ISLAMABAD/KARACHI: The Federal Cabinet has approved framework agreement between the government of the United Arab Emirates (UAE) and the government of Pakistan, according to which control of four berths will be handed over to the (ADP) Abu Dhabi Ports and Terminal Operator for 25 years to be extended for another 25 years.
The Terminal Operator will invest $ 102 million in the next five years whereas KTP’s liability of $ 50 million will be met from the upfront payment of $ 50 million.
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Sharing the details, sources said that on June 21, 2023, Ministry of Maritime Affairs informed the Cabinet Committee on Inter-Governmental Commercial Transactions (CCIGCT) forum that on its recommendations, the Federal Cabinet in its decision June 21, 2023 approved the Framework Agreement between the Government of UAE and the Government of Pakistan and that the Minister of Energy and Infrastructure, Government of UAE signed the Framework Agreement electronically received through MoFA.
The Ministry further added that the Cabinet Committee on Inter-Governmental Commercial Transactions (CCIGCT) during its meeting held on June 19, 2023 constituted a Negotiation Committee to negotiate the Commercial Agreement between KPT and AD Ports with the following composition: (i) Minister for Maritime Affairs (Chairman); (ii) SAPM on Government Effectiveness; (iii) Additional Secretary (ME), MoFA; (iv) Additional Secretary (CF), Finance Division; (v) Chairman, KPT; (vi) GM, Finance, KPT; (vii) GM, Law, KPT; and (viii) GM P&D, KPT.
The CCIGCTR noted that the negotiation committee held its meetings on 19, 20 and 21 June, 2023 under the chairmanship of the Minister for Maritime Affairs.
The negotiation committee examined and discussed the draft terms and conditions of the transaction and negotiated the Operations, Maintenance, Investment and Development Agreement. The Ministry stated that the negotiation committee adopted a comprehensive “terms and conditions comparison mechanism” for price discovery.
Two separate analyses were carried out for price discovery, internal and external. It was added that the variables used to carry out the comparisons included Contract duration, Royalty payments, Ground Rent, Investments made by the host Port, Karachi Dock Labour Board Charges (KDLB) and Investment offered by Port Operator.
The forum was informed that for internal price discovery, the terms and conditions of PICT (the previous operator at KPT), were compared with the rates offered by the AD Ports and that the rates offered by AD Ports were found favorable. It was further stated that for external price discovery, the terms and conditions at three comparable terminals were contrasted with those offered by the AD Ports.
The first external terminal, KICT, was located at the same port (KPT) as the terminal under consideration for the proposed transaction. The second external terminal, QICT1, was located at a nearby port (Port Qasim) and the third external terminal QICT2 is also located at Port Qasim. The rates and terms/conditions offered by AD Ports were found to be better than the terms and conditions at all of the external terminals.
The contact with AD Ports will be for 25 years extendable for another term of 25 years on mutually agreed terms and conditions. The KPT’s liability would be met from upfront payment of $ 50 million. The AD Ports will invest $ 102 million in the next five years.
The Ministry/KPT stated that PICT was paying the royalty at $ 16.01 million with the indexation @ 5% after every 03 years. In comparison AD Ports was offering $ 18 million with effect from commencement date of the commercial agreement which provides a higher price as compared to the previous operator.
The forum was informed that the Price Negotiation Committee shared that the value of the assets to be handed over to the AD Ports at container terminal as well as the liabilities assessed for KDLB was approximately $ 40 million and that AD Ports had offered USD 50 million which would be paid upfront to the KPT.
It was further informed that KPT Board vide BR No. 468 considered the matter regarding the Letter of Intent (LoI), Agreement and Commercial Proposal to acquire operations, maintenance and development rights of the container at berth No. 6 to 9 East Wharf at KPT and ratified the same subject to the approval of the Federal Government.
The ministry while endorsing the recommendations of the Negotiation Committee, sought approval of the Cabinet Committee on Inter-Governmental Commercial Transactions for recommending the same for further approval of the Federal Cabinet.
After detailed discussion, the Cabinet Committee on Inter-Governmental Commercial Transactions submitted by the Ministry of Maritime Affairs regarding “Recommendation of the Negotiation Committee on the Commercial Agreement Between KPT and AD Ports UAE” approved the pact.
KARACHI GATEWAY TERMINAL INAUGURATED: Karachi Gateway Terminal Limited (KGTL), a joint venture of UAE’s Abu Dhabi Ports Group and Karachi Port Trust (KPT) to improve infrastructure and facilities at one of the major ports of Pakistan was inaugurated here on Thursday.
Sindh Governor Kamran Khan Tessori inaugurated the terminal by unveiling the plaque at a ceremony held here at KPT.
ADPG Chief Executive Officer Captain Juma Shamsi and Chairman KPT Syed Sayedain Raza signed the agreement in presence of Federal Minister of Maritime Affairs, Faisal Sabzwari, Sindh Chief Minister Syed Murad Ali Shah, United Arab Emirates Minister for Energy and Infrastructure, Suhail Mohamed Al Mazrouei, Investment and Foreign Trade Minister Dr Thani bin Ahmed Al Zeyoudi, UAE Ambassador Sheikh Ahmed Dalmook al Maktoum, Consul General in Karachi Bakheet Ateeq Al-Remeithi, Diplomates, elected representatives and higher officials also attended the event.
Addressing the ceremony, Sindh Governor Kamran Khan Tessori said Karachi Gateway Terminal Limited will help modernise the terminal with induction of state of the art facilities. He lauded the UAE’s investment in key port operations would also help in stabilising Pakistan’s economy.
Federal Minister for Maritime Affairs Faisal Sabzwari, addressing the signing ceremony assured job security to employees, saying no employee was allowed to be unemployed and all 634 top to bottom rank employees would be hired by Abu Dhabi Ports Group that will manage, operate and develop the KGTL.
He said UAE always stood besides Pakistan in times of need particularly in national disaster situations and a Pak-UAE joint venture was another hallmark of cordial relations of brotherly countries that would transform the negative perception about Pakistan’s economy.
Shamsi vowed that KGTL terminal will emerge as an important port not only in region but also for regional and global business with an approach of cost reduction and efficiency enhancement and will leave significant impacts on Pakistan’s economy and Pak-UAE bilateral relations.
He said that currently UAE is Pakistan’s biggest trading partner in the Middle East with bilateral trade amounting to $9.3 billion in 2022 and this terminal will further increase it besides opening new avenues of trade and development.
He said Abu Dhabi Ports Group will invest in infrastructure, railways and digital solutions and making the operations easier would reduce operation cost.
KPT Chairman Syed Seyedain Raza Zaidi hoped the upfront investment of millions of dollars in the project as the first drop of rain and expansion of the port terminal infrastructure would assist in increasing the revenue and gradually transforming the Karachi as regional trading hub.
Copyright Business Recorder, 2023
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