Gwadar Port - Operations

Operations

Gwadar Port is owned by the government-owned Gwadar Port Authority and 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.

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. A year later, China confirmed that it would be taking control of Gwadar, which they believe has the potential to serve as a oil pipeline hub for Chinese energy needs.