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2 Singapore takes over Pakistani
port By Syed Fazl-e-Haider
QUETTA, Pakistan - Gwadar port on the
Arabian Sea in the southwestern Pakistani province
of Balochistan has been handed over to a
Singaporean firm, which will run it for 40 years.
The concession agreement for handing over
operating rights of the seaport to the Port of
Singapore Authority was signed on Tuesday between
the Gwadar Port Authority (GPA) and the
concession-holder company (CHC), a subsidiary of
PSA International. Under the deal, the first ship
and cargo will be handled at Gwadar port
next
month.
Under the agreement, the GPA will
receive revenues from PSA over a period of 40
years. The investment, revenues and income
received from Gwadar port's entire operations have
been estimated at between US$23.6 billion and
$42.2 billion.
The concession holder has
committed to installing two additional quayside
gantry cranes for the handling of containers
within nine months. The PSA will also undertake
construction of 14 more berths in a
4.5-square-kilometer area beside the existing
three berths. The cargo-handling capacity of
Gwadar port will be expanded by up to 300 million
tonnes from the current 50 million tonnes within
the next two decades.
China financed 80%
of the project's $248 million initial development
costs. In December, a consortium led by PSA won
the contract to operate the deepsea port on the
Arabian Sea. Under the agreement, PSA will run the
port for 40 years, during which time it will be
exempted from corporate tax. Pakistan's AKD Group
is part of the Singaporean consortium. PSA has
envisaged investing $3 billion in the project, of
which $550 million would be invested in the first
five years.
PSA International is owned by
the Singaporean government's investment-holding
company Temasek. Strategically located Gwadar will
be a significant addition to PSA's global network
of deepsea ports. PSA is a global leader in the
ports and terminals business, operating 20 port
projects in 11 countries - Singapore, Belgium,
Brunei, China, India, Italy, Japan, the
Netherlands, Portugal, South Korea and Thailand.
The CHC will establish three separate
operating companies for different business areas,
which will enjoy a complete - federal, provincial
and local - tax holiday for the first 20 years of
the concession.
The materials and
equipment that will be used in the construction
and operation of the port will also be tax-free.
Likewise, the bunker oil used in the port or sold
to visiting ships will be free of duty. These
privileges will remain throughout the concession
period.
Under the agreement, the CHC will
pay a fixed share of its revenues to the GPA.
Pakistan will get a 9% share in income and revenue
from the first day for the cargo operations and
marine services. Three companies will work under
the operator of Gwadar port. One company will
manage the port area and cargo operation; the
second will handle marine functions such as
pilotage; and the third company will operate a
"Free Trade Zone". Pakistan will get 15% of the
revenue from the Free Trade Zone, where warehouses
and other facilities will be constructed by the
PSA.
The Free Trade Zone is aimed at
developing facilities and businesses that are
conducive to the growth of the port. The
concession holder will develop at least 20% of
required facilities within the zone. The remainder
will be developed by either the concession holder
or other investors. The exports of goods from the
Free Trade Zone into Pakistan or vice versa are
subject to normal import and export duties.
As well as being responsible for
navigational safety and security, the GPA will
develop and maintain the common port
infrastructure including access channels,
breakwaters and access roads.
The
international management-consulting firm Arthur D
Little, which has extensive global experience and
expertise in port planning and negotiations with
port and terminal concession holders, has acted as
technical adviser to the GPA during the process.
Under the concession, two terminal areas,
including a multipurpose terminal area, will be
developed. The terminal areas will be expanded in
an easterly direction up to a total length of
4.2km and cater for various types of cargo. The
container terminal area is located along the
western and northwestern coastline of the East Bay
and is to be developed by the CHC.
Initially, the GPA expects foreign
investment of $5 billion to $8 billion in the
multipurpose terminal area; the cost of related
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