Balochistan Chief Minister Nawab Aslam Raisani is seeking cancellation of contract with the Singapore state-owned PSA International Ltd on the ground that the deal signed with it was "one-sided." The PSA contract has also been challenged in the Supreme Court and the matter is pending. Last year, the naval chief also alleged that the Gwadar Port deal was ‘one-sided’. His statement gave confidence to those opposed to the agreement with PSA from day one.
The port is yet to become fully operational. The running of the port affairs was given to the PSA, one of the biggest port operators, so that it will fetch considerable business for making Gwadar Port a success. However the government has been trying, through temporary measures, to bail out the Port of Singapore Authority (PSA), the official said.
Giving a subsidy of Rs585 million the government took the plea that it’s in the national interest to help Gwadar Port in its operation and diverted some of its cargo to the port. On the other hand, the Ministry of Ports and Shipping showed its reservation about this statement and denied that any such move was under consideration.
Senator Hasil Bezanjo said that Gwadar Port was a commercial port and it should not be politicized. He said no one could run the port in isolation be it China, America or Singapore unless the issues are resolved. The major issue is the connectivity of the port to the rest of the country. Law and order situation should be improved. The government is not serious about giving priority to the port and removing the hindrances. He said the master plan incorporated four types of cargo: Gwadar Industrial cargo, Balochistan cargo, National cargo and Transit and Trans-shipment cargo. According to the concession agreement Gwadar Port Authority gets only 9 percent of the port's total revenue.
Connectivity through road connection from the port to Karachi (the Makran Coastal Highways), to Punjab through Turbat, Hoshab, Awaran, Khuzdar, Ratodero and to Quetta through Turbat, Panjgur and Surab with arrangements for round-the-clock and efficient movement of containers and other goods to and from the port has not been done so far. However, in the current scenario and in the absence of basic infrastructure and lack of connectivity no one will be interested to invest.
In this regard, several meetings were held by the Standing Committees of the National Assembly and the Senate on Ports and Shipping and a joint session was held in Gwadar to resolve the issues pertaining to the port operations, the official said. However, an official of the Ports and Shipping Ministry said that negotiations were underway with the officials of Defence Ministry for the resolution of the issue. In this regard, the government has also offered an alternative land to the navy in Pishukan but so far no concrete result has come out. The Navy and Coast Guards were to leave the possession of land last year.
On the other hand, the National Highway Authority official passed the buck on to the government and said funds were required to build the connectivity. He said the cost of the project had doubled touching Rs45 billion while poor law and order situation in Balochistan remains the main reason for delay in linking the port with the other parts of the country. However, the provincial government official said the NHA had diverted funds to other projects. It was also learnt that other than the government, a Chinese company is also directly talking to the PSA to take over the port operations. The source said if these talks materialize then there would be no difficulty in changing the port operator.
“If Gwadar Port is marketed well, the regional ports will lose considerable business,” the official said, requesting anonymity. It’s high time for taking the right decision to change the port operator otherwise Gwadar Port may lose this opportunity vis-a-vis the fast developing Iranian port of Chabahar, the official said. He further said the ministry had written several letters to the PSA about its performance and the business plan which was to be followed as per concession agreement.
According to the concession agreement if any of the parties, either the government of Pakistan or the PSA withdraws from the agreement, it will have to pay the penalty and the amount will be double that of investment. As a result, both the parties are reluctant to withdraw. However, the official said that if China agrees to take the charge of Gwadar Port, there is possibility that it might also pay the penalty. The source said that if the talks materialize then there would be no difficulty in changing the port operator.
It was learnt that PSA had taken the plea in the Supreme Court that the government has failed to provide basic infrastructure including road and rail links which are the main hindrances to Gwadar Port development. No extraordinary concession has been granted to the PSA. The salient features of the concession agreement are similar to the other concession agreements granted by the Government of Pakistan in the port sector.
Under a concession agreement signed with the PSA in February 2007, the official said, the government had to hand over 923 hectares of land on lease to the Singaporean firm by June 2008 for development of a free zone, but transfer of land under the possession of Pakistan Navy and the Coast Guards and private entities needed to develop a free zone for the facilities at East Bay of Gwadar, has still not been done.
The PSA also stated in the court that a certain demarcated port area is with the PSA as per agreement i.e. over 602 meters consisting of three berths was handed over to the PSA as per the landlord’s policy. The rest of the port, which is 50,000 meters, long is still vacant. It was also learnt that the PSA had halted work on multipurpose terminal for ore and coal berths with an estimated amount of $130 million. The matter is pending with the court.