Ctg port lease: economic rationale, strategic concerns

Bangladesh interim government's decision to lease out the New Mooring Container Terminal (NCT) of Chittagong Port to Dubai-based global logistics company DP World has ignited a nationwide debate and raised significant concerns. While the government argues that the move will enhance efficiency, attract foreign investment, and modernise logistics at the terminal, critics raised concern about foreign oversight in key strategic locations and warned that it could compromise national regulatory oversight, weaken safeguard mechanisms, and expose Bangladesh to the risks of future conflict over a national strategic asset.

Chittagong Port serves as Bangladesh's primary maritime gateway. It handles over 92 per cent of the country's foreign trade and processing over 3 million twenty-foot equivalent unit (TEUs) annually. It plays a critical role in ensuring the smooth flow of essential goods, including food supplies, oil, and other strategically important commodities.

The NCT at Chittagong Port, recently developed with modern infrastructure and equipment, plays a vital role in facilitating Bangladesh's international trade. With five Jetties, this is well-equipped, fully operational and capable of handling Ocean going large container vessels. The terminal was designed to handle 1.1 million TEUs annually. Today, it operates at over 1.3 million TEUs, exceeding its intended capacity and contributing over Tk 1,000 crore to national revenue. With the terminal already over performing under local management, many argue that foreign control over such a vital asset-located next to a major naval base-poses a national security risk. This situation raises a fundamental question: how logical is the decision of handing over NCT to a foreign operator?

There is no doubt that Chittagong Port requires urgent modernisation and automation to improve efficiency and remain regionally competitive. While its capacity and operational performance have shown gradual improvement, the port still lags behind key regional hubs-particularly in areas such as vessel turnaround time, cargo clearance, and congestion management. According to UNCTAD's Port Performance Report, the average vessel turnaround time at Chittagong Port is around 3-4 days, compared to just 12-24 hours in Singapore and 24-36 hours in Colombo. Similarly, cargo clearance in Bangladesh takes 7 to 10 days, far exceeding the 2-3 days typical in high-performing ports. These inefficiencies not only delay trade flows but also significantly erode Bangladesh's export competitiveness. In fact, port congestion and logistics-related delays are estimated to increase export costs by 10-15 per cent, undermining the country's position in global markets.

Although official confirmation is not available, newspaper reports suggest that the lease of NCT to DP World is being structured as a government-to-government (G2G) agreement, bypassing an open tender or competitive bidding process. The lack of competition limits Bangladesh's options, potentially restricting the ability to negotiate more favourable terms and maintain robust regulatory oversight. This approach aligns with the precedent set by the Hasina government, which favoured direct negotiations over public bidding for large infrastructure projects. Thus, questions arise as to why the Interim Government is following the same path, raising concerns about transparency and accountability.

In fact, it does not matter whether it is the Hasina Government or the Yunus Government; this is a hallmark of neoliberal economic policy, which emphasises privatisation, globalisation, and the free movement of capital. Due to the influence of corporate power and vested interests, many developing countries are pressured to open their markets to multinational corporations and even transfer the management of strategic assets to these global entities. Institutions such as the World Bank, IMF, IFC, and WTO have played a central role in advancing and implementing the neoliberal agenda worldwide. We should not be surprised if, in the future, our Dhaka International Airport is leased out to a foreign company to improve efficiency.

The key question is whether leasing out the terminal to a foreign company is the only way to improve efficiency. A port operates within a complex and integrated ecosystem, where performance is shaped by a combination of interrelated factors such as infrastructure quality, operational capacity, container handling procedures, terminal operating systems, the efficiency of customs clearance, and labour relations. Enhancing port performance, therefore, requires a holistic strategy of the government that addresses the entire system.

Port  performance is influenced not only by operations and management but also by geographic and physical characteristics. Chittagong Port is situated along the Karnaphuli River on a narrow strip of land, with a draught of approximately 9.5 meters-limiting access for larger vessels. In addition to shallow depth, the river's narrow width, sharp curvature, and tidal fluctuations further restrict vessel movement and contribute to longer turnaround times. Given these physical limitations, Chittagong Port may not be able to match the operational efficiency of ports like Singapore or Colombo. Nonetheless, significant improvements are still possible through an integrated approach-enhancing terminal operating systems, streamlining customs clearance processes, improving labour relations, and upgrading the logistics infrastructure.

Customs clearance is a major contributor to shipment delays and prolonged vessel turnaround times. According to the National Board of Revenue (NBR), it currently takes an average of 7 to 10 days to clear a vessel through customs. Streamlining and modernising customs procedures is a low-hanging fruit-an area where significant gains in efficiency can be achieved with relatively modest investment and within a short period. Without addressing inefficiencies in the national customs clearance system, simply leasing the terminal to a foreign company is unlikely to yield the desired improvements in overall port performance.

The Bangladesh government's decision to hire Saudi operator Red Sea Gateway Terminal (RSGT) to manage the Patenga Container Terminal (PCT) has raised concerns about the effectiveness of foreign-operated terminals and the risks of profit repatriation from Bangladesh. Initially projected to handle 500,000 TEUs annually, PCT has significantly underperformed, processing only 178 TEUs per day on average due to delays in procuring critical operational equipment, particularly gantry cranes, forcing reliance on less efficient ship-mounted cranes. Its underperformance also raises broader concerns about foreign-run port operations, particularly in terms of efficiency, investment commitments, and long-term financial implications for Bangladesh.

In addition, global experiences indicate that outsourcing port operations to foreign companies does not always result in favourable results.  A notable example is the Doraleh Container Terminal in Djibouti, which was leased to DP World under a 50-year concession agreement in 2006. In 2018, the Djibouti government unilaterally terminated the lease, citing national security concerns and the need for greater sovereign control over its critical maritime infrastructure. This decision led to a protracted legal dispute, with DP World challenging the termination in the London Court of International Arbitration. The court declared Djibouti's actions unlawful and ordered the government to either reinstate DP World's rights or provide financial compensation of approximately $686.5 million. This case highlights the potential legal, financial, and sovereignty-related risks that can arise from long-term foreign control of strategic national assets.

A lease arrangement involves transferring control of a strategic asset for a defined period in exchange for periodic payments, commonly referred to as rent. Beyond simple possession, such agreements often grant the lessee significant authority over how the asset is utilised, including discretionary decisions on operations, access, and investment priorities. This shift in control can have far-reaching implications, particularly when the leased asset is of national or strategic importance.

Chittagong Port is one of Bangladesh's most valuable national assets, and any major decision-such as leasing it to a foreign company for operation-must be approached with careful deliberation. Due to its location along key international shipping routes in the Bay of Bengal, the port holds not only commercial value but also critical strategic significance. While leasing the port may improve operational efficiency and attract foreign investment, it also raises serious concerns, particularly potential compromise of strategic control over vital strategic resources and potential future conflicts and security risks.

The experiences of Djibouti, Sri Lanka, and Pakistan's Gwadar Port highlight the possible risks of renting out vital infrastructure to foreign companies. Such decisions should not be made hastily and should be preceded by broad national consultation and consensus-especially at a time when an elected government is not in place. The stake is not merely the future of a container terminal but the broader question of how Bangladesh should safeguard and manage its strategic assets in an increasingly complex geopolitical and economic environment. While port modernisation and operational efficiency are important goals, they must not come at the cost of economic sovereignty or increase the risk of future conflicts.

Golam Rasul PhD is Professor, Department of Economics, International University of Business Agriculture and Technology (IUBAT), Dhaka, Bangladesh. golam.grasul@gmail.com