The Chattogram Port Authority (CPA) will receive 50 per cent of the additional revenue earned from the Patenga Container Terminal (PCT) after the implementation of the new tariff structure. The arrangement will come into effect as the tariff hike has significantly increased operational costs and container handling charges at the terminal.
CPA earlier signed an agreement with Saudi Arabia-based Red Sea Gateway Terminal (RSGT) for the operation and container handling services at PCT. The contract was finalized in December 2023 at a fixed rate of USD18 per TEU.
However, the revised port tariff, effective from 15 October this year, has raised service charges by nearly 41 per cent across various operational segments. The increased earning from this revised tariff will now be shared between CPA and RSGT to ensure revenue adjustment under the existing operational framework.
Revenue adjustment after tariff rise
PCT was developed by the Chattogram Port at a cost of Tk1,230 crore from its own funds. The terminal has an annual handling capacity of about 500,000 TEUs. For operating the terminal, Red Sea Gateway has invested approximately USD170 million in equipment and associated facilities.
According to the CPA, the agreement with RSGT was executed under the old tariff. Since the port has increased charges, both parties are entitled to adjustments under the revenue-sharing provision of the contract. As a result, under the new tariff regime, the CPA will receive 50 per cent of the additional revenue earned from handling activities, storage rent and other charges. The total amount payable by RSGT will be determined after closing the financial statements at the end of the current fiscal year.
Laldia Terminal to operate under new tariff
Meanwhile, the newly signed agreement with Denmark’s APM Terminals for the construction and operation of the Laldia Container Terminal has been executed according to the current revised tariff. The deal was finalized on 17 November. Similar to the Patenga model, CPA will receive 50 per cent of the additional revenue if tariffs increase again in the future.
Officials familiar with the agreement said that the Laldia Terminal proposal originally quoted USD8 per TEU from APM Terminals. Following negotiations, the amount was revised to USD21 per TEU.
The Laldia Terminal will be a full greenfield project, requiring a substantial private investment of around Tk6,700 crore by APM Terminals. Unlike the Patenga Terminal, CPA is not investing in this project but will earn revenue through equipment handling charges, container services and other port operations including pilotage, tug services and port dues. CPA will also earn from marine services and fixed-rate oil charges.
Under the new tariff structure, the CPA has increased loading and unloading charges for FCL containers from USD 43.40 to USD70.11 per TEU for 20-foot containers, and from USD 65.10 to USD105.16 for containers above 21 feet.
If CPA collects USD21 from the USD70 per TEU tariff rate, the port’s share comes to roughly 30 per cent. However, officials say an exact revenue-sharing ratio cannot be finalized at this stage since final earnings will depend on multiple revenue streams for both parties.
APM Terminals will pay USD21 for the first 800,000 TEUs handled at Laldia. For the next 100,000 TEUs (up to 900,000 TEUs), the payment will be USD22. Container handling beyond 900,000 TEUs will be charged at USD10 per TEU.
CPA officials explain that capacity and infrastructure investment at the terminal are being tailored for 800,000 TEUs. Handling additional volumes will require further investment by APM Terminals. Hence, the charge drops beyond 900,000 TEUs after factoring in additional capital costs.
When contacted, APM Terminals’ parent company Maersk declined to disclose contractual details. Adhish Alawani, Regional Communications Manager for Maersk, said in an email reply that revenue-sharing mechanisms across South and Southeast Asian terminals operate under confidential terms.
When contacted to inquire about the details of the agreement with APM Terminals, none of the relevant officials of the Chittagong Port Authority were willing to comment.
