Govt presses China on Gwadar plan
Pakistan has urged Chinese operators of Gwadar Port and its free zone to fulfil their contractual obligations by submitting a time-bound business plan for industrialisation, aiming to make the jewel of the China-Pakistan Economic Corridor (CPEC) fully operational.
The issue of delays in fulfilling the Concession Agreement commitments by China Overseas Port Holding Company (COPHC) was raised during a meeting of the CPEC joint working group on Gwadar. The session took place more than a month before Prime Minister Shehbaz Sharif's scheduled visit to China for the Shanghai Cooperation Organisation (SCO) summit.
According to government sources, Chinese officials were informed that Pakistan was still awaiting a comprehensive business plan for the Gwadar Free Zone. Islamabad asked for the investment schedule, performance indicators, and operational forecasts to guide industrialisation.
Pakistan stressed the urgency of finalising the design, financing, construction, operation, and maintenance of the north free zone. They called for a clear, time-bound implementation strategy to transform Gwadar into a competitive transshipment hub and regional transit gateway, said the Ministry of Planning authorities.
In August 2021, The Express Tribune reported that the Cabinet Committee on CPEC had found the Chinese marketing plan for Gwadar Port unsatisfactory. The matter has remained unresolved, although other projects, such as the international airport, allied services, and the first phase of the Eastbay Expressway, have progressed.
Pakistan urged COPHC to fully utilise the port by developing a ship-refuelling facility, LPG terminal, and ship-to-ship refuelling operations. Officials noted that Gwadar Port and its free zone remain underperforming due to multiple issues. They called for an investment and marketing plan with clear timelines and roadshows to attract strategic Chinese investors and industries, added sources.
Chinese representatives countered that the port needs more resources for sustainable operations. They proposed increasing shipping routes, policy support, and transit trade, and diverting part of Karachi Port's cargo to Gwadar.
Pakistan has already implemented supporting policies to operationalise the port, yet COPHC has not prioritised the north free zone's development and industrialisation. During the meeting, Gwadar Port authorities pushed for expedited construction of roads, water, and power infrastructure in the north free zone.
To make the port economically viable, Pakistan has withdrawn the bank guarantee requirement for Afghan transit cargo. It has also granted exemptions from the Export Policy Order to prospective Chinese investors, allowing the export of potassium sulphate.
According to the new regulation notified by the Ministry of Commerce, two Chinese companies, Agven Private Limited and Hangeng Trade Company Private Limited, have been allowed to export the fertiliser.
Authorities believe that building the breakwater and dredging berthing areas will require significant funds. These investments would not be viable without first expediting transshipment operations, cargo throughput, and business activity.
Some progress has been made elsewhere. Feasibility studies for the Gwadar Railway link and the second phase of the Eastbay Expressway, a 13.5km project, were completed in December last year. The completion of the second phase of this project will improve connectivity between the port and Gwadar International Airport. Pakistan has proposed signing the framework agreement for this phase either during the prime minister's visit or at the 14th Joint Cooperation Committee meeting. Negotiations with China are planned to secure grants for the Eastbay Expressway project.
Islamabad also urged Beijing to meet remaining development responsibilities under the concession agreement. These include building the internal infrastructure of the north free zone, submitting a five-year business plan, and quickly operationalising port-based value-added services.
Chinese experts visited Gwadar in July last year to address bottlenecks. They identified poor connectivity, inadequate utilities, and trade barriers as major issues. They acknowledged Pakistan's efforts over the past year to speed up operations, including regulatory approvals, support for transshipment, and tax exemptions.
Chinese officials acknowledged Pakistan's measures over the past year to accelerate the operationalisation of Gwadar Port and the free zone, including regulatory approvals, support for transshipment, and tax exemptions, the sources said.
Pakistan has committed to routing 60% of all public sector cargo through Gwadar. It has facilitated Afghan transit trade, allowed up to 50% of export proceeds to be used in foreign currency, and withdrawn the minimum turnover tax. However, China has asked Pakistan to further increase the public sector cargo share beyond the agreed 60%, said sources.
Officials reported that electricity and water supply infrastructure is now complete for both the north and south free zones. These zones are connected to the national grid via the Gwadar grid. A desalination plant producing 1.2 million gallons per day is fully operational, with two dedicated water supply lines laid to the north free zone's doorstep.