Deal with Singapore firm may be cancelled

Raisani pledges to challenge in court what he terms “one-sided” deal with Singapore-based company to run Gwadar Port.

ISLAMABAD: The chief minister of Balochistan has pledged to challenge in court what he said was a “one-sided” deal with a Singapore-based company to run the Gwadar Port.

Authorities also dismissed the notion that control of the port would be handed over to the Chinese because of their substantial investment. However, analysts suspect that China will push for a major say over the port in a bid to expand influence in the Indian Ocean.

Meanwhile, Pakistan is keen to become a conduit for trade to landlocked Afghanistan and Central Asia. The country has three major ports – Gwadar in Balochistan and two at Karachi.

Former president Pervez Musharraf’s government gave management and operational control of the deep-sea port in Gwadar to Singapore’s PSA International Limited in February 2007 for a period of 40 years.

However, Chief Minister Balochistan Nawab Mohammad Aslam Raisani on Tuesday asserted that he will seek cancellation of the agreement through the Supreme Court.

“After consultation with legal experts and the law ministry, we have decided that we will go to court this month and seek its cancellation,” said Raisani. “It’s a one-sided agreement. It’s our land. It’s our port and we should run it.”

He added that PSA International had neither brought in trade nor had it expanded the port.

Furthermore, he clarified that there were no plans to hand over the port to China. “Why can we not operate it ourselves? We have trained people,” questioned the chief minister.

Meanwhile, PSA – which runs ports around the world and is owned by state wealth fund Temasek Holdings – declined to comment.

Low cargo levels, no investment

Gwadar Port handled cargo worth approximately $700 million in cargo in 2009, less than half of its capacity, according to a port and shipping ministry official. He said the company had made no investment despite an agreement to invest $525 million over five years.

Pakistan gets only nine percent of the port’s total revenue. Slow business has also caused suspension of the planned $1.5 billion investment by a Chinese company, Tianjin Zhongbei Harbour Engineering, he said.

In September, the naval chief had asked the government to review the contract for the same reasons.

Gwadar was conceived over a decade ago with hopes it would handle transhipment traffic for the Gulf. A regional maritime industry source said a failure to develop infrastructure by the port and check security discouraged trade.

Under the agreement, the Balochistan government, which has been battling a decades-old low-level revolt by nationalists for provincial autonomy, was to develop a free-zone for warehouses and export processing zone in addition to establishing road and rail links.

The central government also appears unwilling to defend the contract with PSA. “I don’t think we will. We can only prove that we followed the due process at the time of awarding the contract,” commented a senior government official.

Middle East and South Asia director of the private intelligence company STRATFOR, Kamran Bokhari, said Beijing was probably seeking to acquire influence over the port. “The Chinese do want to have considerable access to it,” he said. “The port serves as a key location facilitating Beijing’s attempts to expand its influence further west,” he added.

Published in The Express Tribune, November 10^th, 2010.