Bulk and general cargo terminal: CCoIGCT decides to approve draft framework agreement with UAE

ISLAMABAD: The Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT) has decided to approve draft framework agreement with the United Arab Emirates (UAE) for bulk and general cargo terminal at East Wharf at Karachi Port for the ratification of the federal cabinet.

A meeting of the CCoIGCT approved the government-to-government agreement with the UAE and after the ratification of the federal cabinet; the agreement will be signed between the governments of the UAE and Pakistan.

The CCoIGCT considered summary of Ministry of Maritime Affairs regarding G2G agreement between the governments of UAE and Pakistan on Cooperation for the Development of Bulk and General Cargo Terminal at East Wharf at Karachi Port under Inter-Governmental Commercial Transaction Act, 2022. The committee approved G2G draft Framework Agreement for the ratification of the federal cabinet. The agreement will be signed between the governments of the UAE and Pakistan.

The Ministry of Maritime Affairs (MoMA) in the summary told the CCoGIT that Karachi Ports consists of three Wharves as East, West, and South containing five terminals. Three docking terminals outsourced to Terminal Operating Companies (TOC) while remaining two – Oil Terminal and Clean Bulk Cargo Terminal (CBCT) – are presently operated by the KPT.

The CBCT was handed over to KPT in 2016 after the same was built from loan of World Bank. In 2019, KPT proceeded to outsource the CBCT by inviting E0I from TOCs. In pre-qualification stage 11 TOCs were declared qualified by NESPAK, whereas, only Q-Terminal submitted technical proposal. The KPT decided to go for international bidding but at the time the consultants finalised the tender documents, the AD Ports approached Government of Pakistan and KPT through UAE's Ambassador expressing its interest in operation of the two terminals on cast Wharf. KPT further informed that gross revenue of CBCT is PKR 3,100 million pa. Repayment of loan is PKR 3,000 million, operating expense is Rs675 million. The KPT ends up deficit amount of PKR 575 million pa. Ministry of Foreign Affairs (MoFA) has also been tracking the progress of KPT's outsourcing efforts since 2022 for offering CBCT to State of Qatar.

In May 2023, SAPM for Foreign Affairs informed that CBCT can be offered to Saudi Arabia (KSA). The KPT also on its own approached the Q-Terminal who indicated interest to the extent of participating in bidding.

1. In the meantime, MoFA forwarded UAE Ambassador's letter enclosing G2G Agreement between the Government of the United Arab Emirates and Government of the Islamic Republic of Pakistan for the Development of Bulk and General Cargo Terminal at East Wharf, Karachi Port. The proposal was submitted in the CColGCT in its last meeting held on 19-7-2023 vide MoMA Summary dated 14-7-2023.

The CCoIGCT while considering the proposals of the summary dated 14th July 2023 submitted by MoMA constituted the Framework Agreement Committee for a G2G Agreement-

Secretary Law and Justice Division is convener of the committee, whereas, secretary Maritime Affairs Division, Additional Secretary (ME) MoFA, Additional Secretary (CF) Finance Division were the members of the committee.

The Framework Agreement Committee held its meeting on 20th July 2023 under the chairmanship of the secretary Law and Justice Division. Secretary MoMA, Additional Secretary (ME) MoFA, Additional Secretary (CF) Finance Division attended the meeting, whereas, from the UAE side Rashid Abdelrehman Al-Ali, Deputy I lead of Mission, Embassy of the UAE, Islamabad, attended the meeting.

The committee examined and discussed the draft Framework Agreement clause by clause and proposed some amendments. Participants agreed on the terms of amended Framework Agreement.

The Framework Agreement Committee, therefore, recommended that the draft agreement may be placed before the Cabinet Committee on inter-Governmental Commercial Transactions for consideration and recommendation for the Federal Cabinet for granting approval. The minutes of the meeting of the Framework Agreement Committee and amended draft framework agreement are placed at Annex-V and VI respectively.

1. It is to mention that in the last meeting of CColGCT held on 19-7-2023, it was desired by the CColGCT that KPT may apprise about the homework on valuation/pries mechanism on the leasing out of the Terminal. The }CPT has, accordingly, informed (Annex-VII) that following mechanism and parameters may be considered as the basis/yardstick for price discovery on out sourcing the operations of the Bulk and General Cargo Terminal at }CPT:-

Moreover, CColGCT during its meeting held on 19-7-2021 had desired that sponsoring Ministry of the proposal must ensure that the transaction is being carried out with government owned entity as required under G2G Agreement. Therefore, MoFA was requested to confirm that AD Pon is a UAE government entity. The MoFA vide letter dated 21 July, 2023 forwarded the request of MoMA to its Deputy I lead Mission Abu Dhabi. The Mission informed that according to Abu Dhabi Pon Group works under Abu Dhabi Development Holding Co (ADQ) which is a UAE government owned entity.

Copyright Business Recorder, 2023