KARACHI: Port of Singapore Authority (PSA), Aqeel Karim Dedhi (AKD) Group and National Logistics Cell (NLC), the shareholders of Gwadar Port are ready to sell their share of Gwadar Port to China Harbour Engineering Co Ltd (CHEC), which is a state-owned company.
The PSA holds 60 percent of shares, AKD Group holds 20 percent and NLC holds 20 percent shares, sources say. According to sources, the stakeholders have just asked for their investment plus interest which is approximately $25 million.
However, sources in shipping confirmed that the board members of Gwadar Port Authority (GPA) did not issue an NoC because the matter is pending in the Supreme Court and that the ministry should take the matter to the Economic Coordination Committee (ECC) and cabinet and if they clear the matter then the board would have no objection.
The source revealed that CHEC is not only interested in taking charge of the port but is also interested in developing Gwadar Port as per the master plan which includes a free economic zone, desalination plant and warehousing. CHEC will also expand the port from the current 602 metres and plans to develop the rest of the 1,000 metre area.
In the initial stage, CHEC will invest $10billion in the development of Gwadar Port, roads and a free zone.
The government had to hand over 923 hectares of land on lease to the PSA by June 2008 for the development of a free zone but was unable to do so as the land in possession of Pakistan Navy, the Coast Guards and private entities was not transferred. As per the plan the National Highway Authority (NHA) also failed to complete the road network. The NHA attributes this failure to the law and order situation and a shortage of funds.
Source say CHEC has confirmed that it will construct the Ratodero road, link roads and also connect the port with China through roads and railways which are vital for the port. CHEC is a leading company in this field and has completed numerous technically advanced roads, bridges, tunnels, railways and airports.
Balochistan’s chief minister is seeking cancellation of the contract with Singapore’s state-owned PSA International Ltd on the ground that the deal signed with it was “one-sided”. The PSA contract has also been challenged in the Supreme Court and the matter is pending. It was learnt that CHEC will make a shipping consortium with some of the Chinese port operators to market and operate the port.
China has agreed to take charge of Gwadar Port. It is expected that the deal will materialise within 90 days once the Supreme Court gives clearance to the GPA case, said an official.
In this regard, a Chinese delegation will visit the GPA and a share purchase agreement will be signed. According to sources, negotiations between the shareholders and the Chinese are underway.
It bears mention that China constructed Gwadar Port and provided 80 percent of the initial funds worth $248 million for the construction of the port. Of this amount, $50million was given as a grant to mark the 50-years of Pak-China friendship while $198 million was given as a soft loan. Construction work on the port began in 2002 and was completed in 2007.
At present, Gwadar Port is not fully operational. The running of port affairs was handed to the PSA, which has been one of the biggest port operators for 40 years. However, the PSA and the government failed to fulfill their commitments.
According to a ports and shipping analyst, handing over the port to the Chinese by transferring shares to them is the best solution. In the current scenario China is the only country which is working actively on different projects in Pakistan.
“If the Gwadar Port is marketed well, the regional ports will lose considerable business. Gwadar has strategic value once it is connected, according to the master plan, since it happens to be the hub of an energy and trade corridor to and from China and Central Asia,” said the analyst.
An official in the government of Balochistan said that PSA International Ltd had neither brought in trade nor expanded the port. Gwadar Port depends on the government’s seasonal cargo, he said. So far the government has given a subsidy of Rs585million and diverted some of its cargo to Gwadar Port.
According to the master plan, the port is supposed to process four types of cargo: Gwadar industrial cargo, Balochistan cargo, national cargo and transit and transshipment cargo. According to the concession agreement, the GPA gets only nine percent of the port’s total revenue.