Irked by ministries’ inaction: PM tells MoFA to tap CARs with Gwadar trade offers

ISLAMABAD: Prime Minister Shehbaz Sharif has reportedly expressed annoyance at the ministries for their inaction to make Gwadar Port fully operational and directed Ministry of Foreign Affairs (MoFA) to reach Central Asian Republics (CARs) to offer them the use of Gwadar for their trade, well-informed sources told Business Recorder.

The possibility to use Gwadar Port for Pakistan’s oil imports is being examined, especially with reference to the provision of the requisite specialized port infrastructure, oil piers and terminals pipelines, storages, distribution system, and logistic arrangements etc.

Sharing the details, sources said, Ministry of Maritime Affairs (MoMA) apprised the Cabinet that on September 3, 2024, while considering the summary for allocation of 50% public sector imports from Gwadar Port, the Cabinet constituted a Cabinet Committee on public sector imports from Gwadar Port in terms of rule 17(3) of the Rules of Business, 1973 under the convenership of the Minister for Commerce to holistically review the proposals presented to the Cabinet, while taking into account inter alia the financial, commercial, logistical, transportation cost and consumer price implications of the proposal.

Numerous issues uncovered: Gwadar Port struggles to achieve desired success

It was stated that the Committee held meetings on September 4 and 5, 2024, with participation from the private sector i.e. All Pakistan Shipping Association, Pakistan International Freight Forwarders Association, National Logistics Corporation (NLC) Leads Logistics and Faisal Movers, who also gave their input on imports via Gwadar. It was agreed that although the Government had financial constraints, coupled with security challenges and other gaps, it was ready to facilitate with regard to higher transport costs to make Gwadar Port functional and to ensure that 50 per cent public sector imports were through Gwadar Port in the first phase. The Cabinet also apprised that the Ministry of Maritime Affairs was directed to submit a summary to the Cabinet for its consideration and approval of recommendations of the Committee. Accordingly, the summary for the Cabinet was submitted by MoMA on September 2024.

It was further apprised that the Cabinet while considering the proposals of the summary regarding making 50 per cent public sector imports through Gwadar Port decided on September 12, 2024 and received by MoMA on September 23, as follows: (i) at least 60 per cent of all public sector imports of wheat, fertiliser and sugar shall be made through Gwadar Port; (ii) in addition to wheat, fertiliser and sugar, other commodities procured by public sector entities from overseas will also be identified for import of at least 60 per cent through Gwadar Port; (iii) all public sector entities engaged in exportation of goods shall make arrangements to route at least 60 per cent of their exports through Gwadar Port; and (iv) all concerned public sector entities shall align their annual procurement and exportation plans with this policy.

Under the same case, the Cabinet also constituted another cabinet Committee in terms of rule 17(3) of the Rules of Business, 1973 with the following composition and Terms of Reference: (i) Minister for Commerce (convener); (ii) Minister for Maritime Affairs; (iii) Secretary Commerce; (iv) Secretary MoMA;(v) Secretary Railways; (vi) Chairman FBR; (vii) Chairman NHA; ( viii) MD, PPRA; and (ix) any other member co-opted by the Committee.

The ToRs of the Committee were 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 ensure the annual procurement plants of public sector entities, including autonomous bodies that are engaged in procurement from overseas to identify those commodities that can be imported through Gwadar Port ( in addition to wheat, fertiliser and sugar) and to ensure that at least 60 per cent of the identified commodities are imported through Gwadar Port; (iii) to express the exportation plans of the public sector entities engaged in exports to identify the commodities that can be exported through Gwadar Port and to ensure that at least 60 per cent of the identified commodities are exported through Gwadar Port; (iv) 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; (v) 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; (vi) to review the existing security arrangements along the identified routes for transportation of goods to and from Gwadar, and to ascertain adequate security provision; and (vii) 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.

It was noted that Ministry of Maritime Affairs shall provide secretarial support to the Committee. The decision was sent to all the Members of the Committee on September 29, 2024. Moreover, the Committee was notified on September 30, 2024. The decision of the Cabinet was also sent to all Ministries/Divisions for implementation through a letter of October 31, 2024.

Furthermore, Ministry of Maritime Affairs issued reminders to all Ministries/Division requesting therein to provide the updated position regarding public sector imports made so far, in pipeline and planned in future from Gwadar Port. The Ministry of Commerce stated that there were no procurement plans in the pipeline for any public sector imports through TCP. As and when the Federal Government intended to import any commodity especially wheat urea/fertiliser, cotton, etc. through TCP, the same would be implemented through Gwadar port. The Petroleum Division/PSO apprised that fuel products and crude oil cargoes imports required dedicated and specialized port infrastructure, oil piers/LNG terminals, pipelines, storages, distribution system and logistics arrangements. In that regard, various aspects needed to be looked into for fully or partially shifting fuel or crude imports to Gwadar as it would entail a major investment and redundancy of existing infrastructure at Karachi Port and Port Qasim and increase in transportation cost and products prices due to unavailability of cross-country transportation pipeline etc. Therefore, holistic view had to be taken in that regard while taking the concerned stakeholders i.e. port authorities, refineries, OMCs, pipeline companies, transportation entities on board. The Ministry of Railways informed that since inland transportation was required to be carried out through railways, therefore, all imported goods arrived at the Karachi Port as it had rail connectivity with the rest of railway network. It was further informed that the following Ministries had sent “ nil’ reports; (i) National Security Division ;(ii) National Heritage and Culture Division; (iii) Economic Affairs Division ;(iv) Parliamentary Affairs Division; (v) Ministry of Communications ;(vi) Ministry of State and Frontier Regions; (vii) Ministry of National Food Security and Research; (viii) Finance Division; and (ix) Cabinet Division( main Division and allied Organisations).

