBS.
Economist and political analyst Prof Anu Muhammad told TBS, "When the World Bank is a financier in a port project, it is IFC's clear conflict of interest to structure policy in their favour."
"There is talk that IFC may finance PSA Singapore in the Bay Terminal project, though it's not confirmed yet. But if IFC is appointed as concession adviser for the Bay Terminal, that would clearly create a conflict of interest. The CPA needs to address this issue," said economist M Masrur Reaz, who also had a background working at the IFC.
He added that Bay Terminal is being developed under a separate "Build, Equip, Operate" model, where CPA's tariff schedule may not apply.
IFC's dual role
On 28 June 2024, the World Bank's Board of Executive Directors approved a $650 million loan to help Bangladesh develop infrastructure for the Bay Terminal, a deep-sea port project. The financing agreement between Bangladesh and the WB was signed on 23 April 2025.
When the WB board approved the loan, it noted in an official statement: "Furthermore, the World Bank Group's private sector arm, the IFC, is considering investing in one of the proposed private sector-led terminals."
"The Bay Terminal will contribute to modernising the country's seaport infrastructure and improving its connectivity to regional and international markets," said Hua Tan, World Bank's senior transport specialist and team leader for the project.
That statement lays bare a potential conflict. The IFC, which advised the government to sharply increase port tariffs to make operations financially attractive to foreign investors, is simultaneously exploring an investment in a similar project.
Economists said if IFC invests in one of those terminals, it would effectively be advising the government on a project from which it could profit, raising serious questions about impartiality and fairness. Even the perception that IFC may have structured the tender to benefit a company it funds or favours would undermine trust in the process, they said.
Adding to the concern, IFC's compensation model includes a success fee, typically a percentage of the total project value, payable once the PPP deal closes. That structure could create subtle pressure to push the deal through, even if the terms are not fully favourable to the government or local stakeholders.
Prof Anu Muhammad said, "When the government made the move to hike port tariffs, it was clear that they did it to facilitate foreign operators. As the port is running at a substantial profit, there is no justification for raising tariffs."
"If we consider history, wherever DP World took over operations, they increased tariffs. To save the international terminal operators from an awkward situation, the government increased tariffs ahead of awarding the already efficient and profitable terminal," he noted.
"The government, which promised reform, could have enhanced the efficiency of the port. Instead, it continued awarding port terminals without any open tender, like the previous autocratic government," the economist alleged.
IFC's role in tariff design
In its Laldia Container Terminal PPP Project Transaction Structure Report, IFC warned that Bangladesh's rigid tariff regime might discourage international terminal operators (ITOs) from investing. It recommended "assured tariff reforms, including assured tariff increases" as a condition for success.
That advice is now reality. The government, determined to lease out all upcoming terminals – from Bay Terminal's two container berths to the Matarbari Deep Seaport – had little choice but to implement a sweeping tariff revision to make the market attractive for foreign players.
The beneficiaries include not only future entrants but also existing operators. Saudi-based Red Sea Gateway Terminal International (RSGTI) already runs Patenga Container Terminal, while DP World is set to secure the New Mooring Container Terminal (NCT), which alone handles nearly 40% of Chattogram's total throughput. Danish giant AP Moller Maersk, meanwhile, is eyeing the Laldia concession structured by IFC.
How tariff hike benefits foreign operators
An analysis of the revised schedule shows that while both the CPA and international terminal operators will earn more, the steepest increases are concentrated in services that generate income for private operators.
Tariffs tied to handling activities by foreign operators – crane operations, container loading and unloading, storage, reefer plug-ins, and container movements – have climbed by an average of 144%. By comparison, CPA-related charges such as pilotage, navigation, and river dues rose by around 70%.
The contrast becomes clearer when looking at individual items.
A 20-foot reefer container plug-in, for instance, has jumped from $9 to $20.96, a 133% rise that goes entirely to the terminal operator. Meanwhile, the minimum pilotage fee for a vessel of 10,000 gross registered tons has gone from $357.50 to $800, a 124% increase that benefits the CPA.
Yet because container handling, storage, and related services account for the majority of port transactions, the higher hikes in these categories mean international operators will ultimately reap far greater revenue gains than the port authority, even after paying royalties.
What CPA says
CPA Secretary Mohammad Omar Faruk told TBS that they have been attempting to revise the tariff for quite some time, but various factors have prevented it.
"This time, we engaged a Spain-based consultancy, IDOM, to develop a new tariff structure. IDOM analysed the tariffs of neighbouring ports, inflation rates, and the country's economic conditions to propose a rational and timely tariff framework," he said.
What IFC says
TBS sent an email to Makhtar Diop, managing director of IFC, on 19 September and an IFC spokesperson gave the following reply:
"Through its advisory services, the IFC supports governments in developing, structuring, and implementing PPP. We help design bankable projects that attract internationally reputable private partners, so that infrastructure can be delivered transparently and sustainably.
