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What is turning Gwadar Port into a white elephant?
ISMAIL DILAWAR
KARACHI (March 15 2010): Failure to hand over free zone to operator of Gwadar Port, for construction of warehousing facility is turning the Port of the future into a white elephant with both the government and Port Singapore Authority losing millions.
Under the terms of the concession agreement with PSA - three companies were assigned to undertake (a) Port operations; (b) Marine; and (c) A free zone company for warehousing and developing a duty-free industrial zone.
The Chief of Naval Staff agreed at the level of President Pervez Musharraf and with the Federal Cabinet that Pakistan Navy would hand over the land, held by the Navy, adjacent to Gwadar Port for establishing a free zone. It was only after the concurrence with the then Naval Chief that the agreement has signed between Gwadar Port Authority and PSA.
Despite the best efforts of Ministry of Ports and Shipping, Pakistan Navy has thus far failed to hand over the stipulated land to GPA. As a result, no warehousing facility has thus far been developed by the Free Zone Company. As a consequence, no trans-shipment of containers activity can take place, as there is no backspace for containers storage. Thus far, Gwadar Port's usage is restricted to bulk cargo such as: fertiliser and wheat; containers need to be off-loaded, stored and then shipped off by both sea and land to various destinations.
With no railway connection and an incomplete Gwadar-Ratodero road, Karachi is the only point that connects Gwadar with the rest of the country. Of the 950 kilometres, only 400 kilometres road has been surfaced. Karachi port has 18,000 hectares of land available for container movement. It is not a natural deep water and mega ships off-load cargo at Dubai Port, with only Pakistan-bound cargo shipped off on smaller vessels to KPT and PQA.
PSA is, at the moment, using a competitor's port ie operated by Dubai Port Authority for its cargo destined to various ports, north of Dubai in the Persian Gulf.
PSA has thus far invested $31.5 million in capital cost while the net revenue earned so far is Rs 260 million - nine percent of this amount is passed on to Gwadar Port Authority (GPA), says PSA. PSA's Gwadar operational account shows an expenditure of Rs 590 millions - which is more than double the revenue earned thus far.
The sources told Business Recorder that so far Islamabad had, through the Trading Corporation of Pakistan (TCP), imported around 2,507,925.463 tons of cargo, around 1,672,432.800 tons urea and 835,492.663 tons wheat, in at least 71 vessels through Gwadar.
A conservative estimate reveals that each ton of the imported commodities had cost the crises-hit government at least Rs 2,500 extra on account of transportation and handling charges, the sources claimed.
It is an open secret that the cost of doing business at Gwadar is more than double, as all the cargo handlers, from a labourer to a stevedoring company, charge double for their services at the far-located port.
And perhaps realising this backbreaking effect of imports through Gwadar the last Economic Co-ordination Committee's meeting, chaired by Prime Minister Yousuf Raza Gilani, has reportedly allowed the TCP to import 0.4 million tons of fertiliser through Karachi Port.
According to GPA, the PSA's earning from port dues, wharfage, royalty plus other incidental charges like gate pass charges for vehicles, transporters labourers etc, had so far accounted for only Rs 300 million. On the other hand, according to Chairman GPA Ghulam Farooq, the Gwadar Port Authority's earnings during the last three years stood at Rs 25 million only.
