GPA set to draw $42.2-bn in 40 yrs over Gwadar Port deal

Karachi: The Gwadar Port will contribute $42.2 billion, in terms of investment, revenues and income received from its entire operations to the exchequer, over a period of 40 years. According to sources, the concession agreement is going to be inked on Tuesday, February 6, between the Gwadar Port Authority (GPA).

Which represents the Government of Pakistan, and the Concession-Holder Company (CHC), which is a subsidiary of PSA (Port of Singapore Authority) International PTE Limited.

The agreement has a duration of 40 years. Besides, it regulates the rights and obligations of both parties. The GPA will receive revenues (not profit) from the PSA over a period of 40 years. The investment, revenues and income received from Gwadar port's entire operations are between $23.6 billion to $42.2 billion.

Firstly, the GPA expects $5 billion to $8 billion foreign investment in the area of Multi-purpose (MP) terminal and related equipment's to cost PSA at Gwadar Port which would be $1 billion to $1.5 billion; container terminal and others $2billion to $4 billion; the cost of Free Zone development $1.5 billion to 2.5 billion; while the marine services and others would cost $0.5 billion.

Secondly, the GPA to receive revenues from CHC over next 40 years is expected between $17 billion and $31 billion. The expected revenues generated from containers and others would be $10 billion to $18 billion; Free Zone to generate $3 billion to $6 billion; while the MP terminal and others would produce $4 billion to $8 billion revenues during the period.

Thirdly, the GPA would receive income from PSA over the period of four decades between $1.6 billion and $3.2 billion, in which the CHC of containers and others would give $0.9 billion to $1.6 billion (9 percent of CHC revenue); Free Zone $0.45 billion to $0.9 billion (15 percent of CHC revenue); and the MP terminal and others would provide $0.36 billion to $0.72 billion (9 percent of CHC revenues).

The Concession-Holder Company (CHC) will establish separate three operating companies for each of the above business areas. Where appropriate, the CHC can cooperate with strategic partners at the level of the operating companies.

The Port-CHC manages terminal and cargo operation. The CHC will take over the marketing and operations of the current terminal area, which provides 602 metres of berthing and will invest in and expand berthing space in line with demand during the concession period up to a total maximum of berthing space of 14 berths at an area of 4.2 km. These facilities will cater for container cargo and miscellaneous cargo.

The Marine CHC services consist of piloting, tugging, mooring, and vessel traffic control and anchorage management and related marine services, such as bunkering facilities. The CHC shall expand the fleet of pilot and tugging vessels in line with demand.

The AKD Group would have majority CHC and operate the 'Free Zone CHC' and shall develop and operate this area and market its facilities and services. The area set aside within this concession for Free Zone activities related to the port has a size of approximately 923 hectares.

Gwadar Port Authority will remain responsible for the development and maintenance of common port infrastructure, such as access channels, breakwaters and access roads as well as navigational safety and port security.

The terminal areas under the concession, two terminal areas will be developed including multipurpose terminal area. This terminal includes the existing facilities and the areas will be expanded in easterly direction up to a total length of 4.2 km. It caters for various types of cargoes.

The container terminal area is located along the western and north-western coastline of the 'East Bay' and is to be developed by the CHC. The financial arrangements between the parties are simple and the CHC will pay a fixed share of its revenues to the GPA.

For the cargo operations and for marine services, this percent