ISLAMABAD: The government set up a five-member committee on Thursday to negotiate commercial terms with the United Arab Emirates for outsourcing the bulk and general cargo terminal and associated infrastructure at Karachi Port’s east wharf to a UAE-based port operator through government-to-government negotiations without any bidding for competition or price discovery.
The decision was taken at a meeting of the Cabinet Committee on Inter-Governmental Commercial Transactions presided over by Finance Minister Ishaq Dar.
The price negotiation committee — led by Minister for Maritime Affairs Syed Faisal Subzwari and also comprising the Karachi Port Trust (KPT) chairman and three general managers — will immediately start negotiations with the Abu Dhabi Ports (ADP) on Friday (today) in an attempt to sign an agreement and complete the transaction before the government completes its term in about 10 days.
The meeting was informed that the cabinet transactions committee on July 24 approved the recommendations of the Framework Agreement Committee and the consequent G2G draft Framework Agreement for the ratification of the federal cabinet. The cabinet later ratified the decision, and the agreement was then signed electronically by the representatives of the Pakistan and UAE governments.
In light of Section 4(2) of the Inter-Governmental Commercial Transactions Act, 2022, the next steps were to decide on a price discovery mechanism, frame a commercial agreement and form a committee to negotiate terms, conditions comparison mechanism for price discovery and place its recommendations before the transactions committee for approval.
The KPT also suggested some yardsticks for valuation and price discovery, including the terms of agreement, construction and reconstruction cost of the terminal, its life span, maximum capacity for cargo handling, length of quay wall, per-tonne royalty, land rent per metre, storage charges, upfront payment, and quantum and type of investment.
Thus, the cabinet transactions committee approved the price discovery mechanism suggested by the KPT and formed Mr Subzwari-led panel.
Published in Dawn, August 4th, 2023