Terminal deal struck at ‘better price’
PHOTO: AFP
The government has claimed that it struck the Karachi Port terminal deal with Abu Dhabi Ports at a better price compared to the other terminal operators and the UAE port operator would invest $102 million over the next five years.
According to the Ministry of Maritime Affairs, the Pakistan International Container Terminal (PICT) was paying a royalty of $15.01 while the Abu Dhabi Ports offered $18 with effect from the commencement date of a commercial agreement.
The liabilities were assessed at $40 million and the Abu Dhabi Ports would provide $50 million, which would be paid upfront to the KPT.
The Cabinet Committee on Inter-Governmental Commercial Transactions (CCIGCT) held several meetings to finalise the deal. It considered recommendations of a negotiation committee on the commercial agreement between Karachi Port Trust (KPT) and Abu Dhabi Ports in a meeting held last month.
The Ministry of Maritime Affairs said that on the recommendations of CCIGCT, the federal cabinet on June 21, 2023 approved a framework agreement between the government of United Arab Emirates (UAE) and the government of Pakistan.
The UAE minister of energy and infrastructure signed the framework agreement electronically received through the Ministry of Foreign Affairs.
The maritime affairs ministry added that the CCIGCT during its meeting held on June 19, 2023 constituted a negotiation committee to negotiate a commercial agreement between KPT and Abu Dhabi Ports.
The committee comprised minister of maritime affairs, special assistant to the prime minister on government effectiveness, additional secretary Ministry of Foreign Affairs, additional secretary Finance Division, KPT chairman, KPT GM finance, GM law and GM P&D.
The negotiation committee held its meeting on June 21, 2023. It examined and discussed the draft terms and conditions and negotiated the operations, maintenance, investment and development agreement.
The ministry stated that the negotiation committee adopted a comprehensive terms and conditions comparison mechanism for price discovery.
Two separate analyses were carried out for price discovery, ie, internal and external. The variables used to carry out the comparisons included contract duration, royalty payments, ground rent, investments made by the host port, dock labour board charges and investment offered by the port operator.
The cabinet body was informed that for internal price discovery, the terms and conditions of PICT (the previous operator at KPT) were compared with the rates offered by Abu Dhabi Ports and the rates offered by the latter were found favourable.
For external price discovery, the terms and conditions of three terminals were compared with those offered by Abu Dhabi Ports.
The rates and terms and conditions of Abu Dhabi Ports were found to be better than those at the external terminals.
Published in The Express Tribune, July 8th, 2023.
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