Bangladesh’s port development: Why the right contractual model matters

Bangladesh’s seaports play a vital role in economic growth, international trade, and industrial development. As the country seeks to become more competitive in regional and global supply chains, improving port infrastructure and operational efficiency has become a major priority. 

However, port development is not just about taking foreign loans, building terminals, or buying equipment. The way investment agreements are designed, risks are shared, ports are managed, and public interests are protected is equally important. Bangladesh therefore needs a clear policy framework for both existing ports and new port projects.

The recent loan agreement between Bangladesh and the Export-Import Bank of China provides an important example. Signed in October 2026, the agreement covers RMB2.404 billion (approximately $335.78 million) for the expansion and modernisation of Mongla Port facilities. The loan has a 20-year term and an interest rate of 2%. Separately, China Civil Engineering Construction Corporation (CCECC) was contracted to carry out the construction work. 

It is important to understand that a loan agreement and a construction contract do not automatically give a foreign company the right to operate a port. The loan agreement, by itself, does not transfer control of Mongla Port’s operations to a foreign company.

Public discussion should therefore distinguish between three issues: who provides the money, who builds the facilities, and who operates the port. These are separate matters and may involve different organisations. 

The main question is not whether Bangladesh should accept foreign investment, but whether each agreement provides good value for money, distributes risks fairly, and protects the country’s long-term interests. 

The full contracts and procurement documents should be examined before making claims about ownership or operational control.

For established ports such as Chattogram and Mongla, Bangladesh should consider the Landlord Port Model. Under this model, the government or public port authority retains ownership of the land and basic infrastructure and remains responsible for planning and regulation. Private or international companies operate specific terminals under clearly defined contracts. This approach allows Bangladesh to maintain strategic control while benefiting from private investment, modern technology, and professional management. With proper oversight, it can also improve cargo handling, reduce vessel waiting times, and increase overall efficiency.

For new terminals and large infrastructure projects, the Build–Operate–Transfer (BOT) model may be a suitable option, depending on the project’s financial feasibility. Under this arrangement, a private company finances and builds a facility, operates it for an agreed period to recover its investment, and then transfers it to the public authority. 

If the project is supported by a proper feasibility study and realistic estimates of future cargo demand, BOT can attract private investment and reduce the immediate financial burden on the government. 

The Landlord Port Model and BOT are not competing approaches — they can work together. 

The Landlord Model provides the overall structure for port ownership and management, while BOT is one way to finance, build, and operate a particular facility before transferring it to the public authority.

Sri Lanka’s Hambantota Port offers an important lesson for Bangladesh. The port was developed with financing from China, but it faced commercial difficulties and struggled to generate the expected level of business. These difficulties formed part of the wider background to a 99-year operating concession granted to China Merchants Port Holdings. 

The key lesson is not that Bangladesh should reject Chinese investment or foreign partnerships. Rather, every major port project should be based on realistic demand forecasts, careful financial planning, transparent agreements, and effective government oversight.

Bangladesh should also learn from its own experience. The earlier Powerpac Ports arrangement at Mongla Port, initiated in 2016, deserves review to understand what was promised, what was delivered, and what lessons can be applied to future agreements. 

Similarly, the concession arrangements involving RSGT and APM Terminals at Chattogram Port should be examined to assess whether the expected improvements in port operations, investment, and service quality have been achieved. These reviews would help policymakers make better decisions about future port management.

Whatever model Bangladesh chooses, major port agreements should include clear and measurable performance targets. These should cover cargo-handling speed, vessel waiting times, equipment maintenance and reliability, and overall service quality. 

Contracts should also clearly explain concession fees, how port charges are set, staff training, technology transfer, and the conditions under which an agreement can be terminated. The government must also assess any financial risks that could eventually become a burden on public funds.

In the case of Mongla Port, the Chinese loan agreement should be assessed separately from the construction contract and any future agreement to operate the terminals. Borrowing money from a foreign institution does not automatically transfer control of port operations to a foreign company. The government should carefully compare the available management options, considering their financial costs, operational benefits, and long-term sustainability. Existing ports may benefit from a Landlord Port Model, while BOT arrangements deserve consideration for suitable new infrastructure projects. 

For Mongla Port, the feasibility of either approach should be assessed against realistic cargo forecasts, expected revenue, investment requirements, and long-term operating costs. The objective should be to select a model that is financially viable, operationally efficient, and sustainable for Bangladesh.

Ultimately, Bangladesh does not need to favour or reject any particular foreign partner. It needs contractual arrangements that attract investment, improve port performance, ensure public accountability, and deliver long-term economic benefits. Modern infrastructure alone cannot guarantee success. Transparent contracts, strong institutions, professional management, and effective government oversight are equally important. 

By carefully assessing the available options and learning from both domestic and international experience, Bangladesh can develop ports that are internationally competitive, financially sustainable, and capable of supporting the country’s future economic growth.

source : tbsnews