The government is set to hand over Gwadar port to a Chinese company with the same concession, terms and conditions that were earlier agreed with Port Singapore Authority (PSA), informed sources revealed. However, non-clearance of allocated land required for making the port fully operational led PSA to quit the project.
The problem is likely to persist with the Chinese company, sources in the Ministry of Ports and Shipping told Business Recorder. The government issued NoC to PSA in August this year, allowing the Authority to withdraw from the agreement and leave the port but it will take some time to handover the port to the Chinese company due to some procedural hindrances, sources maintained.
It was agreed in the MoU signed with PSA that to fully operate the Gwadar Port, government of Pakistan will provide required land, occupied by Pakistan Navy and Coastal Guard; this remains pending which accounts for PSA's decision to sell its share to a Chinese company.
Pakistan Navy (PN) argues that it is the legal owner of 584 acres of land at Shamba Ismail in Gwadar which was allocated to PN against payment to the government of Balochistan for defence/operational purposes. PN claims that land at Shamba Ismail was made part of the Gwadar Port Development Plan without consulting PN. Ministry of Ports & Shipping has been pursuing the case for transfer of PN land to GPA since almost a decade. The Ministry took up the case with the Prime Minister in 2008 and after thorough scrutiny of records he finally approved the retention of land at Shamba Ismail by PN. And only 30 acres of land for the rail/road link from Gwadar Port to Free Zone/Container Freight Terminal was to be spared by PN.
The government decided in 2002 to construct port in Gwadar to take advantage of its natural shelter. The main objectives for development of the port were trans-shipment, transit trade, Gwadar's industrial development and city growth. Under a Financial arrangement with the Government of China, the port was constructed at an estimated cost of $287.8 million. China contributed to the tune of $220.26 million. M/S Arthur D Little prepared a Master Plan of the Port and identified Strategic Zones and Land Bank requirements for next 35-50 years.
In February 2007 through a concession agreement with PSA Gwadar Pte Limited, the management, operations, maintenance and development of Gwadar port were transferred to the concession holder for a period of 40 years under the Landlord concept. GPA's share in gross income was calculated as follows: PSA Gwadar International Terminal Limited 9%, Gwadar Marine Service Limited 9% and Gwadar Free Zone Company Limited 15 %.
After taking possession of the Port as concession holder the PSA installed 02 Gantry cranes, 200 meter of single rails and one Sub-Station. In accordance with Schedule-5 of the Concession agreement the PSA was bound to invest $775 million for the Development of Port, which did not materialise.
The Concession agreement envisaged the following: (a) Multi purpose Port Terminal handed over to the Concession Holder for 40 years (b) 923 hectares of prime land required to be handed over to the Free Zone Company on 40-years lease basis (c) freedom of operation and remittances.
Following tax exemptions were granted: (a) Corporate income tax for 20 years (b) Income tax on interest income of loans acquired (c) stamp duties on loans acquired, Sales tax, all provincial and local taxes, charges and levies for 20 years (d) Import duties and sales tax on all imports for materials / equipment required for construction / expansion and operations of Port for 40 years (e) duties on ship bunker oils.
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