Deal with Singapore firm may be cancelled

Published: November 10, 2010

Former president Pervez Musharraf’s government gave management and operations of the port to Singapore’s PSA International Ltd in February 2007 for 40 years.

ISLAMABAD: The chief minister of Balochistan has pledged to challenge in court what he said was a “one-sided” deal with a Singapore-based company to run the Gwadar Port.

Authorities also dismissed the notion that control of the port would be handed over to the Chinese because of their substantial investment. However, analysts suspect that China will push for a major say over the port in a bid to expand influence in the Indian Ocean.

Meanwhile, Pakistan is keen to become a conduit for trade to landlocked Afghanistan and Central Asia. The country has three major ports – Gwadar in Balochistan and two at Karachi.

Former president Pervez Musharraf’s government gave management and operational control of the deep-sea port in Gwadar to Singapore’s PSA International Limited in February 2007 for a period of 40 years.

However, Chief Minister Balochistan Nawab Mohammad Aslam Raisani on Tuesday asserted that he will seek cancellation of the agreement through the Supreme Court.

“After consultation with legal experts and the law ministry, we have decided that we will go to court this month and seek its cancellation,” said Raisani. “It’s a one-sided agreement. It’s our land. It’s our port and we should run it.”

He added that PSA International had neither brought in trade nor had it expanded the port.

Furthermore, he clarified that there were no plans to hand over the port to China. “Why can we not operate it ourselves? We have trained people,” questioned the chief minister.

Meanwhile, PSA – which runs ports around the world and is owned by state wealth fund Temasek Holdings – declined to comment.

Low cargo levels, no investment

Gwadar Port handled cargo worth approximately $700 million in cargo in 2009, less than half of its capacity, according to a port and shipping ministry official. He said the company had made no investment despite an agreement to invest $525 million over five years.

Pakistan gets only nine percent of the port’s total revenue. Slow business has also caused suspension of the planned $1.5 billion investment by a Chinese company, Tianjin Zhongbei Harbour Engineering, he said.

In September, the naval chief had asked the government to review the contract for the same reasons.

Gwadar was conceived over a decade ago with hopes it would handle transhipment traffic for the Gulf. A regional maritime industry source said a failure to develop infrastructure by the port and check security discouraged trade.

Under the agreement, the Balochistan government, which has been battling a decades-old low-level revolt by nationalists for provincial autonomy, was to develop a free-zone for warehouses and export processing zone in addition to establishing road and rail links.

The central government also appears unwilling to defend the contract with PSA. “I don’t think we will. We can only prove that we followed the due process at the time of awarding the contract,” commented a senior government official.

Middle East and South Asia director of the private intelligence company STRATFOR, Kamran Bokhari, said Beijing was probably seeking to acquire influence over the port. “The Chinese do want to have considerable access to it,” he said. “The port serves as a key location facilitating Beijing’s attempts to expand its influence further west,” he added.

Published in The Express Tribune, November 10th, 2010.

Reader Comments (7)

  • Sajjad Ashraf
    Nov 10, 2010 - 7:50AM

    There is much more to it than what simply appears in the story. PSA is one of the top port operators in the world. Why would it not want to successfully operate Gwadar defies imagination. Let us not pass our failures to others. Let us learn to take ownership of our own deficiencies. Only then we can develop and this is how Singapore developed from a backwater to one of the most thriving economies in the world. We have one of the top brands running our port. Let us capitalize on it.

    Passing on blames will take us nowhere. Recommend

  • Asim Kaleem
    Nov 10, 2010 - 1:59PM

    The people of Pakistan are always shown wonderful pictures of such horrible deals where leaders like that mushi and shoukat Aziz throw the country’s assets to these foreign entities who in turn fill their countries foreign reserves.

    The only way to revive this port is to give to China as they are the only one who are sincere with us true friends and the hold of Chineese on the world economy shall also requires the same. Just the Balochistan government get serious about security issues.Recommend

  • Yousaf
    Nov 10, 2010 - 2:41PM

    what else they can do? Definitely this will discourage the investment in Pakistan..Recommend

  • Ben
    Nov 10, 2010 - 8:40PM

    Nobody seems to understand that PSA has failed because no infrastructure was available to link the port with rest of the country. And India would make every effort to keep Balochistan unstable so that its own port of Chabahar built for Iran serves the purpose. India is already building road infrastructure for Chabahar port. And India is Iran’s strategic partner. It is a Great Game now being played on the shores of Makran. Read more at: link textRecommend

  • mumtaz ahmad
    Nov 10, 2010 - 11:06PM

    hi all

    we r wellcome all express staf and tribune .sepical ruff kalasara join exprees group.Recommend

  • Nov 11, 2010 - 2:03AM

    I have lived and worked in Singapore for a little while. They have the best port management capabilities in the world. That said, I am wary of handing over any port to the Chinese or any other country. We should be managing our own real estate. Keep in mind of the possibility that once handed over, it will be hard to get it back from the great superpower of China, if at all such a need arises in the future. Risk reduction should be the first and foremost determinant within the context of sovereignty.Recommend

  • Local Operations
    Dec 1, 2010 - 9:04AM

    Pakistan should retain local operational control of Gwadar Port and build expertise of its own citizens.

    Pakistan should hire PSA to conduct training of local staff and local management.

    Also, all NATO goods & supplies bound for Afghanistan must offload at Gwadar and pay port fees; this will help reduce costs of Gwadar port and decrease port congestion at Karachi. All NATO supplies must be charged road tariffs for damaging Pakistani roadways.

    Gwadar is a strategic geographic asset for Pakistan. It should not be neglected, nor corrupted. It is an opportunity to build a completely new, modern city of Pakistan’s future.Recommend

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