KARACHI, Feb 3: A formal agreement for handing over operating rights of the Gwadar Port to the Port of Singapore Authority, envisaging a 40-year tax relief, will be signed on Tuesday in the presence of Prime Minister Shaukat Aziz.

The port is expected to be inaugurated by President Pervez Musharraf some times in March.

This was stated by the federal minister for Ports and Shipping Babar Ghauri in a news conference at the Karachi Press Club on Saturday.

Dispelling all criticism of concessions to the PSA, he said that the process was transparent and operators from private sectors were involved in the negotiations.

The federal minister said that Pakistan needs to develop third and even fourth port to handle future trade which, he said, was growing at over 10 per cent per annum.

He said the KPT and the PQA had their own limitations of draught and availability of port land.

Three companies have been set by the operators. One of them would deal with cargo handling while the second would be responsible for infrastructure development, and the third will be responsible for developing free zone.

Under the agreement, government of Pakistan would be entitled to have nine per cent of the revenue from the first two companies and 15 per cent from the third. Operators were expected to invest $3 billion annually in the project that would help Pakistan earn up to $4 billion through operations.

Under the agreement operators would have full authority, but in case of national security, the government would be able to use the facilities.

The federal minister said that Gwadar Port would serve as an international Hub, and claimed that contrary to 40-year concession given to the operators by the present government, former rulers had envisaged identical concessions spread over 50 years. Senator Ghouri said that apprehensions were wrong that due to Gwadar Port, Port Qasim and Karachi Port would be affected.

Gwadar, he said, would serve as centre for transshipment where mother ships would unload cargo which would then be shipped to other ports by feeder ships.

Justifying concessions to operators, the minister said that Gwadar would be competing with Dubai port which is a tax- and-duty-free port.

But the minister did not explain as to how investors would choose that destination for transshipment and setting up industries in the free zone when there was no infrastructure – water, electricity, roads and adequate settlements for living.The minister was confident that the port would provide large-scale employment, and value of land would further increase, and there would be other income generating activities for local people.

When asked that why Balochistan government was deprived of revenue as local and municipal taxes were also revoked, Federal Shipping Minister said that the decision of exemption was taken by the Balochistan government itself and announced by the chief minister of Balochistan. The federal government, he said, had nothing to do with this decision.