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Economy

Cabinet Panel Snubs Pitch for Second Port at Gwadar

Advocated by an influential minister, the proposal was dropped after the high-powered CCoCPEC argued it would undermine Pakistan’s sovereign commitments with China over the existing port.

A radical new proposal to build a second seaport at Gwadar failed to win approval of the Cabinet Committee on China Pakistan Economic Corridor (CCoCPEC) after a key minister took a dim view of the idea based on how it would reflect on Pakistan’s commitment to the existing port project.

Buoyed by the twin advantages of close proximity to the oil-rich Middle Eastern region and a large landmass for setting up of heavy industries, Gwadar Port is a key project of the China Pakistan Economic Corridor (CPEC).

The proposal to build a second seaport in close proximity to the existing port came from Minister for Maritime Affairs Ali Zaidi. This interesting development was shared with the Federal Cabinet on 10 March 2021 in the shape of decisions taken by the Cabinet Committee on China Pakistan Economic Corridor (CCoCPEC) headed by Minister for Planning, Development and Special Initiatives, Asad Umar. Zaidi and Umar are close friends and are seen hanging out together.

The Gwadar Port master plan was prepared in 2006 by Foreign Consultants (Arthur D little, Lyon Associates & Indus Associated Consultant). The Plan envisaged a seafront about 50 km deep and about 9,000 hectares of industrial port land excluding reclaimed land.

Approved in the Gwadar Policy Board (GPB) which met with the then Prime Minister on 23 July 2007, the plan entailed prompt acquisition of the proposed land-bank to secure unhindered developments of Gwadar Port to its full potential over the next 50 years.

Gwadar Port Master Plan envisaged multi-use area-l of 361 acres, of which 128 acres was acquired in 2006, i.e. before finalization of Gwadar Port Master Plan at a cost of PKR 28 million under the Public Sector Development Programme (PSDP). Multi-use area-2 comprised of 2,283 acres, which was acquired in 2015 at a cost of PKR 6 billion under PSDP.

Port-industrial area-1 consisting of 6,474 acres and a post-industrial area-2 comprising 12,355 acres were yet to be acquired. However, due to a ban on land acquisition and non-approval of PC-I for the project, the proposed industrial areas could not be acquired.

On 17 June 2019, a summary was presented to the Prime Minister, Imran Khan requesting lifting of ban for acquisition of land as per Gwadar Port Master Plan. The Prime Minister directed the Ministry of Maritime Affairs to make a presentation to him on the matter. However, no meeting has yet been held.

The documents presented before the Cabinet further disclose that PC-I for the project for land acquisition for Gwadar Port as per its Master Plan, amounting to PKR 48 billion was submitted to the Planning Commission for approval. The Planning Commission returned the PC-I with the remarks that “the project for which funding was not available or source of funding not clarified should be returned to the sponsors, as per NEC directions conveyed in its meeting held on June 10, 2013 and as per decision of ECNEC on August 28, 2013. Further action on land acquisition as per Gwadar Port Master Plan should be taken after finalization/ approval of Gwadar City Master Plan”.

Recently, the Government of Balochistan approved an Integrated Smart Port City Master Plan and constituted a Committee comprising of Minister for Planning, Minister for Maritime Affairs, Advisor to PM on Finance & Revenue, and Advisor to PM on Commerce & Industries to deliberate on the issue of reserve area in Gwadar land use plan, and make recommendations to the Cabinet for consideration.

The meeting of the Committee was held on 30 October 2019, wherein Advisor to PM on Commerce and Investment, Abdul Razak Dawood and Chairman Board of Investment supported the viewpoint of Ministry of Maritime Affairs. Minister for Planning & Development argued that instead of permanently designating the area for port activities, it should be marked as “first right of refusal for the port”. The Minister for Maritime Affairs had also taken up the matter with the Prime Minister on 31 October 2019.

