‘Weight competing Gulf interests in terminal deal’

Foreign ministry wants political factors to be taken into account in seaport venture

ISLAMABAD:

The government has been advised to navigate competing interests in a major seaport project.

The Ministry of Foreign Affairs has issued a cautionary advisory to the government regarding the development of a Bulk and General Cargo Terminal by the United Arab Emirates (UAE).

Exclusive documents obtained by The Express Tribune reveal that the ministry has stressed the need to consider the competitive settings of Gulf states, particularly Saudi Arabia and Qatar, who might also express interest in the project.

The Cabinet Committee on Inter-Governmental Commercial Transactions (CColGCT) was urged by the Ministry of Foreign Affairs to carefully weigh the political implications of this development, considering Pakistan's significant relations with the Kingdom of Saudi Arabia and Qatar.

The potential investment from these Gulf states in the same project must be taken into account during decision-making.

The meeting of the CColGCT, held on July 19, focused on the government-to-government (G2G) framework agreement between Pakistan and the UAE for the Bulk and General Cargo Terminal's development in Karachi. The Foreign Office was approached for comment but did not respond.

The Foreign Ministry reiterated that any decision concerning the development of the terminal at Karachi Port Trust's East Wharf should strictly adhere to the Inter-Governmental Commercial Transaction Act of 2022.

Emphasizing the importance of a 'Price Discovery Mechanism' as required by law, the Foreign Ministry stated that this aspect should be a central consideration in any deal under the G2G arrangement.

During the meeting, Minister of State for Petroleum, Musadik Malik, requested the ministry to provide a comprehensive rationale and definitive recommendations for the committee's decision-making process.

The finance secretary asserted that the 'Price Discovery Mechanism' should fall within the mandate of the entity or ministry involved in the transaction, with the assessed value of the asset presented to the CColGCT for each G2G deal.

As a result of the discussions, the CColGCT directed the law secretary to develop standard operating procedures (SOPs) to meet the requirements for all future G2G transactions. The proposed SOPs should include a checklist for cases to be presented before the CCoIGCT, outlining parameters such as the rationale for G2G transactions and the potential advantages in terms of foreign direct investment (FDI).

Chairing the committee meeting, Finance Minister Ishaq Dar instructed the sponsoring ministry to confirm the interested party's status as a government entity. The sponsoring ministry must also present the baseline asset valuation, which will serve as a benchmark for the 'Price Discovery Mechanism,' to the committee for the proposed transaction.

The maritime affairs ministry submitted its proposals for consideration and approval by the CColGCT to authorize negotiations on the framework agreement. It proposed the formation of a committee to negotiate the draft framework agreement with the UAE, vetted by the law and justice division and the foreign ministry.

Additionally, a separate committee might be established to negotiate the 'Price Discovery Mechanism' in light of the commercial agreement between the Karachi Port Trust and the Abu Dhabi Port, UAE.

The maritime affairs ministry informed the committee that the foreign ministry had forwarded a draft framework agreement and an expression of interest (EOI) for signing between the Abu Dhabi Port and the Karachi Port Trust. The KPT board instructed the management to proceed according to prevailing laws after examining the matter.

The CCoIGCT approved the maritime affairs ministry's summary regarding the "G2G framework agreement on cooperation for the development of Bulk and General Cargo Terminal at East Wharf."

To oversee negotiations with the UAE, a framework agreement committee was formed, comprising the law secretary, maritime affairs secretary, finance division additional secretary (CF), and foreign ministry additional secretary, with the maritime affairs ministry providing secretarial support.

After finalizing the framework agreement, the committee will present its recommendations to the CCoIGCT for consideration. Additionally, the CCoIGCT instructed the law ministry to develop SOPs to meet the standard requirements for all future G2G transactions under the Inter-Governmental Transactions Act of 2022.

As the government moves forward with the Bulk and General Cargo Terminal development, it faces the challenge of navigating the competitive interests of Gulf states while safeguarding Pakistan's national interests and maintaining crucial diplomatic relations with Saudi Arabia and Qatar.