Foreign firms to operate 3 terminals under Ctg Port for up to 30 years; deals by December

The government is set to sign agreements with foreign companies to operate three key terminals under Chittagong Port, which handles 92% of the country's import and export trades, amid concerns from political parties and local business groups.

Speaking at a seminar in the capital today (12 October), Mohammad Yousuf, senior secretary of the shipping ministry, said the agreements for the operation of the Laldia and New Mooring Container terminals in Chattogram, and Pangaon Terminal in Dhaka's Keraniganj by foreign operators will be signed by December this year.

"Among these, Laldia Terminal is being leased out to a foreign company to operate for 30 years, and the other two container terminals for 25 years," the secretary said.

The seminar titled "Investment Potential in the Seagoing Shipping Industry" was organised by the Economic Reporters Forum (ERF).

The move to have foreign firms to run the Chittagong Port has already drawn sharp criticism from political parties, including the BNP and the Jamaat-e-Islami, and also from major business associations such as the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). 

BNP Acting Chairman Tarique Rahman, in a statement on 18 May, said handing over the management of Chattogram Port to foreigners "is not the responsibility of an interim government" and that such a decision "must be taken by a parliament or government elected by the people."

Similarly, Jamaat-e-Islami Ameer Shafiqur Rahman said during a meeting in Moulvibazar on 25 May that his party had opposed the decision to hand over port operations to foreigners, terming it contrary to national interests.

Ctg port makes hefty profits yet why its tariff was hiked

Critics have noted that despite the current government's pledge to ensure transparency through open tenders for all public procurements – following the cancellation of many previous contracts signed under the G2G (Government-to-Government) framework during the Awami League tenure – the administration has chosen the same process again for the strategically and geopolitically crucial port operation.

On Saturday, economist Professor Anu Muhammad said handing over the New Mooring Terminal of Chittagong Port to foreigners without a tender poses a security risk for the country.

Criticising the advisers for "being in a hurry", Professor Anu Muhammad said, "If there is a need to enhance the capacity of Chittagong Port, that should be done by the next elected government. Why's the rush?"

Speaking at an event in Chattogram, he further asked whether there was any "written commitment" that the Chittagong Port must be handed over to a foreign company, reports a Bangla daily. 

He added that a national asset linked to the country's security must not, under any circumstances, be handed over to foreigners.

Government defends decision

Shipping Secretary Yousuf sought to reassure the public and critics, saying that the contracts would be published on the website to ensure transparency and counter the notion that "we are selling the country."

He dismissed fears over strategic and geographical concerns, citing examples where foreign operators are already successfully working in ports in Sri Lanka and India without issue.

The secretary further highlighted the current inefficiencies, noting that the average logistics cost in Bangladesh is 15%, compared to the global average of 7%. The current "berthing time" at Chittagong Port is around four days, compared to less than a day at Sri Lankan ports.

He argued that improved efficiency would benefit local businesses despite the tariff hike: "The tariff increase will raise costs by $170-$180 per container. However, if the ship turnaround time is reduced by even one day after the foreign operator is appointed, businesses will save about $15,000 in ship rent for that day." 

He added that if the quality and speed of service are enhanced, businesses will not object to the additional costs.

However, when asked by TBS whether the government had conducted any study on the amount of foreign direct investment that would enter the country every five years through the foreign operators, the secretary admitted that no such information was available. He only stated that the investment amount was still under negotiation.

Proposed tariff hike at Ctg Port: Meeting ends without decision as stakeholders oppose

he secretary concluded that the port needs to handle 5.36 million TEUs of containers by 2035, which is impossible without foreign companies. He stressed the ultimate need to establish a multimodal transport system linking the nation's rail, road, waterways, and port networks to realise the country's full economic benefit. 

"There is serious container congestion at the port. Unlike other countries, we allow goods to be unpacked and delivered inside the port area. Out of 13 gates, only six have scanning machines, and three or four are often out of order," he said.

Yousuf added that the appointment of foreign operators would help streamline operations, enhance service quality, and reduce unnecessary delays and demurrage costs for businesses.

Port tariffs hiked to lure foreign investment

The secretary said that the government, based on recommendations from a commissioned consultant, has increased Chittagong Port's tariff rates by an average of 40% to make the operation profitable for foreign companies.

"If a profitable tariff is not set for foreign companies, they will not invest," he stated. "Based on the recommendations of the consultant appointed in 2020, we have increased the tariff. We received their report six months ago and have imposed the rates they recommended."

Yousuf acknowledged that the tariff increase was "a bit high" but defended the move, saying, "If they [foreign companies] get higher tariffs, we will also benefit. The ongoing negotiation with foreign operators is based on the current tariffs... The foreign companies will not come unless there is an advantage for them."