GWADAR PROJECT

S.M. ABBAS ZAIDI,
Research Analyst
, PAGE
Nov 24 - 30, 2008

Gwadar has an immense Geo strategic significance on many accounts as it is located between three increasingly important regions i.e. the oil-rich Middle East, heavily populated South Asia and economically emerging resource-laden region of Central Asia. The Gwadar Port is expected to generate billions of dollars in revenues and create at least two million jobs. The main investors in the project are Pakistani Government and People's Republic of China. China's plan to be engaged in many places along oil and gas roads is evident.

GEO-POLITICAL IMPORTANCE OF GWADAR

Dubai is the hub of business not only for Gulf but also for rest of the world including Europe, United States, Africa, China and Central Asian States, simultaneously. The gulf region is facing many political conflicts at the moment and huge disturbances in the current administrative structure are expected in the coming years. In such scenario, a substitute of Dubai is essential to be located before the crisis hits the finances of millions. Fortunately, Gwadar proves to be the nearest and infact more cost-effective substitute of Dubai, from many aspects. China is emerging as a super economic power of the world in the recent years. Despite occupying a huge area of world's land, it doesn't have any port of hot waters, which can be used the whole year. The distance of Chinese industrial approach to the Shanghai's port is approximately 16000 km and the sea travel of 2-3 months is additional. This costs them a lot in the form of taxes and duties as well. As compared to this, Gwadar port is only on a distance of 2500 km from China and the port is working for the whole year because of the hot waters here. Therefore, the interest of China in the development of Gwadar port is infact in the interest of Chinese economy. The central Asian states, after the independence from USSR, are trying to develop their economies. These states are land locked and Karachi was expected to provide them the services through Afghanistan. For this purpose, a highway from Peshawar to Karachi was constructed but due to Afghan crisis, this line couldn't be established so, Gwadar being near to Iranian border will provide port facilities to Central Asia as well.

GEO-ECONOMIC IMPORTANCE OF GWADAR

With a population of 160000, the Gwadar Town on Makran Coast is now set to become a hub of shipping, commercial and industrial activities. Pakistan and China had signed a comprehensive agreement on March 16, 2002 at Beijing undertaking the task of construction of Gwadar deep seaport of universal standards. The work on the first phase of this mega project, which is being constructed by Chinese Harbor Engineering Company, is now at full swing. The project is bound to be a vital landmark in the economic development of the region. The port comes as a much-needed national requirement in the wake of the rise in cargo traffic at Keamari and Bin Qasim, which are operating at full capacity. It is expected that Pakistan's maritime traffic would rise by three folds by 2010. With the construction of a third port, it is estimated that Pakistan will not only be able to meet its own requirements of the future but also offer its port facilities to the neighboring countries. Gwadar is now destined to be the most important upcoming coastal town located on the inter junction of the three most strategically and economically important regions of the world that are oil rich Middle East, South Asia where one fifth of world population lives and the Central Asian Republics endowed with mineral wealth, educated and highly skilled and disciplined workforce. Meanwhile, the government wants to establish a mega oil city at Gwadar port, which is the most strategic project with an investment of $40 billion at the Gwadar port the biggest crude and refined oil storage base in the region, for which it had allotted 12,500 acres of land. It had announced that the required land be made available on lease at nominal rates to interested parties for setting up refineries or making investment in oil logistics and storage facilities.

PAK-CHINA INVESTMENT

The convergence of Sino-Pakistani strategic interests has put the port project onto a fast track to its early completion. In three years since its inauguration, the first phase of the project is already completed with three functioning berths. Although the total cost of the project is estimated at $1.16 billion USD. China pitched in $198 million and Pakistan $50 million to finance the first phase. China also has invested another $200 million into building a coastal highway that will connect the Gwadar port with Karachi. The second phase, which will cost $526 million, will feature the construction of 9 more berths and terminals and will also be financed by China. To connect western China with Central Asia by land routes, Pakistan is working on building road links to Afghanistan from its border town of Chaman in Balochistan to Qandahar in Afghanistan. In the northwest, it is building similar road links between Torkham in Northwest Frontier Province and Jalalabad in Afghanistan. Eventually, the Gwadar port will be accessible for Chinese imports and exports through overland links that will stretch to and from Karakoram Highway in Pakistan's Northern Areas that border China's Region of Xingjian. In addition, the port will be complemented with a modern air defense unit, a garrison, and a first-rate international airport capable of handling airbus service. In the meantime, the Chinese petroleum industry has indicated an interest in shifting its excess capacity to Gwadar, bringing an estimated investment of $13 billion, as Chinese petroleum industry is keen to invest in Pakistan's energy sector.

CONCLUSION

Gwadar project is a brilliantly planned project and a great strategic move by Pakistan. It's amazing that tomorrow's small fishing village Gwadar is fast emerging as a Deep Sea Port today. This project will not only enhance its commercial worth manifold but will also accelerate the pace of development to an incredible extent. In fact, Gwadar enjoys the status of a third Deep Sea Port of Pakistan which has a special significance with reference to trade links with Central Asian Countries, Persian Gulf, East Africa, United Arab Emirates and North Western India. Gwadar by virtue of its finest location, development projects, recreation programmes and Government's special attention will soon turn into a city which will be comparable with cities like Singapore, Hong Kong and Dubai. In view of the promising future of Gwadar, people from Pakistan and abroad who believe in safe and sound investment, are taking keen interest in Gwadar.