The Patenga Container Terminal (PCT), constructed with Tk1,230 crore from the Chittagong Port Authority (CPA)’s enjoy fund, used to be presupposed so that you just can add half of-a-million twenty-foot the same devices (TEU) to the high seaport’s container coping with capacity.
Since the terminal used to be constructed bigger than two years lend a hand, its foreign operator Red Sea Gateway Terminal International (RSGTI), can also utilise no longer up to 8% of the terminal’s capacity due to lack of equipment, yielding principal much less return on investment for the port and depriving customers the specified services.
Port authority earns a piece
The port authorities impact excellent $18 for every container dealt with – a mere piece of $80-$90 currently charged at Chittagong Port’s totally different terminals. It makes one marvel why Chittagong Port rushed to rope in a foreign operator whereas it had your entire funds and equipment to traipse Patenga terminal itself.
The Saudi Arabia-primarily based operator, which took six months to commence absolute best partial operation, can also cope with a median of 178 TEUs a day against the Patenga terminal’s capacity to tackle 1,369 TEUs day-after-day, constant with the operator’s four-month performance assertion since it started operation in June this three hundred and sixty five days.
AL “influential” tipped the steadiness
Right here’s one thing that some port authority officers had warned prolonged sooner than the “equip, characteristic and defend” contract used to be signed with RSGTI in December 2023 below public-non-public partnership intention.
Enticing a foreign operator for the ready-to-utilize terminal would point out a straight Tk1,000 crore in lost income for the port and lost opportunities for customers for roughly two years’ extend anticipated till the foreign firm would be in a location to commence beefy-scale operation, constant with a snappy willing by the port authorities.
The warnings were brushed off, the port’s chairman used to be modified and the deal used to be signed accordingly as an “influential quarter” all the intention in which by the then Awami League govt used to be allegedly hell-bent to bag it carried out, as advised by official paperwork and remarks of former high port officers.
Gaining with out principal spending?
Port customers attribute the PCT’s poor uncover to a lack of ample investment and equipment by the operator because it needs two years to be totally geared up.
The PCT can no longer cope with non-geared vessels because the operator does no longer hold equipment fancy a crane to promote off containers from ships. It does no longer in fact hold a scanner, so they can no longer cope with imported goods.
As per customs suggestions, all containers encumbered with 38 particular imported objects must aloof be scanned or bodily examined sooner than sending them to inland container depots. Manually examining all import consignments is quite impossible, port customers mentioned, explaining why PCT’s operation is absolute best restricted to coping with a pair of export containers.
Khairul Alam Sujan, vice president of the Bangladesh Freight Forwarders Association, mentioned, “The investor RSGTI does no longer hold a scanner so they can no longer cope with import goods. Even after nine months of signing an settlement they can also no longer chase on beefy operation.
“The port would lend a hand by running it, we businessmen would hold the lend a hand of it. Now we’re no longer getting any advantages,” he mentioned.
Officers inform RSGTI used to be to make investments Tk1,500 crore, 70% of it by taking loans. It has already sought loans from totally different entities along side Infrastructure Development Firm Ltd.
The terminal’s operation used to be handed over to the Saudi company for absolute best Tk220 crore as an upfront concession rate, which is absolute best 9% of CPA’s total investment in the Patenga terminal, which would quantity to Tk2,500 crore if land rate and style cost are added to jetty building charges.
In accordance to former CPA chairman M Shahjahan and two totally different CPA officers who wished to be anonymous, RSGTI is benefiting with out well-known upfront investment. They claimed the company is utilizing earnings from the PCT to aquire equipment.
Nonetheless, in accordance with a TBS e-mail to Erwin Haaze, CEO of RSGT Bangladesh, their verbal change division mentioned, “RSGT has invested a broad $40 million [around Tk480 crore] in Bangladesh. Over the following two years, we understanding to make investments an further $170 million to further modernise terminal equipment and infrastructure.”
