Bangladesh's High Court has declared as illegal government approval for the construction of a private container terminal by an American company at Chittagong.

Bangladesh will lose hundreds of millions of dollars in investments from US companies, some of which are keen to put their money in Bangladesh

Mary Ann Peters US ambassador

The controversial project, which has been under discussion for many years, would have been Bangladesh's biggest foreign investment project.

Dock workers' unions at the state-run Chittagong Port and local politicians have opposed the port because of fears the new port would lead to mass job losses.

The ruling is subject to appeal in the Supreme Court.

US deal

Chittagong Port, on the Bay of Bengal, 216 kilometres southeast of the capital Dhaka, handles 80% of Bangladesh's export and import traffic.

Stevedoring Services of America (SSA), which has already bought 162 of the 200 acres it needs to build the $550m port, had planned to open it in 1999.

The company is the largest terminal operator in the US and has a presence in over 150 locations worldwide including Chittagong and also Kakinada and Dhamra in neighbouring India.

SSA denies the claims that the new dock would trigger job losses but create and extra 4,000 positions.

It plans to appeal the court ruling.

Court ruling

Two Bangladeshi High Court judges made the ruling on Tuesday and ordered further work on the project be stopped.

They said deal had been "arbitrarily" sanctioned by the government in 1998 without a feasibility study and economic appraisal, court officials said.

The US ambassador to Bangladesh, Mary Ann Peters, has already warned further US investment would be threatened if SSA was not given the go ahead.

"Bangladesh will lose hundreds of millions of dollars in investments from US companies, some of which are keen to put their money in Bangladesh," she said in September. nt.