Singapore, others to sell their stakes in Gwadar port to China
Monday, 21 May 2012 | 11:00
The Port of Singapore Authority (PSA), Aqeel Kareem Dedhi (AKD) Group and the National Logistic Cell (NCL) have decided to sell their shareholding in the Gwadar Port to China, sources said.
A senior port official said that the government of China has agreed to take charge of the Gwadar Port and it is expected that the deal will be finalised by the end of this month. A Chinese delegation is expected to arrive soon to visit the Gwadar Port Authority and signed the deal. Since last year negotiations were going on between the shareholders and the Chinese officials, sources said.
PSA holds 60 percent shares in the Gwadar port while AKD Group and NLC hold 20 percent shares each.
The Gwadar Port is envisioned to become a major trans-shipment port and a shipping hub for the landlocked Central Asian States (CAS), Afghanistan and Western China. The Gwadar deep seaport is strategically located at the crossroads of the increasing important regions of the world that is the oil rich Middle East, resource-rich Central Asian Republics and populated South Asia.
The official said some amendments will be made in the concession agreement for the new operator.
It may be pointed out that China not only constructed the Gwadar Port but also provided 80 percent of the initial funds worth $248 million for the construction. Out of $248 million extended by China, $50million was given as grant to mark the 50-year of Pak-China friendship while $198 million was given as a soft loan. The port construction got started in 2002 and was completed in 2007. However, the port is yet to become fully operational.
The running of the port affairs was given to Port of Singapore Authority (PSA), one of the biggest port operators in the world 40 years so that it will fetch considerable business for making Gwadar port a success.
However, PSA and the government both failed to fulfil their commitments.
According to the concession agreement if any of the parties, either government or PSA withdraws from the agreement, it will have to pay the penalty or the amount will be double that of investment. As a result, both the parties were reluctant to withdraw. However, to resolve the issue it was decided to handover the port to the Chinese by transferring shares. A legal expert said that it was a typical share purchase agreement and would be executed as per regulations defined by the regulator.
He said that there was no legal or constitutional glitch in such a deal where all stakeholders had reached an understanding.
Ports and shipping experts believe that if Gwadar port is marketed well, other regional ports will lose considerable business. Gwadar has the strategic value once it is properly connected through an extended road network.
They said the its right decision to change the port operator otherwise the Gwadar port is losing this opportunity vis-a-vis fast developing Iranian port of Chabahar and other regional ports. If this deal materialises than there would be no difficulty in changing the port operator and it is a good step that China will run this port, they said and added in the current scenario China is the only country which is working actively in Pakistan on different projects. Ports experts believe that Balochistan government cannot run the port affairs as it is a commercial port and it needs commercial ports & shipping experts to make the port operational as per its original master plan.
Source: The News Pakistan
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