Gwadar Port

Gwadar Port
Aerial view of Gwadar Port
Facility information
Location	Pakistan
Constructed	Phase I: 2002-2006 Phase II: 2007-present
Operator	China Overseas Port Holding Company
Shipping information
Number of berths:	Phase I: 4 Phase II: 9 Total: 13
Type of ships:	Phase I: bulk carriers of 30,000 deadweight tonnage (DWT), container vessels of 25,000 DWT Phase II: 200,000 DWT vessels

Gwadar Port is a warm-water, deep-sea port situated on the Arabian Sea at Gwadar in Balochistan province of Pakistan.

Location

Gwadar Port is located at the apex of the Arabian Sea and at the mouth of the Persian Gulf, approximately 460 km (290 mi) west of Karachi, 75 km (47 mi) east of Pakistan's border with Iran and 380 km (240 mi) km northeast of the nearest point in Oman across the Arabian Sea. It is situated on the eastern bay of a natural hammerhead-shaped Peninsula protruding into the Arabian Sea from the coastline.

Gwadar Port is situated near the strategic Strait of Hormuz and its busy trading and oil shipping lanes. The surrounding region is home to around two-thirds of the world's oil reserves. It is also the nearest warm-water seaport to the landlocked, but energy rich, Central Asian Republics and landlocked Afghanistan.^[1]

Background

Although construction of Gwadar Port did not commence until 2002, Pakistan identified Gwadar as a port site as far back as 1954 when Gwadar was still under Omani rule.^[2] Pakistan's interest in Gwadar started when, in 1954, it engaged the United States Geological Survey (USGS) to conduct a survey of its coastline. The USGS deputed the surveyor, Worth Condrick, for the survey, who identified Gwadar as a suitable site for a seaport.^[2] After four years of negotiations, Pakistan purchased the Gwadar enclave from Oman for $3 million on 8 September 1958 and Gwadar officially became part of Pakistan on 8 December 1958, after 200 years of Omani rule.^[2] At the time, Gwadar was a small and underdeveloped fishing village with a population of a few thousand. A small port was constructed at Gwadar by the Government of Pakistan between 1988 and 1992 at a cost of Rs. 1,623 million, including the foreign exchange component of Belgian Francs 1,427 million, equivalent to Rs. 749 million, which was arranged by the contractor.^[2] However, technical and financial feasibility studies for a major deep-sea port at Gwadar were not initiated until 1993 under the Government of Pakistan's 8th Five Year Plan (1993-1997).^[3] Gifford & Partners & Technecon of Southampton, United Kingdom, in association with the Karachi-based Pakistani firm, Techno-Consult International,^[4] were engaged by the Government of Pakistan to carry out the feasibility study.^[2]

Construction

Gwadar Port was developed by the Government of Pakistan at a cost of USD $248 million. The construction contract was awarded to a Chinese firm and construction began on 22 March 2002 and Phase I (see below) of the Port was completed in December 2006 and inaugurated by the President of Pakistan General Pervez Musharraf on 20 March 2007.^[5]

Gwadar Port is being constructed in two phases:

Phase I (2002-2006): USD $248 million. Status: Completed in December 2006

• Berths: 3 Multipurpose Berths (capacity: bulk carriers of 30,000 deadweight tonnage (DWT)) and container vessels of 25,000 DWT)
• Length of Berths: 602m
• Approach Channel: 4.5 km long dredged to 12.5m depth
• Turning basin: 450m diameter
• Service Berth: One 100m Service Berth
• Related port infrastructure and handling equipment, pilot boats, tugs, survey vessels, etc.

Phase II (2007–present): USD $932 million. Status: Under Construction

• 4 Container Berths
• 1 Bulk Cargo Terminal (capacity: 100,000 DWT ships)
• 1 Grain Terminal
• 1 Ro-Ro Terminal
• 2 Oil Terminals (capacity: 200,000 DWT ships each)
• Approach Channel: To be dredged to 14.5m depth

Operations

Gwadar Port is owned by the government-owned Gwadar Port Authority^[6] and operated by state-run Chinese firm — China Overseas Port Holding Company (COPHC).^[7] Earlier it was operated by PSA International (2007-2012).

Following the completion of Phase I, the Government of Pakistan on 1 February 2007 signed a 40-year agreement with PSA International for the development and operation of the tax-free port and duty-free trade zone. PSA International was the highest bidder for the Gwadar port after DP World backed out of the bidding process.

In a highly competitive environment, in order to enable Gwadar to compete with its regional peers, the port fees was kept low by allowing a wide range of tax concessions to the PSA International to cut operational and business costs. These include complete exemption from corporate tax for 20 years, duty-free imports of materials and equipment for construction and operations of the port and a free economic zone; and zero rate of duty for shipping and bunker oil for 40 years”. In addition to these incentives, the provincial government of Baluchistan was also asked to exempt the PSA International from the levy of provincial and district taxes.

