GWADAR'S COMPETITIVE POSITION WITH RESPECT TO OTHER PAKISTANI PORTS
Aug 04 - 10, 2008
Gwadar is the third deep-sea port in Pakistan after Karachi and Bin Qasim. The port has commenced cargo handling from March 15, 2008. Officials have been claiming that the working of Karachi and Bin Qasim ports would not be affected by the commencement of operations at Gwadar port as the latter has been designed to serve transshipment cargoes and where mother-ships would unload their cargoes to be shipped to other ports by feeder vessels. Unlike Karachi and Bin Qasim that thrive on captive cargoes, Gwadar Port would have to totally depend on transshipment cargo. As competitor, Gwadar may have a negative economic effect on to other Pakistani ports including Pakistan International Container Terminal (PICT) and its operations. A competition with Gwadar will certainly affect the working of other Pakistani ports. If GPA announces a competitive tariff to attract shipping lines to discharge cargoes at Gwadar instead of cruising to Dubai and Karachi and leaving for the next port for loading, it is believed by some experts that it will drastically reduce number of container vessels handled at PICT on monthly basis.
PICT started commercial operations in August 2002. PICT project had been launched under an Implementation Agreement signed in June 2002 between Karachi Port Trust (KPT) and a private company Premier Mercantile Services, which had sponsored the project. The first Phase of the project was completed in March 2004 at a cost of US$30 million. Presently, the PICT is handling on average 27 container vessels a month. The installation of the Quayside Crane has doubled its crane productivity on empty container moves. After completion of the development work of Phase III, PICT will have the capacity to handle over 550,000 TEUs per annum. Five years earlier, the PICT had commenced Phase II and Phase III development at a cost of US$45 million. The project is being financed by International Finance Corporation- the private sector arm of the World Bank. Since 2004, PICT has witnessed significant growth in container handling volumes and it achieved an annual growth of 302,000 TEUs in the fiscal year 2005-06.
For instance, Trade Corporation of Pakistan (TCP) had chartered a Panamax class vessel for importing 72,900 metric tons of wheat from Canada. It saved US$17 per metric ton by anchoring the ship at Gwadar in March this year instead of country's other ports of Bin Qasim and Karachi, as the Singaporean operators had offered concessional rates, as compared to the country's other ports, for unloading the imported wheat at Gwadar port. However, lighterage of the weight of Pos Glory into another vessel and the process of discharging wheat had created extra financial burden on the company, as it had hired another vessel, technical staff, required machinery and labors, besides the demurrage charges.
Initially, Gwadar port will be used as captive cargo or for trans-shipment purposes only. The port is expected to be a higher revenue earner in terms of foreign exchange for the country, as China, Afghanistan, Central Asian states and Russia would also be using the port where huge cargo ships up to 0.25 million tons could anchor. Initially the port would handle 100,000 containers, 300,000 tons of general cargo and half a million ton of food grains, according to the officials of GPA. The port authorities claim that foreign vessels may come and unload their goods at Gwadar.
Gwadar Port is expected to work as the main transshipment port for cargoes destined for Dubai and Karachi Port. Mother vessels from US, Europe and the Far East will discharge cargoes destined for Dubai and Karachi at the Gwadar Port for onward dispatch through feeder vessels. This would save time and cost for ships coming to the area. Since the official opening of the Gwadar port last year, the ship agents and cargo consultants have been waiting for the announcement of port tariff by the GPA. In May 2007, a delegation comprising foreign mining firms working in Balochistan had approached the Ministry of Ports and Shipping and the GPA to collect basic facts about the operational activity of the port. Gwadar has been designed to be operated as the hub port and it is expected to offer incentive package better than the regional ports like Jebel Ali, Hong Kong Malaysia and Singapore.
Before construction of Gwadar port, PICT was the country's deepest terminal with the designed berths having alongside depth of 13.5 meters and a current alongside depth of 12.2 meters. On the other hand, Gwadar port has depth of 14.5 meters and approach channel of five kilometers. Three multipurpose berths of 210 meters in width have been built. The port can handle Bulk Carriers of up to 50,000 DWT through its three berths. Gwadar port is ready to handle fertilizer and rice shipments for export, as proper bagging infrastructure is available at the proximity of the port.
PICT has 4 Ship-to-Shore Quay Cranes, two Mobile Harbour Cranes, 10 Rubber Tyred Gantry (RTG) Cranes and other ancillary equipment. The dedicated area for the Terminal is 220,000 square meters. The Quay Wall length is 600 meters. Gwadar is the only port in Pakistan with a RoRo facility which means any heavy moving cargo could directly land on the berth without using cranes. It has ultra-modern satellite system with VHF/HF facility. Singaporean operators also planned to bring second-hand two gantry cranes and two RTGs to gear up operations at the port.
As compared to Karachi and Port Qasim, which operate on a royalty basis, the selection of the port operator for Gwadar was on the basis of a gross-revenue-sharing formula. Hence the operator will have to set up three different companies to look after various activities at the Gwadar port, including cargo operation, marine operation and the free economic zone. Last year, Gwadar port was handed over to a Singaporean operator, which would run it for 40 years. The concession agreement for handing over operating rights of the seaport to the Port of Singapore Authority (PSA) was signed on February 06, 2007 between the Gwadar Port Authority (GPA) and the concession-holder company (CHC), a subsidiary of PSA International. Under the agreement, the GPA will receive revenues from PSA over a period of 40 years. The investment, revenues and income received from Gwadar port's entire operations have been estimated at between US$23.6 billion and $42.2 billion.