A body of Pakistan’s federal cabinet on Tuesday endorsed a five-year framework agreement for handing over four berths of the Karachi port terminal to the government of the United Arab Emirates (UAE). This development paves the way for signing a commercial deal.
“The Cabinet Committee on Intergovernmental Commercial Transactions (CCoIGCT) recommended the draft framework agreement to the federal cabinet for approval,” said the Ministry of Finance.
The intergovernmental framework agreement has been finalised to create favourable conditions for the operations, maintenance, upgrading, investment, development, and advancement of the container terminal at Berths 6 to 9, East Wharf, Karachi Port Trust.
Under the chairmanship of Finance Minister Ishaq Dar, the cabinet committee met for the second consecutive day to explore avenues for raising funds after a pending deal with the International Monetary Fund (IMF).
Earlier, a committee set up by Dar finalised the framework agreement at an unusually fast pace in the public sector. The committee held a meeting attended by the CEO of the Abu Dhabi Port, Abdul Aziz AlBalooshi, and the Advisor to Sheikh Ahmad Al Makhtoom, Mustafa Ahmad.
Pakistan aims to reach a deal to hand over the terminals to Abu Dhabi Ports (ADP), a subsidiary of the Abu Dhabi Ports Group. The UAE government expressed interest in acquiring the Karachi port terminals, which were under the administrative control of the Pakistan International Containers Terminals (PICT) last year.
The finance ministry stated that the CCoIGCT considered a summary of the Ministry of Maritime Affairs regarding the framework agreement between the governments of the UAE and Pakistan, aiming to further strengthen relations between the two countries in the maritime sector.
It added that the cabinet committee discussed the recommendations of the Framework Agreement Committee for a G2G agreement under Inter Governmental Commercial Transaction Act 2022 on ports and shipping.
The approved framework agreement specifies that the Karachi Port Trust (KPT) and the Abu Dhabi Ports Company will coordinate to implement the agreement. They will enter into a commercial agreement for technical, economic, and commercial terms to operate the Karachi port terminals.
In case of dispute, both sides will try to resolve the issue amicably. If the dispute remains unresolved, it will be resolved through mutual negotiations remaining “within respective protocols or any other way specified in the subsequent agreements.”
The framework agreement has a life span of five years, which can be extended. However, termination of the framework agreement will not adversely affect the commercial agreement to be signed between the KPT and the Abu Dhabi Ports.
For the past 17 years, Pakistan and the UAE have been unable to resolve the dispute over $800 million outstanding payments related to the sale of 26% stakes of Pakistan Telecommunication Limited to Etisalat.
During a post-budget press conference, Dar mentioned that Pakistan was in a weak position. The UAE warned that it could take Pakistan to the international court over the matter.
Published in The Express Tribune, June 21st, 2023.
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