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Chittagong Port Authority moves to raise charges, port users concerned

A move is on to readjust upward the tariffs on services at Bangladesh’s biggest port in Chattogram, which port-users say will impact the entire economy at a crunch time.

Chittagong Port Authority (CPA) has issued a letter in favour of a few stakeholders, including shipping firms, few days back seeking their opinions on the matter.

They have been given 10 days to comment on the hot issue of country’s external trade with its knock-on impact on domestic trade and economy.

A copy of the letter obtained by the Financial Express (FE) reads: the CPA had last reviewed the charges more than 35 years back in 1986 during the autocratic Ershad regime. In 2007-08, it had some upward adjustments to five key tariffs.

The CPA, which handles more than 90 per cent of the country’s around $100 billion worth of external trade, has some 51 types of tariffs, but storage charge is the biggest head in terms of revenue generation.

The port is a self-dependent organisation and one of the largest contributors to government’s non-tax revenues.

This is one of the busiest ports in the world. On the international ranking-organisation Lloyd list of 2020 it was marked as the 67th-busiest port in the globe.

The CPA in the letter argues that it has taken the step to raise the tariffs as it is implementing many megaprojects in order to enhance its services. It also wants to include more sophisticated equipment in its fleet.

The Authority has already appointed M/S. IDOM, a consulting firm based in Paris, and Dhaka-based Logicforum Limited for a reappraisal of the charges.

They have already completed their field-level works on the matter, according to the letter.

In the meantime, port-users told the FE that it would impact adversely the entire economy at a time when the global and domestic inflation rates are on the rise, after the reopening of the economies.

The stakeholders said the port should be made “truly service provider” in the interest of the people and the economy instead of profit-maximizing organisation.

Md. Abul Bashar Chowdhury, chairman at the Chattogram-based BSM Group, a conglomerate of commodity importers, says all of the 170 million people will be affected directly or indirectly if the CPA raises its tariffs.

“A one-US-dollar increase means it has a multiplier impact on the people,” he warns.

Mr Chowdhury says increase in tariffs will lead to surge in prices of industrial raw materials. Imported goods will also be expensive.

He rues that the port is now labelled as one of the expensive in the world for higher charges, congestion and other hidden costs.

Md. Mahbubul Alam, president of Chattagram Chamber of Commerce and Industry (CCCI), said both exports and imports would be costlier after upward adjustments of the tariffs.

“Exporters will lose competitiveness.”

The port and logistics service charges have already been expensive due to the rise in shipping freight in recent times.

“This [tariff increase] will add another pain for trade and people as ultimately the end-consumers will pay for it.”

Top shipping executives told the FE that there is no reason for raising the tariffs. This has already remained much higher than the other ports located in India, Pakistan and Sri Lanka. The port efficiency in those countries remained much better than in Bangladesh.

They say the port buys equipment while berth operators use it. “The berth operators have no investment in equipment but they have been milking the port’s logistics for a long time, especially since 2007-08.”

The berth operators, on the other hand, raise charges by 4.0 per cent on grounds of enhancement of labour wages although there is no transparency about wage hike.

The labourers who work for the berth operators go empty-handed after retirement. Saif Powertec, the biggest operator, gives only two months’ gross salary as compensation on retirement.

“The port is one of the inefficient infrastructures in the world as we have to wait at least three days to discharge goods,” said one senior shipping executive, wishing not to be named.

He says such delay is hardly seen in other ports around the globe.

He noted that they pay much to the port on account of the dollar-BDT exchange rates.

“In 1986, the dollar-Taka exchange rate was Tk 20. Now it is almost Tk 90. So, in real terms, we are paying much higher if the exchange rate is considered.”

The premier port has some 51 heads of charges. It earns the biggest chunk from storage charges-around 50 per cent of total revenues. A container usually enjoys 4-day free-charge facility and from the fifth day it has to pay $6.0 dollars. And then it surges exponentially.

In terms of container handling, it handles more than 98 per cent of total containers in the country’s external trade.

According to Lloyd’s List, the seaport handled a total of 2,839,977 TEUs of containers in 2020, down by 8.0 per cent from 3,088,187 TEUs in the previous year.

Such decrease in container throughput volume forced the port to lose the previous year’s rank of 58th [in 2019].

The Bangladeshi port ranked 64th in 2018, 70th in 2017, 71st, 76th and 87th in 2016, 2015 and 2014 respectively.
Source: Financial Express

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