What is turning Gwadar Port into a white elephant?

Failure to hand over a free zone area to the operator of Pakistan’s Gwadar Port, for construction of warehousing facility is turning the port of the future into a white elephant with both the government and PSA of Singapore losing millions, according to Business Recorder.

Under the terms of the concession agreement with PSA, three companies were assigned to undertake port operations, marine services and a free zone for warehousing and developing a duty-free industrial zone.

The Chief of Naval Staff agreed at the level of President Pervez Musharraf and with the Federal Cabinet that Pakistan Navy would hand over the land, held by the Navy, adjacent to Gwadar Port for establishing a free zone. It was only after the concurrence with the then naval chief that the agreement was signed between Gwadar Port Authority and PSA.

Despite the best efforts of Ministry of Ports and Shipping, Pakistan Navy has thus far failed to hand over the stipulated land to the port. As a result, no warehousing facility has thus far been developed by the Free Zone Company. As a consequence, no transhipment of containers activity can take place, as there is no back space for containers storage.

So far, Gwadar Port's usage is restricted to bulk cargo such as fertiliser and wheat. Containers need to be off-loaded, stored and then shipped off by both sea and land to various destinations.

With no railway connection and an incomplete Gwadar-Ratodero road, Karachi is the only point that connects Gwadar with the rest of the country. Of the 950 kilometres, only 400 kilometres road has been surfaced.

Karachi port has 18,000 hectares of land available for container movement. It is not a natural deep water and mega ships off-load cargo at Dubai Port.

PSA is using a port operated by Dubai Port Authority for its cargo destined to various ports, north of Dubai in the Persian Gulf.

PSA has thus far invested US$31.5 million in capital cost while the net revenue earned so far is $3 million – nine percent of this amount is passed on to Gwadar Port Authority (GPA). PSA's Gwadar operational account shows an expenditure of $6.95 million, which is more than double the revenue earned so far.

It is an open secret that the cost of doing business at Gwadar is more than double, as all the cargo handlers, from a labourer to a stevedoring company, charge double for their services at the far-located port.

(Source: Cargo News Asia)