- Web Desk
- 58 Minutes ago
Pakistan to hand over Karachi port terminals to UAE
- Web Desk
- Jun 20, 2023
ISLAMABAD: The Pakistani government has formed a negotiation committee to finalise a deal with the United Arab Emirates (UAE) for the transfer of its Karachi port terminals.
This development could potentially represent the first inter-governmental transaction under a law enacted last year to generate emergency funds.
According to a report in The Express Tribune, the Cabinet Committee on Inter-Governmental Commercial Transactions, chaired by Finance Minister Ishaq Dar, convened a meeting to address this matter.
During the meeting, the committee made the decision to establish a negotiation committee responsible for overseeing the commercial agreement between the Karachi Port Trust (KPT) and the UAE government.
According to the decision reached, the negotiation committee has been granted permission to draft an operation, maintenance, investment, and development agreement under the government-to-government arrangements with a nominated UAE agency for the handover of the Karachi port terminals.
Heading the negotiation committee, which aims to finalize a framework agreement, is Minister for Maritime Affairs Faisal Sabzwari. Additional committee members include representatives from the finance and foreign affairs departments, the special assistant to the Prime Minister, the Chairman of the Karachi Port Terminal (KPT), and the general managers of the KPT.
Pakistan intends to strike a deal with Abu Dhabi Ports (ADP), a subsidiary of the Abu Dhabi Ports Group, in order to transfer control of the terminals. The UAE government had expressed interest in acquiring the Karachi port terminals, which were under the administrative jurisdiction of the Pakistan International Containers Terminals (PICT) last year.
PICT, a subsidiary of ICTSI Mauritius Limited, ultimately belongs to International Container Terminal Services Incorporated, a company registered in the Philippines.
Abu Dhabi Ports, a part of the AD Ports Group, operates or possesses 10 ports and terminals in the UAE.
PICT had managed the Karachi terminals from June 2002 for a period of 21 years, which concluded last Saturday. However, the Concession Agreement grants PICT the first right of refusal under specific conditions.
Sources indicate that PICT may raise legal objections based on the terms of the concession agreement, although the company’s CEO was unavailable for comment.
To raise funds quickly, the coalition government passed the Intergovernmental Commercial Transactions Act last year, enabling the expedited sale of state assets. With its agreement with the International Monetary Fund (IMF) now expired, Pakistan is in urgent need of additional financial resources.
Initially, the UAE declined to provide loans to Pakistan, urging the country to divest stakes instead. However, the UAE later committed $1 billion, which remains undisbursed.
While the new law streamlines the process of selling assets, the government may need to engage “transaction advisors or consultants” to determine appropriate prices in accordance with Section 4(e) of the Commercial Act.
Sources suggest that caution must be exercised by the government during the finalization of the deal with the UAE, as it represents the first transaction of its kind, and the outgoing operator is presenting certain challenges.
Originally, the plan was for the Karachi Port Trust to manage these terminals. However, the cabinet committee was informed that the KPT lacks the capacity to do so, and the PICT should continue operations until June 30th.
The government anticipates finalizing the new agreement with the UAE by that deadline.
In a statement issued by the Ministry of Finance, it was revealed that the cabinet committee reviewed a summary from the Ministry of Maritime Affairs regarding the management of PICT’s operations. The committee was informed of the interest expressed by ADP, a government-owned entity of the UAE, in operating the container terminal.
Furthermore, the cabinet committee decided to establish another committee responsible for negotiating the draft framework agreement between the UAE and the Pakistani government. This agreement, falling under the purview of the Inter-Governmental Commercial