GWADAR PORT

Coming soon

By AMANULLAH BASHAR
Jan 19 - 25, 2004

A silent revolution is ready to spring out in the communication sector of the country from the deep drafted sea port of Gwadar which in the making.

The most prestigious project of Gwadar Port will not only be a significant addition in the port and shipping sector of the country but is bound to entail a multi-directional network of road communication within and outside the country.

The development of Rail, Road and Sea communication originating from Gwadar in all directions is expected to generate tremendous economic activities in the areas so far remained neglected due to lack of communication access.

COMMUNICATION LINKS

To bring Gwadar close to the national mainstream, a 700 km long Mekran Coastal Highway is in advanced stage of implementation. It will link Gwadar with Pasni, Ormara and Karachi. Another regional linkage is the Gwadar Ratto-Dero motorway joining it with Indus Highway through Turbat, Awaran and Khuzdar. A rail link is also planned to connect Gwadar to Quetta and Zahidan. Civil Aviation Authority has also undertaken plans to upgrade the existing length of runway from 5,000 ft to 15,000 ft for operation of wide bodied jet air-crafts. The improved aviation facilities will be available for use by the end 2004.

Gwadar Port would provide the shortest possible access to the landlocked Afghanistan and Central Asian Republics and Pakistan would immensely gain from the project.

Located at the entrance of the Persian Gulf, some 460 km from Karachi, Gwadar has had immense Geo-strategic significance on many accounts.

The continued unstable regional environment in the Persian Gulf in particular as a result of the Iran/Iraq war, the Gulf war and the emergence of the new Central Asian States has added to this importance.

In view of the Geo-strategic importance of this forthcoming project, the economic managers are looking for the enormous economic benefits soon after the development of Gwadar Port.

These benefits are including capitalization on opportunities for trade with landlocked Central Asian States and Afghanistan. The forthcoming port will help promoting trade and transport with Gulf States. The project will be instrumental for promoting trans-shipment essentially for containerized cargo besides unlocking the development potential of hinterland.

The port is currently on its way to completion and according to informed sources the first phase of the project is likely to be completed in the first quarter of 2005.

The first phase of the project is being developed at cost of Rs.14.9 billion (US$. 248/- million). Under the plan the construction time was estimated 36 months that means that the first phase should be operational by March 2005, however, the day and night efforts of the Chinese experts indicate that the project may go into operation much earlier than expected.

The first phase of the port includes construction of three multipurpose 602m long berths besides construction of a 4.5 kilometer long approach channel dredged to 11.5m to 12.5m. This highly impressive national project also includes the development of a turning basin of 450m dia and one 100m service berth.

Related port infrastructure and port handling equipment and pilot boats, tugs, survey vessels are also included in the first phase of this project.

Gwadar port is being equipped with the essential port handling equipment and other infrastructure required for smooth operations of a modern port. On completion of Phase-I, the Port will handle Bulk Carriers of up to 30,000 DWT and Container Vessels of 25,000 DWT.

Second phase of the Project is planned to be built on BOO/BOT basis at an estimated cost of US$ 600 million. It will comprise of 9 additional berths including 4 container berths, one bulk cargo terminal having a capacity to handle 100,000 DWT ships, one Grain terminal, one Ro-Ro terminal and two oil terminals to handle 200,000 DWT ships. When completed, the second phase would help reducing congestion at Port Qasim.

Considering the Geo-economic imperative of the regional changes, the Asian Development Bank's (ADB's) Ports Master Plan studies considered an alternate to the Persian Gulf Ports to capture the transit trade of the Central Asian Republic (CAR) as well as the trans-shipment trade of the region.

Both Karachi and PQA were considered for such development but were found unattractive to major shipping lines due to the remoteness from the main shipping routes, the limitations of draft for mother ships and large bulk oil carriers and the comparative long turn around times. The ADB studies, however, considered Gwadar to have the most advantageous location for such an alternative port in the region, which could handle mother ships and large oil tankers in due course.

Keeping that aspect in view as well as the inherent strategic and economic benefits that Gwadar Port offered, the transport plan of the 8th Five Year Plan (1993-94) of Pakistan included the development of Gwadar Port as an essential element of its aims and objectives. Technical and financial feasibilities therefore were under taken resulting in decisions for the development of Gwadar Port.

The Project started on 22 March 2002, is on fast track and is expected to get ready prior to its schedule time i.e. March 2005.

In fact it would surprise many that with initiative and calculated risk, the port started receiving merchant ships since Jan 2003 and have been able to off load hundreds of tones of cargo imported for the Project, thus saving precious time and money which otherwise is required for transportation of the same cargo by road from Karachi/PQA to Gwadar.

