Nov 8 - 14, 2010

Unfortunately, in Pakistan often decisions are made under high-priced political considerations rather than on merits. Shifting urea and wheat cargos to Gwadar port was such an imprudent decision that would weigh on national exchequers already under strain. What else could be the reason behind transferring dry cargos from strategically located Port Qasim to Gwadar port that has no rail and poor road connections with the hinterlands? Due to poor road and absence of rail connectivity, Trading Corporation of Pakistan (TCP) had to bear huge transportation costs for transporting urea and wheat consignments anchored on the Gwadar port.

TCP has incurred an additional cost of 2,260 rupees per tonne in transporting these dry cargoes—which can be cost effectively handled at Port Qasim—from Gwadar to Karachi, according to an estimate. TCP under the directives of economic coordination committee is handling all its imports at Gwadar port apparently to justify the establishment of Gwadar port, commented critics.

A top government official went on saying Gwadar port project is a sheer disaster. The Port of Singapore Authority (PSA) was delegated the responsibility of Gwadar port operations under 40-year concession agreement that binds the authority to share nine per cent of total revenue earned from the port operations with the Gwadar Port Authority (GPA). And since March 2008, PSA distributed only 33 million rupees to GPA as its share of revenue from port operations, minister of ports and shipping reportedly told lower house last month in a reply to query of losses suffered and profits earned from Gwadar port operations since its inception.

It is said government failed to provide land as per the accord with PSA and therefore the operations at Gwadar port have not been reached their full bloom. Whatever the reason and conflict between GPA and PSA are, it is a fact that for the last three year nothing substantive in terms of revenue was turned out for the government of Pakistan, which attached high ambitions with the Gwadar port that could enhance transhipments and international maritime trade with Afghanistan and through there with central Asian republics.

The Planning Commission's task force on maritime disappointed over the sluggish operations at Gwadar port and openly rejected in its presentation the possibility of docking at the port for many years basing its conclusion on inconsistent commercial activity. It is an irony infrastructure that is vital to attract investments in the resource-rich province of Balochistan has not been established. Roads and rail links that are necessary to make connection of the port with other locations for even transit are yet to be constructed. Notably, the task force believed the construction of roads and rail tracks would take another four year to be completed.

Arab countries are willing to invest in oil and gas sector in the province and set up oil refineries but without building required industries near the port undoubtedly, the investment's proposals can never be materialised. Besides, making port operational will continue to require government's financial assistances in the present circumstances. In addition to investments on the basic infrastructure, sizeable funds will be required for fabrications and construction of modern berths and terminals.

Until proper berth structure is made available, the port cannot even be used as transhipment to other ports in the country. Gainsaying is the fact that peaceful Balochistan is needed more than anything to secure transit trade and bank on geographical advantage of the province.

In this relation, Karachi Port and Port Qasim are far more good and trade-prone. Basic infrastructure facilities such as road network and rail links connect these two ports to main arteries of the country. Pakistan's premier Karachi port located in the financial and business capital with the country's largest consumer market and accessible to varied industries accounts for 75 per cent shares of maritime trade of Pakistan with the whole world while Port Qasim is on the way of becoming logistic port since clusters of industries are being established within its close vicinity.

It is equally true, however, that cargo handling capacities of Pakistan's key two ports of Bin Qasim and Karachi are not adequate extending waiting time to jack up cost of shipping and trade.

Poor management and administrative anomalies are the common characteristics of all three seaports in the country. World Trade Organisation said Pakistan's ports lag behind the international maritime standards because of their constricted capacities, slow cargo handling and discharging, and complicated custom appraisement system. Interplay of three factors played major role to shove cost of importation and production in the country, WTO said in a report. Transportation system is also in shambles with dilapidated roads and rickety rail tracks. Ports and shipping sector of the country is virgin for investments in advancements in cargo handling, discharging, and storages. There is lack of bulk cargo handling facilities causing jetty congestion and inordinate delays of several weeks.

In contrast, neighbouring India has developed its seaports in accordance with the world standards. In terms of volume, 80 per cent of the port traffic in the world's second largest economy is dry and liquid bulk. It has 12 major and 187 minor ports, though major ports handle 74 per cent of commercial activity. Abandoning past policy of state domination, Indian government is now encouraging private sector to come towards port development and operations in addition to have launched 22 billion dollar modernisation project for the major ports. Dubai Ports International, Maersk, and PSA are some prominent names, which made significant investments in port terminals. Especially, Gangavaram Port Ltd (GPL) has become the most modern port in India capable of handling cap size vessels due to its deep draft. Alone major ports of India handled cargo of over 463 million tonnes in 2006/07, which was projected to rise at a rate of 7.7 per cent per annum till 2014. India is eying to enhance loading and unloading capacity of ports to match with the pace of its sizzling economic growth. On the other hand, ports in Pakistan are not being developed in line with the demand from importing and exporting sectors in the country. Typically, all three ports handled only seven million tonnes cargo in 2008/09. Often jetty congestions caused inordinate delays of consignments at ports inflating bills of traders. Not only imports in the country but also exports from the country are on upward trajectory and large quantities of exports and imports come to pass on daily basis. Government of Pakistan is also encouraging private investments in port modernisation and developments.