Gwadar — A
new port in the offing
A $1.16 billion project
By AMANULLAH BASHAR
July 09 - 15 , 2001
Pakistan has two significant ports — both are
located at Karachi. At present, all the petroleum cargoes are handled
at these two ports. The import of cargo has to be very carefully
planned, due to inadequate port capacity and other limitations. It is
a fact that ports like other essential items of physical
infrastructure are often difficult to justify in economic terms,
especially when planning for the ports expansion/development.
An analysis of port operation would indicate that a
marginal overloading may not justify an expansion in economic terms
but definitely will cause congestion since the benefits are derived
from reduction in costs to the ships using the ports and streamlining
of cargo handling. Congestion in the ports is the most obvious
shortcoming in the ports including Pakistan where it arises out of
draft limitation on vessels, inadequate berth capacity and inadequate/
shortage of unloading infrastructure and storage in the port area.
The underlying reason for port conditions in
Pakistan was reluctance of policy makers to attribute priority to the
development of ports in Pakistan.
It is the high time that we should eliminate all
bottlenecks and concentrate on developing a new, independent and
dedicated port for ships and lesser demurrage costs along with easier
availability of berths.
Credit goes to the present government for finding
the answer to these shortcomings in the form of 'Gwadar Port', which
according to reports has become a focal point especially of the port
and shipping business around the world.
The development of a 3rd port in Pakistan seems to
be inevitably important in view of mandatory expansion in the sea
transport activity particularly in the oil sector and growth in import
and exports in the days to come.
Currently, the total capacity of Keamari port and
Port Qasim is 23.5 million metric tons per year. However it is
estimated that import/export volume will be much more in next five
years. With full utilization of port capacity, there is a clear
indication that capacity will become difficult to handle the
ever-increasing volumes in future, which pinpoints towards an enormous
Another challenge is to ensure that the existing
infrastructure is used in a manner that ensures maximum effectiveness
and economy of scale through the following measures: i. Night
navigation both at Keamari port and Port Qasim. Since the existing
capacity to handle import/export cargo especially in oil sector, the
development of Gwadar port is the viable option for crude and
petroleum products besides general merchandise.
It is important to note that the viability of a
mode of transport is function of quantity or volumes and distance to
be transported. The greater the distance and quantity, the lower the
average costs due to economy of scale.
The proposed seaport at Gwadar responds positively
to these questions.
The Iran gas pipeline project for export of natural
gas through Pakistan is a ready project and most probably is finalized
during the visit of President Gen. Pervez Musharraf to India on July
14. Pakistan has already given its willingness to provide corridor for
the pipeline to India.
The Iran gas pipeline project costing about $3.2
billion in fact is supposed to pave the way for another massive
project that the oil pipeline from Iran to Pakistan. In this regard,
the most suitable location for terminal of the oil pipelines. Active
players in petroleum sector feel that Gwadar will be the ideal
location for the pending joint venture project i.e. Iran-Pakistan
Refinery instead of Gaddani in the current plan.
This scenario places the forthcoming port of Gwadar
as the place for future business.
China has agreed to extend loan on soft-term for
phase-1 of Gwadar deep-sea port, estimated to cost around $250
million. The total cost of the project is estimated at $1.16 billion.
A team of experts, led by the Chinese
communications minister evaluated a number of projects but selected
Gwadar deep-sea port. The government however was clearly told that
completing the Gwadar port as a friendship project was not possible in
the given circumstances but China was ready to extend loan on soft
term plus technical know-how.
The Chinese team also discussed the project with
Finance Minister Shaukat Aziz. The officials, however, are not yet
clear whether the loan would be coming from the Chinese government or
from a private bank. A team of Pakistani officials after receiving
terms of the loans will visit China to finalize the deal.
When the Chinese Prime Minister visited Pakistan in
March this year, Pakistan attempted to persuade the Chinese leadership
to help it built the Gwadar deep-sea port and then use it for
exporting its industrial output from Western China to the world
The Chinese officials at the very outset had
indicated to the Pakistani leadership that it might not be possible
for it to fund the entire Gwadar port project worth $1.16 billion, as
the project was not financially viable at this point of time, it
however agreed to give serious thought to the project due to its