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ISLAMABAD The Planning Commission's task force on maritime industry has urged the government to cancel the deal with the Port of Singapore Authority (PSA) to operate the Gwadar port.
According to a presentation before Deputy Chairman of the Planning Commission Sardar Aseff Ahmed Ali, the Gwadar port project is a disaster, as the 40-year concession agreement with the PSA has not yielded any results in its first three years.
“The government and the PSA are in default of commitments. No commercial vessel (has) arrived at Gwadar port in three years and there is no possibility of any (docking there) for many years.”
The task force said the port would be made approachable by road in four years, and a rail link would take between 15 and 20 years.
A rail network that could connect the port with Afghanistan, and through Afghanistan, with Central Asian Republics and China, in addition to cities and towns in Pakistan, was badly needed.
The task force said that goods from 72 ships had been unloaded at the port at a rate of Rs2,000 per ton, which translated into a revenue of about Rs220 million for the PSA.
According to the presentation, the government was to purchase 2,281 acres of land on the waterfront for the PSA. This land was to be given to the port operator for 40 years.
“But purchasing the land does not seem possible because doing so would cost at least Rs15 billion,” said the task force. “And without this land, the PSA is unwilling to invest.”
The PSA had undertaken to spend $525 million in five years, but nothing was spent in the last three years. The PSA was not likely to invest even in the next two years, said the task force.
The concession agreement could be revisited. The best option would be to cancel the agreement, said the task force.
If this happened, a penalty of only $8-10 million would have to be paid. Negotiations with the port operator could be initiated on this issue, said the task force.
The use of three berths at the port was the best alternative, according to the presentation.
Building infrastructure was vital for attracting investments in areas like petroleum storage and refining, oil field-related equipment, construction and fabrication.
The concept of a logistics port should be introduced with appropriate industries, using the only Ro-Ro (roll-on, roll-off) berth in Pakistan, said the task force.
If Gwadar was to be used for government cargos, “trans-shipment to Karachi should be considered”. With the existing berth structure, according to the presentation, there “is no possibility of the ... port achieving break even and the government will have to subsidise it for many years”.
The Balochistan government was opposed to the concession agreement with PSA because the Baloch people were not gaining anything from it, said the task force.
The port would not be viable for transshipment or transit until the law and order situation in Afghanistan improved and China was connected via road and rail links with Gwadar, according to the presentation.
The task force pointed out that no facility for supporting the oil industry existed even though the port was on the mouth of Gulf. “Due to this, Pakistan is unable to attract investment in Gwadar from Gulf countries ... in the oil and gas sector”.
