Gwadar port still facing problems; phase-2 delayed

ISLAMABAD — Gwadar Deep Sea Port, Pakistan’s third port in Balochistan, is still facing problems including that of tariff due to which it has not been made fully operational after its inauguration in March last year.

By A Correspondent

Published: Tue 4 Mar 2008, 9:09 AM

Last updated: Sun 5 Apr 2015, 1:16 PM

The situation, according to the sources, has led to the delay in undertaking the much talked about Phase-2 which was initially planned to be developed by the private sector. However, Caretaker Finance Minister Dr Salman Shah when contacted said that although security issues have been sorted out to some major extent, the government needed to provide necessary marketing facilities to the investors at Gwadar.

He said he did not know about tariff issues due to which foreign ships have not reportedly started coming to the Gwadar port in a big way. But he said that communication facilities were required to be provided to the investors to help them reach Afghanistan and Central Asia through the port in Balochistan.

“Let us first create all possible facilities to attract foreign ships to come to Gwadar port,” Dr Shah said hoping that the future government would further take up the issue.

While the officials of the Federal Bureau of Revenue (FBR) have no clue of tariff issues, Director-General Gwadar Development Authority Mir Ahmed Baksh Lehri claimed that these issues have been “settled” with Singapore Port Authority, (SPA), the operator of the facility.

“The concession agreement with SPA has been notified that offers three packages including customs duty and sales tax,” he said. The concession agreement with SPA, Lehri said, also included post operation marine services and export free trade zone.

However, he conceded that tariffs concerning the whole Gwadar city was yet to be finalised and offered to tourism, hotel and other industries.

The development of Phase-1 has cost $250 million which mainly included Chinese $200 million funding and the remaining $50 million had been arranged by the government.

According to one senior official of the ministry of communication, the government will soon be holding negotiations with local and foreign companies to develop the Phase-2 at a cost of $524 million.

Phase-2 he said, will be developed through private sector on Built Operate Transfer (BOT) and Built Operate Own (BOO) basis. Its extension work includes 23 berths, two container terminal, two dry bulk terminal, two oil terminal, one RO-RO terminal, one bulk cargo terminal, one general cargo terminal and channel dredging from 15.6 metres to 20 metres deep with allied facilities.

Phase-2 will also have the development of railway station to link the port with other parts of the country, the official said.

Phase-1 components, included 3 multi-purpose berths each of 200 metre length with 650 metres back area, handling capacity: ships up to 50,000 DWT, 5km approach channel dredged up to 11.5 metres, cargo handling equipment and utility crafts and development plan. This development plan to be executed under three separate contracts includes dredging/reclamation works, port operational equip & crafts and marine/civil works and building.

The idea of developing this port is to make it an integral component of the trade corridor for Central Asian states, China and the Gulf as 60 per cent trade of oil and gas is done through this route.

Some experts estimate that Pakistan could earn up to $60 billion per annum out of transit trade when Gwadar Port and the National Trade Corridor are fully developed and operational.

In reply to a question, Lehri said that since its inauguration, local and foreign investment in Gwadar is on the rise. Recently, a Chinese firm agreed to set up a steel mill there. Provision of water, electricity, roads and other basic necessities are being ensured for the industrialists as well as implementation of Gwadar Master Plan for providing residential, industrial and other business facilities is also underway.

Asked about the problems in undertaking the second phase, he said it will be started when the port has become 80 per cent functional. But the second phase in one sense, he believed, has been undertaken as the work on deepening of the channel has started.

A deep sea port like Gwadar is already attracting global attention, and once it is fully active, Gwadar will become one of the important gateways to prosperity for the people of Pakistan in general and Balochistan in particular.

Gwadar could spur economic progress through out the region by reducing the transport time between China, Middle East, Central Asian States, Europe and Africa, he said.

The operation and management of the port had been handed over to the SPA under a 40 year agreement between the Gwadar Port Authority (GPA) and the Concession Holding Company (CHC) a subsidiary of the GPA that is operating 22 ports in 11 countries.

The company will invest $550 million in next five years. The port will not only promote trade and transport with Gulf States, but will also provide transshipment of containerized cargo, unlock the development potential of hinterland and will become a regional hub for major trade and commercial activities. Newly built coastal highway passes next to the port.

In reply to a question, he said that SPA has given a concessional rate to the Government of Pakistan to help import new wheat consignment at Gwadar port. “The government would hopefully be importing the wheat consignment through SPA in March this year”, the Director-General of Gwadar Port Authority said.

Multipurpose terminal has been included in the future development plan of the port. Further expansion up to a total berth length of 4.5km. General cargo, container, ferries, cars, clean dry bulk (with restrictions), bunkering, water supply 4-5km entrance channel with two turning basins are also included in the project.

Gwadar is located on the southwestern coast of Pakistan, close to the Strait of Hormuz on the Persian Gulf. More than 13 million bbl/d of oil pass through the Strait. It is strategically located between three increasingly important regions: the oil- rich Middle East, heavily populated South Asia and the economically emerging and resource-laden region of Central Asia. It is expected to create at least two million jobs.

In 2007, the government of Pakistan handed over port operations to PSA Singapore for 25 years, and gave it the status of a Tax Free Port for the following 40 years. Gwadar is located on the Gulf of Oman close to the entrance of the Arabian Gulf, about 460 kilometres west of Karachi.

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