According to the agreement, the Gwadar Port Authority, the Government of Pakistan would get a fixed share i.e. 9% of the revenue from cargo and maritime services, and 15% of the revenue earned from the free-trade zone. PSA International is expected to invest US$550 million in the next five to ten years on creating the operational facilities. Salients of the agreement are as under:

1. Agreement signed between Gwadar Port Authority (GPA) and Concession Holding Company (CHC) a subsidiary of Port of Singapore Authority (PSA) on 05-02-2007.
2. 40 year lease agreement for operating and managing Gwadar Port.
3. PSA will invest US $550 million during the next 5 years for Port Development. The areas where the concession agreement is to be implemented are Terminal and Cargo operations, marine services and Free Zone development.
4. GPA will receive the following fixed share of revenues: 9% from Cargo operations and Marine services. 15% from Gwadar Free Zone business.
5. No duty would be imposed on the machinery and equipment to be imported for development work in this area and for port operations, for 40 years.
6. CHC (the port operator) will have complete exemption from corporate tax for 20 years.
7. Duty exemption for shipping lines and bunker oil for Gwadar port for 40 years.
8. CHC will have complete exemption from all local and provincial taxes for 20 years.
9. CHC will take over the marketing and operations of the current terminal area which provides 602 metres of berthing and will invest and expand berthing space as demand grows during the concession period up to a total maximum of 14 berths in an area of 4.2 km.
10. Marine services to be operated by CHC will consist of pilotage, tugging, mooring, vessel traffic control, anchorage management and bunkering.
11. GPA will be responsible for dredging of approach channel and harbour to maintain the required depth. All conservancy, security and firefighting services will be provided by GPA.
12. First Commercial Cargo Vessel "Pos Glory" berthed at Gwadar Port with 70,000 Metric Tonnes of Wheat on 15 March 2008.^[8] Handled by Gurab Lines Shipping Gwadar.^[9]

In September 2011, the Wall Street Journal reported that Gwadar is doing little business as a commercial port, and that Pakistan had asked China to take over the operation.^[10] A year later, China confirmed that it would be taking control of Gwadar, which they believe has the potential to serve as an oil pipeline hub for Chinese energy needs.^[11]

Pakistan on 18 Feb 2013 formally awarded a multi-billion dollars contract for construction and operation of Gwadar Port to China. Under the contract, the port which will remain the property of Pakistan but would be operated by the state-run Chinese firm — China Overseas Port Holding Company (COPHC).^[12]

The contract signing ceremony was held on 18 Feb, 2013 in Islamabad and was attended by President Asif Ali Zardari Chinese Ambassador Liu Jian, some federal ministers, members of parliament and senior government officials.^[12] The ceremony was actually held to mark the transfer of the concession agreement from the PSA (Port of Singapore Authority) to the COPHC.^[12]

On 11-October-2013, Pakistan Minister for Ports & Shipping, Kamran Michael announced that Gawadar port will be operational in 5 month.^[13]

Strategic importance

Gwadar is strategically located on the western end of Baluchistan coast on the opposite end of the Gulf of Oman which is an important route for oil tankers bound for Japan and western countries out of Gulf. Since outflow of goods from western China and Central Asia reaching Gwadar will pass through this overland trade route, Pakistan could earn millions of dollars a year in terms of port and cargo handling charges and also as freight charges for import cargoes and export goods. According to Arthur D. Little (Malaysia), the main consultant firm of the Gwadar development phases, low-cost land and labour are available, there is proximity to oil and gas resources and Gulf countries, there are some agricultural and mineral resources, while there could be tax-free status for investments and trade. The Gwadar Port is expected to generate billions of dollars in revenues and create at least two million jobs.

Gwadar has the potential to acquire the status of a center piece as a gate to Strait of Hormuz; it can compete with the United Arab Emirates ports by improving the exiting links to Caspian Region, and thus providing a better trade route to the land locked Caspian Region. Gwadar has the potential to be developed into a full-fledged regional hub and a trans-shipment port in the future. In the event that shipping routes through the Strait of Malacca were blocked, Gwadar could serve as an alternate route for trade between East Asia through the Indian Ocean and Western Asia. In military and strategic terms, Gwadar could potentially be used to varying degrees as a monitoring station and listening post for observing the sea-lanes from the Persian Gulf to a full-fledged foreign naval base by the PLA Navy. It is also located further from the reach of the Indian Navy when compared to Karachi which was attacked twice during the Indo-Pakistani War of 1971. Its strategic location is seen as lending itself to establishment as a potential 'pearl' in the String of Pearls network of Chinese-funded ports scattered around the Indian Ocean, especially since about 60% of Chinese energy requirements come from the Persian Gulf.

Indian concern

India has voiced "deep concern" over China's cooperation with Pakistan in the Gwadar Port^[14] and ignoring its own master plan to develop Iranian Port of Chabahar since 1990's to strengthen its presence in Indian Ocean.^[15] Indian Defence Minister A. K. Antony said that “In one sentence, it is a matter of concern for us, My answer is very straightforward and simple.”^[16][17] Pakistan rebuffs Indian concerns by maintaining that “it was a matter of bilateral interest for Pakistan and China, and no one needs to get furious over this subject.”^[18]

Numismatics

Gwadar Port was featured on the back of the Five Pakistani Rupee currency note, which is not in circulation now.

See also

• Karachi Port
• Port Qasim
• Keti Bandar
• List of seaports
• Merchant Navy
• Merchant Navy (Pakistan)

References

External links

• Gwadar Port Authority
• Government of Pakistan, Board of Investment, Gwadar
• Latest Updates Gwadar Pakistan
• Gwadar Deep Sea Port’s Emergence as Regional Trade and Transportation Hub: Prospects and Problems

Coordinates: 25°06′38″N 62°20′23″E / 25.1106°N 62.3396°E / 25.1106; 62.3396