China – Takes Over Operation of Pakistan’s Gwadar Port

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(London Post – Media Reports)   Wednesday marks a historic day in China-Pakistan relations as Pakistani authorities formally hands over 2,281 acres of Gwadar Port’s free trade zone to the Chinese Oversees Ports Holding Company Ltd (COPHCL) on a 43-year lease in a landmark ceremony.

After the formal handover of the free trade zone, all business affairs of the port will be carried out by Chinese authorities. Analysts believe the event is another proof of the brotherly friendship between the two countries that has been tested by times of difficulty and forged by mutual trust.

Media reports say that COPHCL will execute the port’s affairs through its three main companies including Gwadar International Terminal (GIT), Gwadar Marine Services Ltd and Gwadar Freezone Company Ltd.

GIT will also be responsible for the port’s operations by handling business related matters. Gwadar Marine Service Ltd, will look at the port’s operation by providing allied services and Gwadar Freezone Company will look after affairs of the free zone area by developing and providing allied facilities to the investment companies in the free zone area.

The Pakistani government has already declared Gwadar port a free trade zone for the next 23 years. The scheme is part of the China-Pakistan Economic Corridor (CPEC), an ambitious $46 billion investment plan linking western China to the Arabian Sea with infrastructure, energy and transport projects.

Gwadar port, located 540 kilometres (335 miles) southwest of Karachi, was built in 2007 with technical help from Beijing as well as Chinese financial assistance of some $248 million.

The deal, signed by the government of Baluchistan, Pakistan’s biggest but poorest and least-populated province, will also allow China to build an export zone and an international airport, local provincial officials have revealed.

As part of the wider plans, work on the Gwadar International Airport would start in the next couple of months. China is reportedly building a road network to link the zone to the airport and a sea port, and the provincial government will provide the land according to requirements.

Reports say that acquiring the land from private owners to build the economic zone took several years and cost the Baluch government around $62 million.

But analysts believe the road ahead is by no means smooth. Baluchistan province has been roiled since 2004 by a separatist insurgency aimed at seeking greater control over the province’s rich oil, gas and mineral resources. So Pakistan is raising a special security force of between 10,000 and 25,000 men to protect the port.

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. So Gwadar has the potential to be developed into a full-fledged regional hub and a trans-shipment port in the future.

Experts say that 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. At the same time, China would be able to bypass the Strait of Malacca, a dangerous, piracy-rife maritime route, through which 80 percent of China’s imported oil is transported.

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