Fazle Ekram Chowdhury, president of the Berth Operators Association, advised TBS that if the port authorities had managed the terminal itself, either by a neighborhood or foreign operator as one more of leasing it to a foreign company, the port’s capacity would hold elevated, and a well-known quantity of foreign currencies would hold stayed in the nation.
He also identified as for the interim govt to review the settlement and rob appropriate gallop.
The style PCT slips out of CPA’s hand
On 31 July 2019, the shipping ministry signed an MoU with Red Sea Gateway Terminal Firm Small of Saudi Arabia, intending the contract to be below Public Deepest Partnership (PPP) mannequin on a G2G (govt-to-govt) foundation.
Nonetheless, the final settlement used to be signed with RSGTI, a company registered in the UK on 7 June 2022.
PPP projects are typically supposed for “greenfield” web sites, where no infrastructure exists. In inequity, the PCT used to be constructed at a “greyfield” location, where the CPA had already carried out the terminal’s building.
Soon after completion of the building work in July 2022, the CPA used to be gearing up to commence industrial operation of the Patenga terminal with its enjoy sources. A a success trial operation with berthing a rice-encumbered vessel from Myanmar in November that three hundred and sixty five days adopted by coping with of one more ship in January next three hundred and sixty five days used to be a testimony of the nation’s high seaport’s functionality of running the terminal on its enjoy.
However the then Awami League govt decided to engage a foreign operator for Patenga terminal and in the end handed its operation over to RSGTI for 22 years in December closing three hundred and sixty five days.
The deal got right here as a surprise for the port authority that had aired its concerns against the chase and wondered its rationale prolonged sooner than the deal used to be signed.
The port authority then mentioned it used to be in a location to manipulate the Patenga terminal all by itself and impact Tk1.6 crore day-after-day in foreign currencies, reaching Tk546 crore in a three hundred and sixty five days excellent by coping with containers at the terminal’s three berths.
Roughly Tk460 crore would be required to aquire some equipment that shall be recovered from the terminal’s earnings absolute best in a three hundred and sixty five days, the port authority had mentioned in a snappy willing for the shipping ministry.
If the kind of cope with a foreign operator used to be inevitable, it’ll be fancy the one of berth operators already engaged by the port who utilize the port’s equipment and portion revenues from container coping with, it advised.
Rear Admiral M Shajahan, the port authority’s chairman at the 2nd, in a letter (considered by The Alternate Traditional) to the then high minister Sheikh Hasina on 5 April 2023 mentioned the functionality harm the kind of deal can also motive to the port and the nation.
Shahjahan used to be replaced interior per week by Rear Admiral Mohammad Sohail, who used to be the port chairman when the RSGTI deal used to be finalised in December closing three hundred and sixty five days.
Deal signed below impact?
Officers who were enraged about the process started speaking out since the regime change on 5 August, even though many were aloof unwilling to be quoted. Even a former Bangladeshi workers of the IFC, the transaction adviser for the port authority, mentioned in a social media post on 12 August that she “used to be ousted from the company’s South Asian team” for raising dispute against the deal that she thought would undermine the nation’s interests.
Chatting with The Alternate Traditional this week, Shahjahan mentioned the terminal’s beefy operations were delayed by two years as a result of “impact” of former high minister’s non-public sector adviser Salman F Rahman and former reveal minister for shipping Khalid Mahmud Chowdhury at hand it over to the foreign company.
One more former port official also spoke out.
“We’re unhappy that now we hold signed a cope with RSGTI for running PCT after building your entire infrastructure. We signed an MoU with RSGT, no longer RSGTI. How did RSGTI attain into the image?” mentioned former CPA member (admin and planning) Zafar Alam, who served the port for eight years and used to be enraged about signing the MoU.
Lost revenues
Some CPA officers reveal the lease settlement for the PCT has sacrificed the nation’s interests by providing indecent advantages to the Saudi company.
As an illustration, the CPA currently earns $80-$90 per TEU container dealt with at the port terminal, whereas it pays berth and terminal operators $8-$10. Nonetheless, at the PCT, RSGTI will pay the CPA absolute best $18 per TEU.
