Gwadar: a key for rapid development

Activation of China route as energy corridor can prove to be windfall for Pakistan, complemented by 923-hectare free t

ISLAMABAD:

The idea of developing a modern port at Gwadar goes back to 1954, when a survey by the United States Geological Survey (USGS) convinced Pakistan of its strategic importance. However, it took us 54 years to realise the dream when the current port, after completion, received its first commercial cargo on March 15, 2008.

Even thereafter, it remained, virtually, dormant for 18 years till the Iran war compelled diversion of some cargo traffic towards it. This is despite the fact that, as per the website of the Gwadar Development Authority (GDA), Gwadar's GDP is projected to grow to $30 billion by 2050, along with its per capita GDP to $15,000, ie, around eight times its current value for Pakistan.

Background

Gwadar was integrated into Pakistan in 1958 through its purchase from Oman. However, only a small port catering to local fishing vessels could be established there till 1993, which largely proved to be a failure. Later, in 1999, China offered to develop a modern port, and the project's execution commenced in 2002, which took around five years to complete. As to the port's capacity, it has only three multipurpose berths and one service berth.

In order to give more context to the port's size, it may suffice to highlight that the port at Karachi has 40 berths and Port Qasim has 18. Thus, while Gwadar can dock only three ships at a time to the maximum, with each of around 200 metres in length, Karachi can accommodate about 13 times more. Similarly, Gwadar's designed annual throughput for containerised cargo is 100,000 TEUs (twenty-foot equivalent units), while the same for Jebel Ali, in Dubai, alone is 19.4 million. Also, while Jebel Ali handles around 15.5 million TEUs annually, Gwadar handled only 8,300 TEUs in 2025.

Located in the Arabian Sea opposite Oman, the port is situated at the end of the Strait of Hormuz 120 km downstream of Chabahar port in Iran and 630 km upstream of Karachi Port in Pakistan.

Oil exports of seven countries, including Saudi Arabia, the UAE, Kuwait, Qatar and Iraq, comprising 20% of the aggregate global oil exports, pass through this route. With around 50% of its aggregate oil imports coming through this route, China tops the list of importers. The other chokepoint, after the Strait of Hormuz, in this supply chain is the Strait of Malacca, which connects the Indian Ocean with the Pacific. In case of any friction in the area, China's supplies can face major disruption due to its blockade. However, trucking oil to Kashgar in China from Gwadar can completely bypass the said strait.

If this concept is implemented, then, with Saudi Arabia already serving around 14% of the oil import needs of China, a large footprint of Aramco in Gwadar can be a real possibility. But all such concepts need to be analysed thoroughly, without further delay, to identify and start implementing the most feasible option. In fact, the entire concept of the route from Gwadar to China also serves as an energy corridor for transporting oil, gas and LNG, which is so far surrounded by a lot of open questions about its operational as well as commercial viability. They need to be resolved as a priority to proceed further.

Of course, activation of the route as an energy corridor can also prove to be a windfall for Pakistan, especially when the same is complemented with the 923-hectare free trade zone in Gwadar, which can uplift and literally drive the entire economy of Pakistan. The zone, if populated with heavy industries like minerals processing, steel, chemicals, pharmaceuticals, refineries and petrochemicals, can serve as a major industrial and trading hub in the region. The shipyard project alone, on the anvil since 2007, can give an impetus to a plethora of support industries such as steel mills, marine paints, control systems, shipping containers, etc.

What is to be done

Since its commissioning in 2008 till 2025, Gwadar Port has handled around 7.4 million tons of imports, with the annual maximum of 3,900 tons in FY20-21. As to exports, they were negligible. Similarly, there was hardly any identifiable transshipment traffic. This means that till the Iran war, Gwadar was economically non-existent. In my view, a sustained and optimal utilisation of the given asset requires the following measures:

1) A nodal analysis of possible logistics of hydrocarbons from Gwadar to China in the context of available options, economic viability and execution timelines is essential on priority.

2) A lessons learnt exercise in the context of our past performance can help in future course correction. This may include capacity mapping of the forums managing CPEC projects. Governance models of institutions like that of DP World need to be followed. It has a completely professional board with each director having a relevant and world-class profile. No wonder, nobody wants it to be privatised. Even around 50 years back, they developed the globally largest man-made port at Jebel Ali in less than three years.

3) Presumably, the port's capacity is planned to be expanded to around 100 berths in the next 20 years. This not only needs meticulous planning and preparedness, but also calibration in the context of realistic economic projections.

4) Requirement of human capital of all categories (engineers, technicians, etc) needs to be identified as a priority, followed by its development. The maximum possible volume of this human resource should be from Balochistan. Similarly, a plan needs to be introduced for the integration of industrialists and bright young entrepreneurs from Balochistan into CPEC projects.

5) Investment flyers of international standards need to be prepared for each pertaining project in the Gwadar free trade zone. This may be complemented with frequent professional presentations in Gwadar on the industrial and trading potential of the zone for the ambassadors of pertaining countries. Similarly, summaries of prefeasibility studies for the planned projects, along with multiple commercial models, may be frequently presented to potential investors. Also, at least one cabinet meeting of the federal government at the site on a quarterly basis may help in expediting progress.

6) The salient benefits of the port, including its bunkering potential, need to be marketed aggressively through a dedicated campaign with the help of marketing experts. For strategic tasks, commercial tools like benchmarking studies may prove more viable instead of tendering.

7) Gwadar may be assigned a special status for education and skilling, health, employment and availability of amenities. Winning the hearts of such a small population through genuine focus in these areas should not be that difficult. Once achieved, the people can serve as the main bulwark against all the forces of negativity in the province.

Thus, a key for the rapid development of not only Baluchistan but also Pakistan does indeed lie in Gwadar. However, that is only possible by following the path of merit, professional management and, above all, loads of empathy for the people of Balochistan.

THE WRITER IS A PETROLEUM ENGINEER AND AN OIL AND GAS MANAGEMENT PROFESSIONAL