Do we need a foreign operator for terminal management?
The interim government is pressing forward with plans to lease out the New Mooring Container Terminal (NCT), the largest and most profitable terminal at Chattogram port, to the UAE's state-owned DP World, through a government-to-government (G2G) arrangement. This initiative was originally undertaken by the Awami League government in March 2023, but was stalled in the face of the port workers' protest. Now, the interim government is pursuing the same arrangement, under the public-private partnership (PPP) model, bypassing an open and competitive bidding process.
According to a recent Prothom Alo report, the World Bank's International Finance Corporation (IFC) is the project's transaction adviser. If all goes as planned, a concession agreement is scheduled for signing by November. After that, the operator will fully take over the terminal, recruit manpower, collect container handling charges, and pay the port authority an upfront fee, an annual payment, and a per-container fee. But it is not yet clear how much DP World will invest, what specific improvements it will bring, and how the revenue will be shared between the Chittagong Port Authority (CPA) and DP World.
For all latest news, follow The Daily Star's Google News channel. 
Costing Tk 2,000 crore, the 950-metre NCT was constructed by the CPA in 2007. It is equipped with five berths: four for ocean-going container vessels and one for smaller container ships. Of the port's 18 quayside gantry cranes, an important container-handling equipment, the NCT alone has 14. It can currently handle around 1.3 million TEUs against the design capacity of 1.1 million TEUs. About 44 percent of the port's container traffic goes through this terminal, making it the most revenue-generating facility. The CPA's records state that it earned Tk 1,216 crore in revenue from the NCT in FY23, with a net income of Tk 574 crore after expenditures. Why, then, lease out such a profitable terminal that has been operating successfully for 17 years?
Some argue that Chattogram port is inefficient compared to seaports in other countries, and that hiring a foreign operator will solve the issues. However, port performance does not solely depend on the operator's efficiency. It also depends on various factors like channel depth, number of terminals and berths, yard space, customs management, etc. While crane moves per hour may relate to operator skill, other metrics—such as vessel waiting time, berth occupancy, container dwell time, and overall handling—depend on the broader infrastructure and systemic factors.
Bonik Barta recently reported that Chattogram port's channel is prone to siltation due to its geographical location. With regular dredging, the maximum depth reaches 9.5 metres during high tide, dropping to six to seven metres during low tide, preventing larger vessels from entering. The port's limited channel depth naturally hinders its ability to match the efficiency of deep-sea ports like Singapore (16 metres), Colombo (18 metres), or Vietnam's Cai Mep (16-18 metres). However, improvement can be made through automation, streamlined customs, improved connectivity, and better logistics infrastructure. Handing it over to a foreign operator isn't the only option available; the CPA can achieve much by hiring expert consultants if necessary and implementing targeted reforms.
Furthermore, deciding who manages a country's ports should not be based only on technical or management capabilities. Ports are strategic national assets with implications for national security. In 2006, DP World tried to acquire terminal operations at six US ports from a British firm named P&O, but the US Congress opposed it citing security risks. As a result, DP World had to hand over those terminals to an American company called Port America.
There are many such instances, demonstrating that port management is not treated like just any other investment. Foreign company ownership can change hands for political or strategic reasons, leading to uncertainty over port control. While big powers may be able to influence such ownership changes, weaker countries may not have that leverage. Hence, these risks must be taken into consideration.
Another revealing case is the dispute between DP World and Djibouti. The East African country sits near the Red Sea and the Gulf of Aden—close to the Suez Canal, one of the world's busiest maritime routes—and serves as Ethiopia's main seaport. In 2006, Djibouti signed a 30-year concession deal with DP World to operate Doraleh Container Terminal (DCT), which began operations in 2009. But in 2018, Djibouti cancelled the contract, saying the operator undermined national sovereignty and was plagued with irregularities and poor management.
Djibouti tried to renegotiate the contract and even offered to buy out DP World's shares. DP World agreed initially but subsequently added an additional restriction on Djibouti developing new ports on its territory. Djibouti rejected this as an infringement on sovereignty and ultimately terminated the contract. The relationship between Djibouti and UAE also soured as a result. In April 2019, a London court ordered Djibouti to pay DP World $533 million for breach of contract. This underscores the legal, financial, and geopolitical risks that can emerge when strategic national assets like ports are placed under foreign control.
Bangladesh also had an unfavourable experience with Patenga Container Terminal, handed over in June 2024 to Saudi Arabian firm Red Sea Gateway Terminal International (RSGTI). RSGTI was supposed to invest $240 million (Tk 2,640 crore) into the terminal over 22 years, and the port authority would get revenue of Tk 300 crore annually, according to a Samakal report.
However, 10 months on, the promised investment did not materialise. Due to a lack of equipment and skilled personnel, the terminal was operating at only 12 percent of its expected container handling capacity—handling just 170-180 containers per day out of a possible 1,369. Moreover, the port authority's revenue per container from Patenga is only $18, while it is currently $47 per container from the NCT.
There is also concern that container handling charges may increase under a foreign operator, which could raise business costs and undermine competitiveness. For example, according to an UNCTAD report, in Australia, DP World unilaterally raised infrastructure surcharges dramatically to recover its investment: Melbourne port's surcharge soared from 3.45 Australian dollars per container in 2017 to 85.30 dollars in 2019—more than 2,000 percent increase. Similar hikes occurred in Brisbane and Sydney, raising alarm at Australia's competition regulator.
The New Mooring Container Terminal currently provides employment to nearly 1,000 workers. If it is leased out to DP World, instead of creating new jobs, there is a risk that existing employment opportunities could be adversely affected. For example, in 2019, DP World reduced 10 percent of its workforce in Australia to deal with volume losses and blamed the Maritime Union of Australia for refusing to make concessions in the bargain to deal with the losses.
Handing over port operations to a foreign operator offers no guarantee of national benefits. For example, Singapore's ports, widely praised for efficiency, are operated by state-owned PSA Corporation and Jurong Port. Ultimately, everything depends on governance. Without proper oversight, even foreign operators fail to deliver; with effective supervision, even domestic operators can perform well.
Considering Chattogram port's strategic importance, geopolitical risks, and existing profitability, handing over the NCT to a foreign company is not advisable. Moreover, it is questionable whether the interim government has the mandate to make such a strategic decision before a national election. The government should rather focus on building national consensus around reform recommendations and preparing for a credible election.
Kallol Mustafa is an engineer and writer who focuses on power, energy, environment, and development economics. He can be reached at [email protected].
Views expressed in this article are the author's own.
Follow The Daily Star Opinion on Facebook for the latest opinions, commentaries and analyses by experts and professionals. To contribute your article or letter to The Daily Star Opinion, see our guidelines for submission.
Comments