CPA should shun dual role of regulator, cargo handler

Chittagong Port Authority (CPA) would be well advised to shun dual role as regulator and cargo operator at the same time to avert conflicts of interest as the seaport is on the cusp of operational model change.

The World Bank has made such suggestion as the CPA is gradually adopting 'Landlord Port Model' by appointing foreign cargo operators in newly built port terminals.

Its suggestion got through a programme in Dhaka with the stakeholders as the multilateral lender conducted an institutional and regulatory review titled 'Bangladesh Maritime Ports Sector PPP Support'.

The CPA, one after another, is leasing out its terminals on the Bay of Bengal to private sectors, especially to foreign operators, and inviting foreign investments in this sector.

Already, Jeddah-based Red Sea Gateway Terminal International (RSGT) has been awarded the task of operating the newly built Patenga Container Terminal (PCT). Also, negotiations are afoot with Dubai-based terminal operator DP World for operation of New Mooring Container Terminal (NCT).

Moreover, The APM Terminals, a subsidiary of Maersk Group, is set to be awarded deal to build and operate Laldia Container Terminal in Chittagong.

Under the landlord model a port authority owns only the basic infrastructure, leases it out to private operators for cargo handling, while the authority looks after regulatory functions and supervises commercial operations.

"To avoid future competition issues among the upcoming private partners, (the) regulator and operator should work at an arm's-length distance," the World Bank suggests citing an example of conflicts of interest in Chittagong port.

At Chittagong Port, nearly all of the major equipment is owned and provided at present by the CPA while operations are done by local private operators. Some smaller equipment like the empty-container handlers is owned by private-sector parties.

In case of Patenga Container Terminal, the terminal operator itself will invest in equipment collection.

"(The) current practice in Chittagong port is not in line with the landlord model," the World Bank says and shows the flaws.

It thinks the recent developments and regulatory framework show that transitioning towards landlord model is possible.

The World Bank at the programme also made port-sector forecast that sys there is a need for continuous grow in trade volumes, in order to help the Bangladesh economy grow.

Also, it underscores diversifying and widening exports and export industries - over and above textiles and garments - and attracting new investments in other industries like cold warehousing.

The development financier further notes that the Bangladeshi traffic-demand projection indicates that, at a Compound Annual Growth Rate (CAGR) of 7.2 per cent, the number of containers is predicted to increase from 3.3 million twenty-foot equivalent units (TEUs) in 2021-22 to 11.4 million TEU in 2039-40.

The growth in import containers at a CAGR of 6.8 per cent is considered main driver of Bangladesh's container throughput, while a significant increase in empty export containers is expected in order to maintain a balance between the total import-and export- container flows.

While analysing the container-demand-projection scenario, the World Bank has observed that a substantial cargo potential is there for transiting boxes to and from North-East India given its population and foreseen economic growth.

Bangladeshi ports may get container traffic of some 0.6 million TEUs per annum from North-East India, it predicts about regional porting prospect.

However, in this case, the World Bank cites lack of infrastructure, customs arrangement, and geopolitical issues as major constraints.

Also, the World Bank says, apparel, being Bangladesh's main driver of export volumes, may generate an additional 0.7 million TEUs of export annually depending on global demand and turmoil in other main export markets

The current Bangladeshi container-port landscape has a capacity of 3.2 million TEUs which with the planned developments of the Patenga Container Terminal, Bay Terminal, and Matarbari Terminal may expand to 8.3 million TEUs by 2029/30.

Contacted, CPA spokesperson Mohammad Omar Faruk told the FE Friday that handover of the cargo-handling responsibility to the private sector immediately is not possible-it requires time.

However, he does not see any conflict of interest in CPA's role as a regulator and also in handling cargoes.

"There is no bar on playing dual role by the port authority in case of landlord port model," he insists.

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