POTENTIAL

Phase II of the project involves construction of more berths on BOT basis including two container berths, one bulk cargo terminal, one grain terminal with a capacity of handling vessels up to 100,000 DWT, one roll on/roll off terminal, two oil piers for vessels up to 200,000 DWT and future expansion of two container berths. On completion of the project, Gwadar Deep-sea port would be one of the world's most strategically located ports in this part of the world.

On successful completion of Phase-I, it is anticipated that the private sector would come forward to invest in the second phase of the Project. It is envisaged that the complete development of such a mega project will take 8-10 years depending on the active participation of the private sector.

COST OF THE PROJECT

Total amount equivalent to Rs 14.9 billion (248 million US dollars) were approved by ECNEC for Phase-I of the project. The financial agreement for development of Phase-I was signed with the Government of China on 10 August 2001 under which the Chinese will provide US$ 198 million. While the Government of Pakistan will provide US$ 50 million.

China's total financial assistance of $198 million in this project includes grant of $18 million, another grant assistance worth $31 million, interest free loan worth $31 million, concessional loan worth $58 million, Buyer's Credit $60 million.

Pakistan will be spending Rs300 million ($50 million in local currency. Additional development costs were also envisaged for Electrical Supply 132 KV Transmission Line from Turbat to Gwadar at an approx cost of Rs.360.00 million and a Railway line from Gwadar-Panjgoor-Dalbandin (515 Km) at approx cost of Rs.8,500 million. This is, however, not a part of the sanction to the Gwadar Port Development Authority.

HUMAN RESOURCE

The Chinese have mobilized 450 personals from China and hired 512 Pakistani workmen as per following detail:

INFRASTRUCTURE

The design and construction of residential buildings and civil works of various port operation buildings and related infrastructure development being carried out by Pakistani contractors and firms out of the US dollars 50 million allocated for the Project. Award of contract for the construction of residential area was approved by the MOC in June 2003 and the Contractor has already fully mobilized and a construction activity has started.

LAND MANAGEMENT

Concurrent with the Port development a Master Plan of Gwadar has been approved by Balochistan Government through NESPAK and which has been a hot topic of discussions at various forums. Implementation of the Master Plan was in fact the responsibility of Government of Balochistan. However, no headway has been made so far which is a matter of concern.

The business community from all over the country is taking keen interest in the development of this port city despite restrictions imposed by the government of Balochistan in land transactions, transfers etc, the expected business attracting the land brokers at a massive scale who are busy in buying and selling of the private land.

Consequently, the prices of land adjacent to the port area have taken a quantum jump which proved a windfall for the native people having property rights in this future port city. The Government of Balochistan had recently announced establishment of Gwadar Development Authority, however, it has not started working yet. It is the need of the hour that the concerned authorities should take immediate steps for land management in a way that the genuine investors could buy land at an affordable price. There is an urgent need for an effective check on speculative land transactions to keep the land prices at an affordable level which highly important to attract investors.

The following business potentials have been identified in the Master Plan of Gwadar Deep Sea-port Project:

Increased trade to and from Balochistan and Iran.
Trade potential from Central Asian States through Afghanistan.
Transit cargo (liquid and dry bulk)
Development of warehousing and assembly industries (EPZ)
Oil storage, refineries, petrochemical industries etc.
Handle the shipping traffic of the region.

Gwadar Master Plan envisages development of about 18,600 hectares of land for this project. The port is being developed over an area of 400 hectares. An export processing zone over 74 hectares located on land adjacent to the port in East Bay. A special Industrial Zone of about 4000 hectares lying to the north of the town. An oil refinery of 1000 hectares located to the north east of the town, linked to proposed oil terminal by an underground pipeline across East Bay. A residential area over 400 hectares stretching North of the existing town along West Bay.

INVESTMENT

Some of the evident investment opportunities in the newly developed port city are identified in the areas of infrastructure development including internal roads and services, water and power and communication services for the new township and the industrial zone. Private-owned Ware Houses and Cold storages. Private cargo handling equipment and trucking yards. Corporate Infrastructure i.e. offices for operating firms and agencies. Development of Commercial and residential areas and buildings. Labor related amenities for thousands of workers employed on developmental work. Development of Hotels, Motels, Hospitals, colleges and Schools. Tourism related industry, marine fuel bunkering for visiting ships to include large fuel storages and mobile barges etc. Oil refinery and large oil storages. Ferry services between Gwadar-Karachi/Oman/Bunder Abbas and UAE. Industrial Export Processing Zone, Hinterland road, 735 km long Gwadar-Rattodero Expressway which will pass through Turbat-Awaran-Khuzdar and Shahdadkot.

Improvement of existing Gwadar-Quetta road via Turbat-Panjgoor-Kharan-Nushki.

