KARACHI: Skipping the normal process of inviting competitive bids, the Karachi Port Trust (KPT) has entered into a 50-year concession agreement with the Abu Dhabi Ports Group (ADPG) of the UAE government to operate the Karachi Gateway Terminal Ltd (KGTL).

Sindh Governor Kamran Khan Tessori inaugurated the gateway by unveiling the plaque in a ceremony held at KPT.

The UAE’s ADPG would manage, operate and develop KGTL with an investment of $1 billion.

The 50-year concession agreement would attract a much-needed investment of over $2bn to expand and modernise shipment facilities and establish a special economic zone and rail connectivity between KPT and Port Qasim.

Chief Executive Officer ADPG Captain Juma Shamsi and Chairman KPT Syed Sayedain Raza signed the agreement.

A 50-year concession agreement signed to develop KGTL

Mr Tessori said that the terminal would strengthen economic ties between the UAE and Pakistan besides helping in modernising the terminal with the induction of state-of-the-art facilities. He lauded the UAE’s investment in key port operations which would also help in stabilising the economy.

“Investment from the UAE is highly important in stabilising Pakistan’s economy,” he said.

Federal Minister for Maritime Affairs Faisal Sabzwari said it was ensured that no workers were offloaded and over 600 employees in different categories would be hired by the ADPG.

He said an upfront investment of Rs50 million would be followed by further investment in PICT and Port Qasim. He added that an enhancement in royalty up to 12.5pc is expected with this investment.

Mr Shamsi vowed that KGTL would serve both local, regional and global business activities, ensuring cost reduction.

Mr Zaidi said that a huge upfront investment in this project would help increase the revenue besides gradually transforming the port city as a regional trading hub.

ADPG in a press statement said that under the terms of the 50-year concession agreement, a joint venture between Abu Dhabi Ports, 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 JV will undertake significant investments 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 one million TEUs per annum. This expansion and enhancement will further cement the Terminal and Karachi’s position as a key player in the maritime industry.

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 $55m and EBITDA of around $30m annually.

This strategic agreement follows the signing in May this year of a Memorandum of Understanding, which linked both entities’ shared vision to drive growth, promote trade diversification, and strengthen bilateral ties between the UAE and Pakistan.

Published in Dawn, June 23rd, 2023