Privatisation of Chittagong Port

The bell for privatisation of Chittagong Port has tolled. The Foreign Minister M. Morshed Khan on return from a foreign visit recently supported the idea of privatisation of the port. Fourteen years ago, I found Mr. Khan, a man belonging to business community, critical of the port's state of affairs.

The subject of privatisation was raised in a seminar held at Dhaka on port services under the auspices of the Ministry of Shipping during the time of the last caretaker government. In one session of the seminar, I asked the presenter of a paper, who was an official of Chittagong Port, if he agreed with an idea of the president of Chittagong Chamber of Commerce and Industries, on the

conversion of the port into a public limited company. The president was a man from the shipping business community. While the paper presenter was trying to parry away the subject and I attempted to press it further, the session chairman asked me to abstain. The chairman was a party at that time in the venture of establishing a container terminal at the mouth of the river Karnaphuli by one Stevedoring Services Associates of Bangladesh.

As far as I understand, the US Deputy Assistant Secretary of State proposed to privatise the port partially or fully. In an article published in The Daily Star in the year 2002, I suggested to privatise the port partially through converting it into a public limited company in which 51 per cent of the shares were to remain in the hands of the government and

49 per cent of the shares in the hands of public. I expected that the article would create a field for discussion. But it did not. Political leaders have opened their mouth now after Uncle Sam has spoken.

Many now talk of the poor efficiency in the port's operations. During my service at the port, I found some persons demanding that the port should be operated in the manner they demanded. One of them even published a notice in the press asking his people to observe strike in the port because his demand was not met. But many of the same critics shied away when they were asked to make a monetary investment in the port's activities.

Why retain 51 per cent?
The government is an institution to which our people look with great hope. I have found public shareholders of the companies whose 51 per cent shares are in the hands of the government and 49 per cent in the hands of the public to look towards the government's nominees on the board as protectors of their interest. They believe that these persons have no personal monetary interest in the affairs of the company. Directors from the public side hold the government nominees in high esteem because of their education, experience, and allegiance to their service discipline.

Secondly, the case of the attempt to establish a container terminal at a place ahead of the present port in Chittagong by one Stevedoring Services Associates of Bangladesh in collaboration allegedly with a non-existent foreign company has sent warning signals to the people. The project has reportedly been found to be an illegal venture.

Thirdly, forcing the port to close down for one week in the year 1996 ( I heard from a Port user that the closure ran actually for three weeks) by a political party and a further threat given now by that party that, it will close down the Port in future, if its political demands are not met,

suggest that to keep the Port running, the government should have a strong say in its affairs. A few months back, I heard a foreign consultant, who was in Bangladesh for over a year in a project whose activities were spread over the villages and who worked in another country of this sub-continent, to say that, the people of Bangladesh were highly politicized which was not the case in the other country. The Port cannot be left to the mercy of national politics. The government should have effective tools in its hand to keep the Port in operation always.

Assistance for privatisation
The first task in privatisation of the Port is to make an assessment of the value of its assets and liabilities. The second task is to prepare a capital structure for it. The third task is to prepare a plan for the creation of a new Board of Directors. The fourth task is to go ahead with the formation of the company. The fifth is to allow the Board to function without interference. Assistance in these tasks can be provided by experts available in the country.

After the above tasks are done, the new Board of Directors should decide what reforms should be brought in the activities of the new company and how those would be done. I believe that this country has necessary local expertise to do it. The reforms that the Port's administration brought in small doses over a period of time have been effective and sustainable.

M A Kamal, FCA, FCMA is a former member-finance and chairman of Chittagong Port.