Pakistan may transfer operational control of the Gwadar deep-water port from Singapore’s PSA International to a Chinese company, The Financial Times has reported.
“We have reached an agreement with PSA, where they have decided to leave the port at Gwadar. They are in discussions with a possible Chinese investor,” Minister of Ports and Shipping Babar Ghauri told The Financial Times in an interview.
Gwadar, built with a loan from China, is close to the Pakistan-Iran border and the Strait of Hormuz, through which much of the Gulf’s oil exports are carried by ship to international markets.
PSA began running the port five years ago under a contract valid for up to 40 years, but is now preparing to leave.
PSA declined to comment but Mr Ghauri and Singaporean sources confirmed that PSA’s imminent handover of control was triggered in part by Pakistan’s failure to fulfil its commitments, one being the building of a motorway link to service the port. Other differences included the government’s failure to transfer land for the port’s expansion.
“There is a decision for PSA to leave and we have given our consent,” said Mr Ghauri, who declined to name the potential Chinese replacement.
However, officials said strategic as well as commercial interests played a part in the change.
China’s assumption of the port contract “will be a landmark development, both for Pakistan and China”, said a senior government official. “This has great value for China,” he said. “We believe the Chinese may use their presence at Gwadar to lay down a pipeline in future for transporting Middle Eastern oil to western China.”
Another Pakistani official said the port contract would be “the second most vital Chinese investment in Pakistan after the Karakoram highway”, the road linking Pakistan to western China.
Gwadar port, which had a total investment of $248 million, received $198 million in funding from China, according to the commerce ministry in Beijing.
Published in The Express Tribune, September 1st, 2012.
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