ISLAMABAD: The Federal Cabinet has constituted an inter-ministerial panel to ensure 60 per cent of public sector imports of wheat, fertiliser and sugar are made through Gwadar Port by the concerned public sector entities, official sources told Business Recorder.
The decision was taken by the Cabinet, in its previous meeting, presided over by Prime Minister Shehbaz Sharif.
The Cabinet was informed that the Economic Coordination Committee of the Cabinet in its decision of December 2, 2008, had decided that “wheat, fertiliser and coal be imported through Gwadar Port.” In July 2022, the prime minister had also directed that “in order to support port operations at Gwadar and economic activities in Gwadar, a portion of the procured wheat may be earmarked for transportation through Gwadar.
Govt decides to bring in 50pc govt imports thru Gwadar port
The ministry stated that in pursuance of these directions, Gwadar Port successfully handled 12 ships containing (0.45 million M. Ton Wheat and 0.1 million M. Tons urea) and dispatched the cargo to destinations in upcountry through NLC without any vessel demurrage, cargo handling loss and cargo shortage. The prime minister had also directed that immediate measures were to be taken to enhance imports from Gwadar Port, as communicated vide PM Office letter of May 17, 2024.
In pursuance of the said directions of the prime minister, the Ministry of Maritime Affairs held two meetings with the key stakeholders on May 16, 2024 and May 24, 2024, wherein, it was agreed that concerted efforts would be made to apportion a certain percentage of government imports from Gwadar port. The matter was also taken up with the port operator; i.e., China Overseas Port Holding Company Limited (COPHCL) to further reduce its port charges; etc, to cover the difference in cost between the ports in Karachi and Gwadar. The COPHCL conveyed the port operation rates of Port Qasim and Karachi Port, which reflected that charges at Gwadar Port were on lower side as compared to the ports at Karachi.
The ministry added that Ministry of Commerce (MoC) also intimated that Trading Corporation of Pakistan (TCP) was ready to land allocated cargo in any quantities at Gwadar Port as decided by ECC/Cabinet. The proposal was supported for future procurements. It was however observed that diverting shipments to Gwadar Port might lead to increase in freight/transport costs, which would be borne by the procuring agency.
The Ministry of Industries & Production (MoI&P) informed that from the year 2024, the ministry had already been engaging private sector/ urea manufacturers for the distribution of urea with no federal/ provincial subsidy.
The MoI&P further supported the proposal for using Gwadar Port for procurement of urea for Government of Pakistan, having either element of federal or provincial subsidy.
The Ministry of Maritime Affairs also pointed towards sharing of reports of National Fertiliser Marketing Limited (NFML) and TCP through MoI&P. It was explained that NFML, in its report, had intimated that it manages the distribution of urea imported via both Karachi and Gwadar Ports to designated upcountry destinations whereas the primary variation was the impact of freight charges due to additional distance of 640 kilometres from Gwadar Port. The freight rates quoted by the transporters in response to NFML tenders from Gwadar Port appeared 76 per cent higher than Karachi Port. However, the port charges at Gwadar were 50 per cent less with faster handling. The comparative import cost statement of Ports at Karachi and Gwadar excluding inland transportation cost, were prepared by TCP. It was stated that if 1.5 million metric tons were imported, the difference amounted to Rs9 billion. However, if 0.5 million tons (likely scenario this year) were imported, then only Rs. 3 billion was the effect. The average effect per metric ton was calculated as Rs11,500, and Rs 578 per 50 kg bag. The details of urea, wheat and sugar imported by the public sector during the last five years from 2019-2020 to 2023-2024 was also shared with the Cabinet.
After detailed discussion on the issue of import through Gwadar Port, the Cabinet in its meeting held on September 12, 2024, directed that all public sector entities engaged in exportation of goods shall make arrangements to route at least sixty percent of their exports through Gwadar Port; and All concerned public sector entities shall align their annual procurement and exportation plans with this policy.
The Cabinet constituted a Committee in terms of rule 17(3) of the Rules of Business, 1973 comprising, (i) Minister for Commerce; (ii) Minister for Maritime Affairs; (iii) Secretary Commerce; (iv) Secretary Maritime Affairs; (iv) Secretary Railways; (v) Chairman, Federal Board of Revenue; (vi) Chairman National Highways Authority; (vii) Managing Director, PPRA; and (viii) any other member co-opted by the Committee.
The Terms and Reference (ToRs) of the Committee are as follows;
(i) to ensure that 60 per cent of public sector imports of wheat, fertiliser and sugar are made through Gwadar Port by the concerned public sector entities;
(ii) To review the annual procurement plans of public sector entities, including autonomous bodies, that are engaged in procurement from overseas;
(iii) to identify those commodities that can be imported through Gwadar Port (in addition to wheat, fertiliser and sugar); and
(iv) to ensure that at least 60 per cent of the identified commodities are imported through Gwadar Port;
(v) to review the exportation plans of public sector entities engaged in exports;
(vi) to identify the road and rail infrastructure that can be utilised to transport goods to and from Gwadar Port; and to identify the road and rail links that need to be repaired, as well as, new alignments that need to be constructed over the medium term;
(vii) to identify private sector commodities that can be imported and exported through Gwadar; and to formulate an incentive package, if required, to encourage the private sector to import and export commodities through Gwadar Port and;
(viii) to review the existing security arrangements along the identified routes for transportation of goods to and from Gwadar, and to ascertain adequate security provision.
The Committee shall meet at least once a month and submit its report to the Cabinet at the end of every quarter of a calendar year.
The Ministry of Maritime Affairs shall provide secretarial support to the Committee.
Copyright Business Recorder, 2024
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