The Cabinet was apprised that a meeting of the Cabinet Committee was held on December 17, 2024 to review the progress on the decision of the Cabinet. The Members of the Committee who attended the meeting, considered the tasks one by one and took the following decision: (i) ensure 60 per cent public sector imports of wheat, fertiliser and sugar from Gwadar Port - decision sent to all Ministries for implementation. Various Ministries informed that no imports have been planned this year so far as public sector imports are need based depending on supply demand situation in the country. Need for import of wheat can be a probability during the current fiscal year; (ii) review annual procurement plans of PSEs/autonomous bodies that are engaged in procurement from overseas ( the Committee reviewed the procurement plans of TCP in its meeting held on December 17, 2024 and decided that Ministries and PSEs/autonomous bodies under them may be again asked to share their annual procurement plans); (iii) review of exportation plans of PSEs to identify the commodities to be exported through Gwadar Port( the Committee discussed various options for exports through Gwadar port including rice exports ); (iv) ensure that at least 60 per cent identified commodities are exported through Gwadar Port. TCP informed that negotiations are underway for export of 50,000 M rice to Bangladesh and since the exports would be on CIF+ Liner out basis, therefore, the private sector would be undertaking this task. Agreement with Bangladesh has been signed recently. The TCP has requested the private sector to consider using Gwadar Port for rice exports also. However, the increased transportation costs may be an issue which may make the price less competitive as compared to Indian rice in that market. However, the TCP will make its best endeavour to convince the private sector to consider using Gwadar Port for export of rice); (v) identify the road and rail infrastructure and those to be required for transport of goods to and from Gwadar Port. The NHA informed that N- 85 is operational and remaining portions of M-8 are under construction on priority. Framework agreement on construction of Eastbay Expressway phase-II in EPC mode under grant-in-aid to connect Gwadar Port to NGIA is in process; (vi) indentify private sector commodities that can be imported or exported through Gwadar Port. Committee initially identified fertiliser and wheat having potential for imports and exports by the private sector. Committee proposed that bulk cargo may be considered to be made through Gwadar Port; (vii) formulate incentive package to encourage private sector to export and import commodities. It was informed that Transshipment Policy is being actively formulated. Cabinet Committee on Chinese Investment Projects (CCoCIP) is working to address the problems/bottlenecks in operationalisation of Gwadar Port. ECC has approved withdrawal of bank guarantee replacing with insurance guarantee on import under ATTA from Gwadar port. M/s Agven requested to allow export of Potassium Sulphate fertiliser by exemption from EPO 2022.

The Committee also reviewed existing security arrangements. It was noted that Perimetric Security System at Gwadar Port is in place for making the port secure. Ministry of Interior informed that sufficient formations on each transportation route are in place. Committee recommended that concerned efforts be made to meet the security challenges.

It was further apprised that all Ministries/Divisions were again requested through a letter of December 24, 2024 and reminded on December 31, 2024 to provide the updated position on public sector imports and exports made so far, in pipeline and planned during the current financial year from Gwadar Port. Thereafter, the Committee would consider the responses of all the Ministries/Divisions/Organisations in its forthcoming meeting.

The Cabinet was informed that the Committee had seen, approved and authorised submission of the Report to the Cabinet for information and further direction.

The Ministry of Maritime Affairs cited greater comparative distance between Gwadar Port and other major cities, security issues, and huge cost of transporting oil to Gwadar Port as major hurdles in implementing the Cabinet decision.

In the ensuring discussion, the Prime Minister expressed dissatisfaction at the underutilization of Gwadar Port as a key hub of commercial activities. He pointed out that the main purpose behind the Cabinet decision of September 2024 was to ensure that Gwadar Port was made functional so that the issues of congestion at Karachi Port were addressed. He stated that it was very important to ascertain as to how much commercial activity was going on in Gwadar and what was the status of public sector imports and exports passing through the port.

“Prime Minister took notice of the issues highlighted by the Ministry of Maritime Affairs and stated that inaction was a mark of big failure on part of the Ministries that did not plan properly,” the sources added. Prime Minister further stated that there was no time for any excuses and if there were any higher costs involved, the Federal Government shall take the burden.

After witnessing inactiveness of Ministries, Prime Minister assigned responsibility to Minister for Planning, Development and Special Initiatives, Ahsan Iqbal to come up with possible solutions.

Iqbal has held a couple of meetings with the stakeholders and grilled them for their inactions, besides Pakistan’s ambassador to CARs, asking them to submit plans to make Gwadar Port attractive to CARs.

The Cabinet directed that transshipment policy be formulated, to carry out Afghan transit trade through Gwadar Port and arrange Turkmenistan’s import and exports through Gwadar Port for which a working group could be constituted in Pakistan’s embassy in Turkmenistan.

The Cabinet also noted that many Central Asian Republics were interested in using Gwadar Port for their international trade, which could be very beneficial for Pakistan’s economy, and to facilitate which the Ministry of Foreign Affairs should reach out to their governments. It was further noted, that the possibility of carrying out Pakistan’s oil imports through Gwadar Port should also be examined, especially with reference to the provision of the requisite specialized port infrastructure, oil piers and terminals, pipelines, storages, distribution system and logistic arrangements etc.

Iqbal has been tasked to submit a comprehensive plan to operationalise Gwadar port for consideration of the Cabinet. The plan may include options for public private partnership and meeting any logistics and transportation cost differentials by the government.

Copyright Business Recorder, 2025