Laldia, Pangaon terminal deals being finalised in unusual haste

A long-term agreement between Chittagong Port and Denmark-owned APM Terminals for building and operating a terminal at Laldia Char are set to be signed today, Monday.

The signing ceremony was scheduled to take place in the morning at Dhaka’s InterContinental Hotel, but the unusual haste at which this long-term agreement is being finalised has raised questions.

On the same day, at the same venue in the afternoon, another agreement is scheduled for the Pangaon Inland Terminal near Keraniganj. The Pangaon terminal is being handed over to Switzerland-based Medlog SA for a 22-year operating tenure. Meanwhile, the agreement with APM Terminals for constructing and operating the Laldia Char terminal will span 33 years, with an additional option to extend it by 15 more years. Although APM Terminals is Danish-owned, it is registered in the Netherlands.

According to a report by the International Finance Corporation (IFC), a member of the World Bank Group, that served as the transaction adviser for the Laldia project—the timeline from submission of the operator’s proposal (APM Terminals) to completion of the agreement was set at 62 days. However, the Port Authority completed the entire process in just two weeks, an unusual speed.

Although the process of establishing a terminal at Laldia Char began during the Awami League government’s tenure, there was no sense of rush at that time. The work was progressing at a normal pace. But after APM Terminals submitted its proposal on 4 November to build and operate the terminal at Laldia Char, the Port Authority and related agencies pushed the process forward with an unusual speed.

Two people with the knowledge of port affairs told Prothom Alo that such agreements must be handled with extreme caution. If any clause fails to safeguard the country’s interests, the consequences can be severe. South Africa’s Djibouti provides a major example. In 2004, Djibouti signed an agreement with DP World to build a terminal, and the terms were heavily in favour of the operator. When the Djibouti government later terminated the contract, DP World went to an international court. The court ordered the Djibouti government to pay 385 million dollars in damages with interest, and an additional 148 million dollars in compensation for rights.

How the deals unfolded at rapid pace

It has been learned that APM Terminals submitted its technical and financial proposal on 4 November. The next day, 5 November, the technical evaluation took place. On November 6, after evaluating the financial proposal, negotiations began the same day. Port sources say that negotiations were concluded during the public holidays on 7 and 8 November (Friday and Saturday). However, a source at the Ministry of Shipping says the negotiations concluded on 9 November.

On the same day, the Port’s Board approved the proposal in its meeting. After the meeting, the summary was sent to the Ministry of Shipping the same day. The next day it was forwarded to the Ministry of Law. On 12 November, the proposal was placed before the Cabinet Committee on Economic Affairs, which recommended approval.

It has also been learned that following the recommendation, the Chief Adviser gave final approval yesterday, Sunday. After that, APM Terminals was issued the Letter of Award the same day. Normally, after receiving the Letter of Award, there is a two-week period before the contract signing. But in this case, the agreement is being signed in less than a day.

Attempts to reach the Port Chairman, Rear Admiral S M Moniruzzaman, for comment were unsuccessful as he did not answer his phone.

Pangaon deal also moving quickly

Like Laldia, the Pangaon Inland Terminal agreement is also progressing rapidly. On 6 November, the technical evaluation committee for the Pangaon Terminal submitted its report. On 9 November, the financial evaluation was completed. The report was forwarded to the Ministry of Shipping the next day. By yesterday, all remaining tender processes were completed. In other words, all procedures were concluded within one to one-and-a-half weeks of the technical and financial evaluations, enabling the agreement to be signed.

Medlog SA had submitted a financial proposal of Tk 1.08 billion (108 crore) to operate this terminal. After negotiations, it was finalised at approximately Tk 1.21 billion (121 crore). Jointly built in 2013 by Chittagong Port Authority and the Inland Water Transport Authority, the terminal cost Tk 1.56 billion (156 crore).

Suspicion over the rush

The details of this long-term Laldia agreement cannot be fully disclosed because it includes a nondisclosure agreement. How much of the contract will be made public and how much will remain confidential will be known on the signing day.

Asked about the matter, Professor Anu Muhammad, member of the Committee for the Protection of Democratic Rights, told Prothom Alo yesterday, Sunday that secrecy and haste in signing such long-term agreements pose a threat to national interests. He said such actions would be seen as a grave betrayal by a government that assumed responsibility through a mass uprising. He added that the government’s rush over port matters –while ignoring urgent issues like elections and law and order – raises suspicion. It shows that the interests of foreign companies are being protected through commission-takers.

However, during a visit to the port last week, the Shipping Adviser told journalists that no terminal would be handed over in a way that harms the country. He said details of the agreement would be known after its signing.