Part of Karachi port operations leased to UAE group for 50 years

KARACHI: The UAE-based AD Ports Group has signed a 50-year concession agreement with Karachi Port Trust (KPT) to operate Karachi Gateway Terminal Limited (KGTL) and invest $220 million (Rs63.129 billion) for infrastructure development in the first 10 years of the deal, a statement said on Thursday.

The development takes place when cash-strapped Pakistan looks for external financing to support its ailing economy.

Under the agreement, a joint venture (JV) between AD Ports Group, as a majority shareholder, and Kaheel Terminals, a UAE-based company, has been formed to manage, operate and develop the KGTL berths 6-9 at Karachi Port’s East Wharf, the AD Ports said.

The JV will undertake significant investments of $220 million in infrastructure and superstructure over the next 10 years, with the bulk of it planned for 2026. The development works will include the deepening of berths, an extension of quay walls and an increase in the container storage area.

As a result, the terminal will be able to handle Post Panamax class vessels of up to 8,500 TEUs (Twenty-Foot Equivalent Units) and container capacity will increase from 750,000 to 1 million TEUs per annum. The expansion and enhancement will further cement the terminal and Karachi’s position as a key player in the maritime industry.

Captain Mohamed Juma Al Shamisi, managing director and Group CEO, AD Ports Group, said, “The AD Ports Group is delighted to embark on this landmark concession agreement with Karachi Port Trust, which exemplifies AD Ports Group’s strategy of investing in key maritime trade routes for the UAE, replicating our successful integrated business model in regions that offer long-term, sustainable growth prospects.”

The agreement has the potential to unlock a new chapter of growth and progress for both the UAE and Pakistan, enabling to strengthen ties with key trading nations and leading to increased economic growth and prosperity, according to Shamisi.

“We foresee significant opportunities ahead. Together, in line with our wise leadership’s vision, we will redefine the maritime landscape and create value for all stakeholders,” he said.

The terminal’s operations are all dollarised with no foreign exchange exposure to the Pakistani rupee. Historically, the terminal has been generating revenue of around $55 million and EBIDTA (earnings before interest, taxes, depreciation, and amortisation) or around $30 million annually.

Faisal Subzwari, Federal Minister for Maritime Affairs, said, “The UAE and Pakistan have a strong and long-standing relationship, which is experiencing continuous growth in the areas of trade and investment due to our leadership’s commitment to further strengthen ties.”

The signing of the agreement underscored both the nation’s shared vision for the development of port infrastructure and set the stage for a prosperous global maritime ecosystem, he added.

The UAE was Pakistan’s number one regional trading partner in 2021, accounting for over 40 per cent of Pakistan’s trade with Arab countries, with non-oil exports from the UAE to Pakistan valued at nearly AED 4.8 billion ($1.3 billion) in 2022, according to Pakistan’s ministry of foreign trade. Additionally, re-exports from the UAE to Pakistan amounted to AED 10.6 billion (US$2.9 billion), reflecting a 7.7 per cent growth compared to 2021.

Syed Syedain Raza Zaidi, Chairman, Karachi Port Trust, was of the view that the agreement between AD Ports Group and KPT marked a significant milestone and holds big potential for the growth and development of Karachi Port. “By joining forces, we are paving the way for a thriving container terminal that will enhance efficiency, attract investment, and stimulate the economy,” he said.