We aim to strengthen the government's capacity to deliver infrastructure efficiently, which is critical for sustainable economic growth and job creation. Beyond advisory services for PPP transactions, IFC works across the private sector globally to promote investment, create new markets, and help attract private capital to support private enterprise projects in emerging markets and developing economies."
IFC is advising the Bangladesh government through the PPP Authority and the CPA to mobilise private sector investment and private expertise intended to make the Chattogram Port operations more efficient and expand the port capacity. These measures are aimed at strengthening Bangladesh's competitiveness in global trade. As the PPP transaction adviser, IFC will act in the interests of its government client, not operators or developers.
IFC has detailed conflicts of interest policies and procedures, including a specialised operational conflicts function tasked with advising on the appropriate management and mitigation of conflicts of interest. When conflicts of interest arise, IFC may employ a number of safeguards, including appropriate disclosures, segregation of teams between any conflicting activities, and information-sharing restrictions. Consequently, the transaction-advisory services units are generally distinct from the investment teams at IFC.
As part of IFC's advisory services to implement a PPP transaction for Laldia Container Terminal, CPA was advised to consider a tariff revision to ensure LCT's financial viability, given the significant capital investment and operating costs involved in the design, financing, construction, and operations and maintenance of LCT by the private partner.
With LCT's annual throughput capacity envisaged at 800,000 TEUs per annum (~ 27% of CPA's existing capacity) once implemented, the container handling capacity of CPA would significantly improve, helping reduce the waiting time of ships on the high seas as well as set a benchmark for better services to users in terms of lower truck-turnaround times.
IFC is supporting CPA by designing a balanced and bankable risk allocation, establishing standards for efficient port operations, and ensuring a consistent and appropriate stream of financial returns to CPA.
Was the tariff burden already high before the hike?
The CPA has defended its decision to raise tariffs, arguing that rates had remained unchanged for four decades. But traders counter that they were already paying inflated charges well before the hike.
Their main complaint is that CPA sets most tariffs in US dollars. In 2020, when the exchange rate was Tk85 per dollar, handling one TEU container at $43 cost Tk3,655. By 2024, with the dollar at Tk124, the same $43 charge had risen to Tk5,332 – an increase of Tk 1,677, or 45%, in just four years.
Traders argue that this currency-driven escalation meant tariffs were already climbing steeply, even without the new hike.
Abdur Razzaque, chairman of RAPID, a research organisation, said the CPA could have raised tariffs in phases instead of imposing a 40% hike all at once. A gradual increase, he explained, would ease the cost burden on traders and give them time to adjust.
"Setting the tariffs in taka would also offer some relief," he added. "It would let traders predict their costs without worrying about fluctuations in the dollar exchange rate. Fixing the rates in taka could be a practical solution."
Neighbouring ports' tariffs higher, but more effective than CPA
Chattogram Port has raised tariffs, pushing the average cost per 20-foot container from about $97 to $133. The sharpest jump came in loading and unloading charges, which rose from $43 to $68 per container.
In comparison, Singapore and Colombo still charge more in absolute terms, with terminal handling fees averaging around $180–190 and $150–250 per 20-foot container, respectively. But those ports deliver faster turnaround, broader connectivity, and more reliable schedules – benefits that often offset the higher upfront charges.
Maritime trade expert Captain Anam Chowdhury said, "Though the tariff is higher in Singapore and Colombo, the actual cost for handling cargo goes higher even with lower tariffs in Chattogram."
"When a vessel embarks at Singapore port, it gets an on-arrival berth. Within one or two days, it can sail for its next destination after unloading and loading cargo. But in Chattogram port, it takes two to five days to get a berth, then another two to three days to unload and load containers. That means the total turnaround time is 5-7 days. The vessels have to pay port dues, river dues, and light dues for 5-7 days. If you add the fixed operating cost of the vessel for these days, the total cost for handling cargo in Chattogram port goes far higher than in Singapore and Colombo ports," he explained.
He said the concern for Bangladesh is that exporters now face steeper bills without assured improvements in port efficiency.
Higher costs will be passed on to consumers
Business leaders said that while the new tariff boosts revenues for foreign operators, local traders will struggle with higher costs of doing business – costs that will ultimately be passed on to consumers already bearing the brunt of inflation.
Amirul Hoque, managing director of Seacom Shipping Ltd, said government officials lack negotiation skills. "The CPA should have thought about the increasing cost of doing business caused by the tariff hike before considering IFC's recommendation," he added.
Appeal for new tariff review
Bangladesh Shipping Agents Association Chairman Syed Mohammad Arif, in a letter to the senior secretary of the Ministry of Shipping on 18 September, appealed for a review of the new tariff structure, highlighting the potential ripple effects on Bangladesh's export-driven economy and warning of eroded competitiveness in the global freight market.
He argued that traders were already paying inflated tariffs due to the rising US dollar. "When the tariff was last reviewed, the exchange rate was less than Tk50 per dollar. Today, the dollar price has already increased to Tk120," he said.
