Research Analyst
Oct 29 - Nov 4, 2012

Gwadar Port is a developed warm-water, deep-sea port situated at Gwadar in Balochistan province of Pakistan at the apex of the Arabian Sea and at the entrance of the Persian Gulf, about 460 km west of Karachi and approximately 75 km east of Pakistan's border with Iran. The port is located on the eastern bay of a natural hammerhead-shaped peninsula jutting out into the Arabian Sea from the coastline. The Gwadar port is situated right next to the strategic Strait of Hormuz and its busy oil shipping lanes. The surrounding region is home to around two-thirds of the world's oil reserves. It is also on the shortest route to the oil rich Central Asian states through land-locked Afghanistan. Gwadar Port is managed by the Gwadar Port Authority. The development work started on March 23, 1998 and its first phase was completed on May 1999. Phase I covered building of three multipurpose berths and related port infrastructure and port handling equipment. The Gwadar Port project was initiated by Nawaz Sharif. Gwadar Port became operational in 2008 with the first ship to dock bringing 72.000 tonnes of wheat from Canada.


Phase I:

Phase II:

Us $ 248 million. Status: 100% Complete US $ 932 million: Work Progressing on building 9 additional berths, which will be:
3 Multipurpose Berths 4 Container Berths.
Length of Berths 602m 1 Bulk Cargo Terminal (to handle 100,000 DWT ships).
4.5 km long Approach Channel Dredged to 11.5m-12.5m. 1 Grain Terminal.
Turning basin 450m dia. 1 Ro-Ro Terminal.
One 100m Service Berth. 2 Oil Terminals to handle 200,000 DWT ships.
Related port infrastructure and port handling equipment & Pilot Boat, Tugs, Survey Vessel etc.  


Gwadar Port is being constructed in two phases with heavy investment from China. China has acknowledged that Gwadar's strategic value is no less than that of the Karakoram Highway, which helped cement the China-Pakistan relationship. Beijing is also interested in turning it into an energy-transport hub by building an oil pipeline from Gwadar into China's Xinjiang region. The planned pipeline will carry crude oil sourced from Arab and African states. Such transport by pipeline will cut freight costs and also help insulate the Chinese imports from interdiction by hostile naval forces in case of any major war. Chinese funded US $198 million and also provided 450 engineers on site to finish the project on time. Commercially, it is expected that the Gwadar Port would generate billions of dollars in revenues and create at least two million jobs. Technical and financial feasibility studies commenced by the Government of Pakistan in 1993 but construction could not start until 1998. The Gwadar Port was built on a turnkey basis by China. Gwadar Port is now being expanded into a deep sea port and naval base with Chinese technical and financial assistance.


Initially, the chairman of Dubai ports World, Sultan Ahmed bin Sulayem, who met Pakistani president General Pervez Musharraf in May 2006, expressed a strong hope for management of facilities at the strategic Gwadar port and development of infrastructure in the southern port city and elsewhere in Pakistan. But a decision was taken not to bid, after India's National Security Council voiced concerns about DP World's ventures in India, alongside its plans in Pakistan, and the chairman assured the Indians their pull-out was well considered and India need not have any security concerns.

The port will now be in competition with that of Dubai in UAE. Following the completion of Phase I of Gwadar, Government of Pakistan (GoP) in Feb 2007 signed a 40-year agreement with PSA International for the development and operation of the tax-free port and duty-free trade zone.

The PSA International was the highest bidder for the Gwadar port after DP World backed out of the bidding process. In a highly competitive environment, in order to enable Gwadar to compete with its regional peers, the port fees was kept low by allowing a wide range of tax concessions to the PSA International to cut operational and business costs. These include complete exemption from corporate tax for 20 years, duty-free imports of materials and equipment for construction and operations of the port and a free economic zone; and zero rate of duty for shipping and bunker oil for 40 years. In addition to these incentives, the provincial government of Balochistan was also asked to exempt the PSA International from the levy of provincial and district taxes.

According to the agreement, the Gwadar Port Authority, GoP would get a fixed share i.e. 9 per cent of the revenue from cargo and maritime services, and 15 per cent of the revenue earned from the free-trade zone. PSA International is expected to invest US$550 million in the next five to ten years on creating the operational facilities.


Pakistan's construction and infrastructure forecast is negative for 2012, based on declining investor confidence. The energy and utilities sector remains strong, however, with a number of hydro and wind power providing some respite. The construction industry value is expected to be US$3.78 billion for 2012 based on year on year (y-o-y) growth of -1.29 per cent. This negative trend is expected to continue across the forecast period, with y-o-y growth averaging -1.47 per cent up to 2016, when the industry value will have reached US$4.6 billion.