Transfer of 584 acres of naval land to Gwadar Port: guidance from law minister

[LahoreEstate]

TAHIR AMIN
ISLAMABAD (March 08 2009): The Ports and Shipping (P&S) Ministry has sought guidance from the Law Minister regarding the transfer of 584 acres of naval lands at East Bay to Gwadar Port Authority (GPA) to establish Free Industrial Zones. The Ministry in a letter addressed to Law Minister on Friday informed him that Secretary, Ports and Shipping held a meeting with all stakeholders on February 25, 2009.

Wherein the government of Balochistan said that 9000 acres of land having sea access of 278 acres, is available to be handed over to the Ministry of Defence to shift its infrastructure to safeguard the coastal belt of Gwadar.

The P&S Ministry is seeking legal guidance from the Law Minister over the shifting of naval land after Balochistan government told that the land was available for Defence Ministry that could be used for Pak navy. The P&S Ministry had earlier moved a summary to the Prime Minster over the transfer of land to GPA that was rejected. Now the Ministry wants to move a summary again to the Prime Minister after consultation with Law Minister.

Sources said that the P&S Ministry in its letter has opined, By not transferring the Free Zone land to the Port of Singapore Authority (PSA) in accordance with the terms of the agreement, we have already defaulted and it would be well in its right to seek legal remedy through the court under Clause 7.10.2 of the Concession Agreement.

In case of this eventually, it is apprehended that the Port operations would be suspended after having financial and legal implications that would also discourage foreign investment, badly needed by our country. In the letter, the P&S Ministry has proposed that if the Ministry desires transfer of Defense land to GPA, on gratis basis, then PMs approval may be obtained for the transfer of the said land in favour of Ministry on gratis basis, for further handing over to GPA.

The port was formally inaugurated on March 20, 2007 and is presently handling wheat and urea ships successfully. The operation of the port has been assigned to the PSA, the operators of international repute, for a period of 40 years under a concession Agreement signed between GPA and the PSA on February 6, 2007. The scope of the concession Agreement includes cargo/terminal operations at the existing facilities and development of additional berths on 4.2Km space, which is available for this purpose.

Expansion of the container terminal facilities, marine services ie piloting, tugging and traffic management, Free Zone development and operation over 923 hectares of and cargo operations. Free Zone is key to Gwadar port meeting one of its primary objectives of transhipment. There could be no Free Zone without transhipment. The purpose of the free zone is to augment and supplement port activities and to value-add the cargo, thereby attracting more shipment into the port which is the real source of revenue for any port.

Clause no 5 deals with the terms of the Free Zone development and operations. Clause 5.1.1 provides that, the free Zone Area shall be located immediate west and adjacent to the planned container terminal measuring approximately 923 hectares, which GPA will acquire in terms of Article 5.3.3 of this Agreement, with a clear title vested therein and with full authority to lease the same to Free Zone Company for the establishment of free Zone.

As per clause no 5.1.2, the Free Zone Area will be part of the port, which will be under the jurisdiction of GPA. GPA shall determine the policies regarding development of free zone Area in consultation with the free zone company or sub-lessee shall be taken by GPA except to the extent provided for herein.

Moreover, the concession Agreement also provides that the Free Zone Area will be custom free and grants 20 years tax holiday to businesses that may be established in the Zone area. Under clause 5.3.3 of the concession Agreement it is mutually agreed by both the parties that; GPA shall acquire the land for the Free Zone Area on or before the following dates.

Realising the importance of the Free Zone Area, the then President and the Prime Minister directed on February 2, 2007 that 584 acres of land in the possession of Pakistan Navy at East Bay, Gwadar should be handed over to GPA, for the said purpose as soon as possible. After protracted correspondence, Ministry of Defence has informed that said land was transferred by the Government of Balochistan to Pakistan Navy in 1960 on ownership basis.

Further, in terms of Defence land Rules, 1944 the land in question cannot be transferred, free of cost to GPA, as this is an autonomous body. The land in the ownership of Pakistan Navy/coastguards as on the signing date is approximately 261 hectares: the date of commercial operations. Remaining approximately 662 hectares: December 31, 2007, provided that GPA shall be allowed a grace period for the acquisition of this land until June 30, 2008.

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