POTENTIAL PROJECTS AT GWADAR PORT

Gwadar being unexplored territory till to date as far as business is concerned; a lot of business activities are possible. There are numerous businesses that offer sizeable profits for the investors in Gwadar. The potential business areas identified as fish processing, crabs processing, cold storages, ice factories, seawater reverse Osmosis desalination plants for profitable purpose, shrimp farming, training services in fisheries and aquaculture, port management projects, hotels and restaurants and resorts, date processing, canned food, gravel crush plant, water sports center and recreation facilities, oil palm oil cultivation which Government of Balochistan can provide land on easy terms and marine and automobile repair workshops, cluster for Internet service providers, renewable energy, wind, solar and IPPs, clearing and forwarding agency, hospital clinics, re-rolling mills, warehouses, boat building and naval architecture institute, oil storage tankers, ferry service for Karachi Ormara-Pasni-Gwadar and up to Oman and Dubai.

VIEWS

Rashid Soorty, a leading business leader feels that Pakistan should go one step further to offer China Gwadar free zone for promoting joint ventures between China and Pakistan. Citing the example of Singapore which assisted Indonesia to develop Batam Island and contributed to its infrastructure by building roads, communication, power generation etc. A large number of all types of industries are set up at Batam Island most of these multinational industrial projects are export-oriented and all of them are working in full swing earning huge foreign exchange for Indonesia.

China can assist provincial government to provide technical assistance and expertise for setting up of joint ventures or investment by financially sound Pakistani entrepreneurs. This will fill up the 'missing link' in our export shortcomings. Pakistan should give preference to those investors who either go for joint venture with China or other countries with an objective for speedy industrialization and growth of our export.

The incentive to investors should be to avail land at Gwadar free zone for a lease period not exceeding 30 years, renewable on the condition of successful running of the project. The initial lease should be for 3 to 5 years to make it obligatory on the part of investors to come up to its commitment as outlined in feasibility of the project and should be ready to forsake their right if failed to implement their program on dot.

Government of Pakistan has reportedly agreed to lease out land to UAE at Gwadar for the establishment of shipping companies and other related trade activities. It is not known how much land will be allotted to UAE but it is quite evident that the most precious land near the sea port will be asked for by UAE for shipping companies.

Ports in UAE are already developed and the objective of asking for land at Gwadar appears to be to monopolize shipping industries in the Gulf States which may prove a set-back to develop our own marine and shipping industry in Pakistan.

Joint venture by Pakistan investors particularly in the field of shipping should have priority and government may re-consider UAE asking for leasing of Gwadar land for same purpose. Pakistani government make it obligatory on the part of our investors to come with viable project proposals for investments considering the merit of each project purely from the point of economic consideration and its fulfillments as outlined in feasibility, our country can march towards industrialization rapidly and provide new hi-tech industrial projects with huge investment in Balochistan province exclusively for stepping up export and shipping. This will further provide avenues for utilization of country's vast potential of mineral, oil and agriculture resources.

Government has also been considering providing land to small and medium enterprises. The criteria for putting up small and medium industries should be the same as outlined above i.e. priority to genuinely planned small industries that have adequate funds available from self resources or manage to borrow up to 50% from DFI against sound collaterals. All proposals must be accompanied by guarantee to go into production as there is no room to absorb any more sick units on their failure to implement the scheme. It is imperative that investors must contribute minimum of 50% investment to ensure that the unit is viable, sound health and means to survive for long and not intended to exploit government's confidence placed in them.

To ensure that products of all major, small and medium industries have marketing potentials, government must undertake extensive exercise by alerting our Consulates and Embassies abroad to provide feed-back on marketing potentials in those countries they are serving Pakistan's interest and also ensure that golden track of Gwadar land has absolutely unmatched return.

OUTLOOK

Despite the fact that Gwadar is comparatively free from the tribal influence, however, people of the area have two major concerns perturbing their minds. Firstly they feel that influx of the population from rest of the country may through them in minority. Secondly, the local population lags in education and other skills, they have a fear that the major share of the economic opportunities may be grabbed or snatched by the people coming from other parts of the country. Some elements with vested interest are taking advantage of the situation and are out to blow things out of proportion. There is an immediate need to win the confidence of the local population by giving them examples of other parts of the world like Dubai, Sharjah or even for that matter of the European and the United States where people have got together from different parts of the world, yet the local population of those areas was least bothered with the presence of the people of different cast and creed as the lions' share out of the prosperity goes to the people of the relevant area.

Currently, local population is living in an organized way mostly in semi-pucca houses. In order to get them involved in the development process, there is a need that the development authorities should developed low cost but decent housing scheme equipped with all basic civic facilities. This uplift in their living standard would sure to give them a taste of the economic prosperity which is yet to come after development of the city and the port. Winning confidence of the local people is more significant to make Gwadar a jewel in the crown of the national economy.