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Govt plans shipyards at Gwadar, Port Qasim

Updated March 21, 2014

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Federal Minister for Finance, Senator Mohammad Ishaq Dar chairing a meeting regarding New Karachi Shipyard Engineering works. — Photo by APP
Federal Minister for Finance, Senator Mohammad Ishaq Dar chairing a meeting regarding New Karachi Shipyard Engineering works. — Photo by APP

ISLAMABAD: The government on Thursday decided to set up two new shipyards at Gwadar and Port Qasim with investments from Japanese and Korean firms on build, operate and transfer (BOT) basis.

A decision to this effect was taken at a meeting presided over by Finance Minister Ishaq Dar who asked the ministry of defence production to move a formal summary to the prime minister for approval and the ministry of finance would strongly support the proposal.

A senior government official said the finance minister was stunned to know that the proposal for new shipyards with zero investment from the government was floated by a number of Japanese and Korean firms and a formal summary was submitted to the government in 2008 but did not move an inch since then.

He said the case was originally submitted to the government in 2008 following a group of renowned shipyard operators in Japan and Korea conducted a feasibility study and offered to finance the shipyards.

Under the proposal, the consortium had asked the government to be equity partner in the shipyards by providing shores, land and infrastructure and the rest would be taken care of by the investors.

The meeting decided to present a case for formal approval by the prime minister within a few days and since there was no financing required on part of the government, the ministry of finance would fully support it because it would enhance economic growth, create job opportunities and help the two ports to expand exponentially in commercial terms.

It was decided to start first with the Gwadar port where deep seashores were available and it would not only support development of Gwadar Port commercially in terms of increased traffic arising out of its proximity with Gulf ports and the ability to provide repair and maintenance support to international ships travelling in the area.

This would be followed up with another shipyard at Port Qasim. Currently, Pakistan has only one shipyard at Karachi port but that too is sometimes unable to provide services to shipping industry because of congestion and comparatively away from international shipping routes.

Vice Admiral (Retd) Iftikhar Ahmad Rao, who is chairman of Ship Building Association, gave a detailed presentation on global shipyard industry and historical perspective of the importance of seas for mankind and for the nations who became great powers.

The meeting was informed that the maritime sector was prime source of growth, employment and social cohesion in the developing countries as the world GDP grew by 3.6 per cent annually on average against 4.3 per cent growth in sea trade per annum over the last 50 years.

In other words, world’s GDP grew eight times, whereas, sea trade grew 13 times in the last half century, he added. China started shipbuilding in the 1990s and now it was the global leader with 41 per cent share, followed by South Korea and Japan with 33 per cent and 20 per cent share respectively, the meeting was informed.

The meeting noted that there were over 1,000 shipyards in China and even India had over 100 shipyards. In comparison, Pakistan has only one shipyard, Karachi Shipyard Engineering Works (KS&EW) with two small dry docks.

It was noted with optimism that deep seashores, abundance of labour force and location were Pakistan’s great advantages in comparison to others regional countries.

Minister for Defence Production Rana Tanveer Hussain informed the meeting that it required five years for a shipyard to be completed and hence it was important to expeditiously complete the necessary approval process in order to achieve progress in ship building sector. He said the federal government could provide land and related infrastructure as its equity in the proposed shipyards. “The rest of the investment will be made by foreign companies which are leading the industry”, he said.

Mr Dar said the ship building industry had huge potential for Pakistan because of its deep seashores and hence, in line with the true potential and ideal location, ship building industry should contribute towards economic development and poverty alleviation.