Mar 03 - 09, 2008

Gwadar Port Authority (GPA) has reportedly informed the Senate Standing Committee on Ports and Shipping that the first ship would arrive at the Gwadar port this month (March). The committee has expressed its concern over the delay in making the port fully operational and directed the ministry to streamline its efforts and remove hurdles to make the port functional. It has underlined the need for overcoming deficiencies and removing hurdles to make the Gwadar Port a regional hub by attracting the transit and trans-shipment trade.

Though officially opened last year in March, Gwadar port is still confronting hurdles to start its operations. The port has so far seen no significant development on operational side. Even, the electricity has not yet been provided to the port to carryout its routine activities and the generators are being used for power generation. The infrastructure projects, which will connect the port by road and rail links with rest of the country, are currently in planning and execution stage. On the other hand, GPA claims that all port infrastructures have been completed and work on several projects including the housing complex is in progress.

Gwadar port is an important project for Pakistan and its timely operationalization and completion is even more important. First phase of the project has already been completed and it is currently in its second phase of development. The first phase includes three multipurpose berths of 602m quay length, one service berth of 100m length, 4.35 km navigable channel of 11.6/12.5m depth, roads, plinths and transit shed, operational craft and equipment, including navigational aids and shore based port buildings and allied facilities.

The second phase is longer and mainly includes the development of port-related infrastructure projects, which cannot be carried out without the active support and participation of private sector. There is a need to mobilize the private sector by announcement of attractive incentives and improvement of security situation in Balochistan. After completion of second phase by 2010 at a cost of $840 million, Gwadar is likely to become one of the busiest ports in the region, providing warehousing, trans-shipment and industrial facilities for trade with over 20 countries, including Gulf countries, Iran, Central Asian States, India, China and East Africa. As a future trading hub in the region, Islamabad has already extended tax exemptions and tax holidays at the industrial zones and duty-free economic zones in Gwadar.

Since the Port of Singapore Authority (PSA) International has taken over the Gwadar port in Balochistan, it has been facing some problems in making it operational. Islamabad has already asked the concession holder Singaporean firm to expedite their work, especially after having received a 40-year tax holiday. Under the concession agreement, the Singaporean operators were committed to installing two additional quayside gantry cranes for the handling of containers, undertaking construction of 14 more berths in a 4.5-square-kilometer area beside the existing three berths and establishing three separate operating companies for different business areas, which will enjoy a complete - federal, provincial and local - tax holiday for the first 20 years of the concession.. The cargo-handling capacity of Gwadar port will be expanded by up to 300 million tons from the current 50 million tons within the next two decades.

Singaporean firm is committed to develop two terminal areas, including a multipurpose terminal area. The terminal areas will be expanded in an easterly direction up to a total length of 4.2km and cater for various types of cargo. The container terminal area is located along the western and northwestern coastline of the East Bay and is to be developed by the port operators.

Gwadar port is a project of national importance. The project is seen as a catalyst to give boost to the country's economy and it would serve as a centre for different corridors to help Pakistan meet its growing demand in various key areas. It will unlock the Balochistan hinterland. The770 km long coastal belt of Balochistan extends from the mouth of Hub River near Karachi right up to Gwadar Bay near Chahbahar in Iran. The port would help bring Balochistan's coastal areas into the socio-economic mainstream. It will serve as a catalyst for fast track development of the province bringing it at par with other provinces of Pakistan. The establishment of Special Economic Zone, Free Trade Zone, and Export Processing Zone (EPZ) in Gwadar would open the province to international investment.

It is also true that Gwadar project has been a victim of lethargy and non-professional approach. It however took up the pace in October 2006 when Gwadar Port Implementation Authority (GPIA) called fresh expression of interest (EoI) and offered request for proposal (RfP) for Gwadar port operations and selected Port of Singapore Authority International (PSAI) as its operator. Similarly, the official opening of the Gwadar seaport had been rescheduled many times and it was finally inaugurated last year. The main reason for delayed inauguration of Gwadar port was the law and order problem in Balochistan.

Now after the general elections of February 18, it will be the responsibility of the incoming government to ensure timely completion of several port-related projects. For instance, the former government had planned to spend $7 billion in the next eight years to improve the road-infrastructure for which a network would be ready by 2014 to link China and South Asian republics through Gwadar.

Perhaps the biggest challenge for the new political set up in Islamabad and Quetta will be the improvement of security situation in Balochistan. For the last four years, the forces of destabilization have been in full romance creating an insurgency like situation in the province. The incidents of violence and terrorism that took place in different areas of the province in the year 2004 and 2005 had forced the government to beef up security in Gwadar. Political stability is essential to maintain stable security environment in the province. The prevailing situation cannot attract foreign investment in Gwadar. There is a dire need to assuage the grievances of local people and resolve all issues through a political reconciliation.