Moreover, the CPA would absolute best obtain this $18 for the principle 2.5 lakh TEUs dealt with yearly, despite the incontrovertible fact that the terminal has the capacity to tackle five lakh TEUs. For any further TEUs beyond this restrict, the CPA would obtain absolute best half of of the per TEU tariff.
Apart from, the CPA would obtain absolute best 30% of the income surplus, whereas RSGTI would obtain 70%.
“Our tariff structure is precisely regulated by the published rates of the CPA tariff book. Whereas the specifics of the concession settlement live confidential, we are in a position to guarantee you that its terms adhere to global industry standards,” the company outlined in an e-mail respond.
“These terms embody upfront payments, fastened month-to-month payments, month-to-month royalty prices, minimum volume guarantees, key performance indicators with associated penalties, and income sharing,” it mentioned.
IFC’s war of hobby
The World Financial institution’s non-public sector lending arm IFC used to be residing to make investments in PSA Singapore to create the Bay Terminal Project of the CPA spending over $1.5 billion.
PSA Singapore will bag the fund from the IFC, mentioned two former CPA chairmen Mohammad Sohail and M Shahjan in loads of media events.
When the PPP Authority supposed to nominate the IFC as a transaction adviser to structure the enterprise mannequin for the PCT and formulate the concession settlement with RSGT, the CPA adverse the option because the entity which is willing to formulate the rule of thumb shall be an investor, constant with Shahjahan.
He mentioned since the PCT serves because the benchmark concession settlement for the CPA, the terms and circumstances established in this settlement will seemingly be referenced for future projects, such because the Bay Terminal and the Matarbari Deep Sea Terminal Project.
Whistleblower’s panic
Sumaya Mahmud, a former IFC official who served as an investment analyst in the company’s South Asia team between June 2022 and April 2023, and used to be straight away enraged about drafting the settlement, has no longer too prolonged previously raised loads of allegations, along side claims that the settlement undermined the nation’s interests whereas favouring RSGTI.
“We were below indecent undue stress to expedite the process at least and compromise the quality of the due diligence,” she wrote in an define social media post on 12 August.
Chatting with TBS later, Sumaya claimed to hold reported this to senior IFC officers but used to be forced to resign and removed from the treaty-making process.
Steven K Shalita, Director of Communication and Outreach at IFC, replied to an e-mail from TBS referring to Sumaya’s allegations.
In his response, Steven mentioned that IFC assisted the Chittagong Port in drafting agreements aimed at attracting foreign investment by income-sharing, whereas making sure transparency and accountability in accordance with global standards in the port sector.
He also emphasised that the IFC takes complaints from both former and latest officers severely and adheres to strict interior insurance policies to be obvious a excellent option of such matters.
CPA defends the deal
A letter used to be sent to the CPA’s latest chairman Rear Admiral SM Moniruzzaman on 8 September, in quest of clarification on totally different points linked to the contract, however the organisation first and predominant declined to present a written response due to contract responsibility.
Nonetheless, on 30 September CPA Secretary Mohammad Omar Faruk, in a message, advised TBS that the contract did no longer harm the interests of the CPA or the nation.
“The contract permits nearly all controls of CPA, along side tariff rates, security, and Marine services which put it in a financially advantageous location because the landowner,” the port official mentioned.
With out reference to what number of containers the Saudi company handles, the CPA will obtain a tariff constant with out a lower than 2.5 lakh TEUs, the CPA secretary mentioned.
The port hopes to impact a stunning quantity of money over 22 years with out any further investment. “The port will obtain no lower than 4/5 times of their investment from RSGTI over the contract period exclusively from tariff shares. Moreover, Bangladeshi officers and workers will characteristic the terminal which is willing to be obvious fat earnings of foreign currencies,” the official added.
Moreover, it has an impact on the diplomatic relationship between Saudi Arabia and Bangladesh. By abilities sharing, this would possibly increasingly enhance the competitiveness of CPA with the in style ports of the arena, the CPA secretary mentioned.