The Ministry of Maritime Affairs is of the view that all the major ports of the world had integrated industrial areas, affording industries the advantage of proximity to the port in order to reduce cost of doing business. Ports like Jabl-i-Ali (UAE), Salala (Oman), Singapore, Port Qasim, etc., all have designated industrial areas managed by the concerned port authorities. The designated industrial areas at Gwadar Port, envisioned in the Master Plan, had been conceived in view of the international best practice.

The documents further disclose that on 22 February 2021, the Ministry of Maritime Affairs submitted the following proposals for the considerations of Cabinet Committee for CPEC:

(i)            The Government of Baluchistan may be requested not to alienate any part of Gwadar portland as per Gwadar Port Master Plan 2006 and preserve the sanctity of the Port Master Plan, which was approved by Gwadar Policy Board meeting, chaired by the then Prime Minister and comprising of all the stakeholders, including the Government of Balochistan;

(ii)           The Government of Balochistan may be requested to lift ban to the extent of Gwadar Port for acquisition of land as per the Gwadar Port Master Plan; and

(iii)          The Ministry of Planning, Development & Special Initiatives may be directed that PSDP project titled “land acquisition as per Gwadar Port Master Plan” may be restored with significant allocation to enable Gwadar Port Authority to start land acquisition accordingly. The total allocation of PKR 48 billion may be divided into four equal installments. This cost may vary based on the prevalent rates set by Collector Gwadar.

However, when discussion started on the proposal of the Ministry of Maritime Affairs, Minster for Maritime Affairs Ali Zaidi was of the view that while approving the Integrated Gwadar smart Port City Plan in August 2019, the Ministry of Maritime Affairs was not consulted although it was a concerned stakeholder.

He argued that the plan could hamper the prospects of future port expansion, and he suggested that possibility of setting up another port at Gwadar could also be explored to increase business activities in the area. He also expressed concern over the construction of a 300-MW coal-fired power plant at port area of Gwadar because of its environmental implications.

Makhdum Khusro Bakhtyar, Minister for Economic Affairs stated that non-availability of uninterrupted power supply and scarcity of water was the main hindrance in generation of business activities in Gwadar. He also proposed that more powers may be delegated to Gwadar Port Authority (GPA) to take necessary decisions independently and instantly to fully operationalize Gwadar port without any further delay.

Minister for Planning, Development and Special Initiatives, Asad Umar, who is heading the entire set up on CPEC projects observed that once a decision or commitment was made by the Government, it had to be honored. He opined the Government should not establish a competitive port operation at least during the period of agreement with Chinese concession holder.

He also observed that specific evaluation of future prospects for investment must be made by the Board of Investment (BoI), which should help devise viable plan for maximum utilization of Gwadar port potential.

After threadbare discussion on the controversial proposal of Ministry of Maritime Affairs, the meeting took the following decisions

(i)            The government should not set up another port at Gwadar in competition with the existing port;

(ii)           The Ministry of Maritime Affairs to expedite work on strategic plan at Gwadar, as per the decisions taken by the Prime Minister during the meeting on South Balochistan Development Programme held on 29 October 2020;

(iii)          The Ministry of Maritime Affairs and the Concessionaire for Gwadar Port and Free Zone to make a presentation to the CCoCPEC on the Concessionaire’s business plan, within two weeks. Power Division to submit a summary on options for power supply to Gwadar within two weeks;

(iv)          The BoI to present an independent assessment of investment potential of Gwadar Free Zone, along with recommendations on necessary measures to unlock the potential. The report/ presentation shall be submitted in two months’ time;

(v)           The BoI to also, present a comparative assessment of the CPEC SEZ investment incentives and those offered by other countries in the region to similar zones; and

(vi)          Ministry of Maritime Affairs to explore the possibility of establishment of a joint holding company for all its ports with a view to reducing reliance on PSDP and utilization of the resources available with various ports for development of new infrastructure and facilities.

The Federal Cabinet, in its meeting also ratified the decision of Asad Umar led committee on CPEC as there was feeling that any such decision would send a negative message to Beijing, already queasy over some decisions taken at different forums.

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