Gwadar Port: Cabinet proposes a revisit of contract

[LRE]

Cabinet proposes a revisit of Gwadar Port contract


MUSHTAQ GHUMMAN
ISLAMABAD (June 26 2008): The federal cabinet has proposed a revisit of the contract signed between a consortium of Singapore Port Authority (SPA)/AKD Securities and Shaukat Aziz-led government on Gwadar Port, well-placed sources told Business Recorder.

The cabinet had considered 'Gwadar Port Authority's revised bill for carving a new corporate structure of the port' in its meeting on June 4 but did not clear the bill due to several reservations. "The GPA affairs as well as the contract signed with the foreign operator called for a thorough review in consultation with the Balochistan government," sources quoted Prime Minister Syed Yousuf Raza Gilani as saying.

The cabinet was informed that the previous cabinet, on 27 June, 2007, had approved the draft bill for the establishment of GPA, subject to certain conditions including provisions relating to appointment of chairman and members of the board and their term of office, etc.

The Master Plan and business strategy of Gwadar Port envisaged that the chairman and members of the board shall be non-executive. The responsibility for management of all affairs of the authority would rest with the Chief Executive Officer who would act as the co-opted board member and would report to the non-executive chairman and the board on all matters including those delegated by him to his subordinate officers.

The Ministry of Law and Justice has vetted the draft bill titled 'Gwadar Port Authority Act, 2008' prepared by the Ministry of Ports and Shipping. However, the cabinet observed that the draft bill is flawed and contains self-contradictory provisions. Moreover, the proposed corporate structure was not in line with best international practices.

The cabinet after detailed discussion over the controversial draft bill has decided that it should be first examined by a committee comprising Ministers of Port and Shipping, Finance, Law and the Deputy Chairman of Planning Commission. It has also been decided that one Minister from Balochistan should also be co-opted.

It is not yet clear whether the committee has submitted its report to the Prime Minister for consideration. According to sources, phase-II of the project will be implemented on BOO (Build-Own-Operate) or BOT (Built-Own-Transfer) basis. Phase-II envisages construction of 10 more berths eastward of 4,200m long coast in phases under private sector as and when the utilisation on the existing berths under Phase-I reaches maximisation (ie 70 percent).

The port would be provided road and rail link with the national network. Port of Singapore Authority International (PSAI) has been assigned the job of port development under Phase-II in the concession agreement for 40 years. Gwadar Port is expected to contribute $42.2 billion, in terms of investment, revenues and income received from its entire operations to the exchequer, over a period of 40 years.

Copyright Business Recorder, 2008