UAE offers to acquire Karachi Port terminals
UAE The United Arab Emirates has leased control of the Karachi Port terminals for 50 years in a negotiated deal that could be the first foreign transaction without a competitive bidding process. According to the offer by Abu Dhabi Ports Company of the United Arab Emirates, Pakistan will receive $50 million in advance for fixed equipment and infrastructure. Under the offer, the UAE company will pay $18 per intersection royalty and $3.21 per square meter.
These conditions must be approved by the Federal Cabinet. The Karachi Port Trust will receive about 23-24 million dollars annually from the current expected sea freight traffic, says a member of the cabinet committee discussing the draft operation, maintenance, investment and development agreement between the Karachi Port Trust (KPT). and the ports of Abu Dhabi.
Chaired by Finance Minister Ishaq Dar, the Cabinet Committee on Intergovernmental Commercial Transactions (CCoIGCT) on Wednesday discussed the draft operation, maintenance, investment and development agreement between Karachi Port Trust (KPT) and Abu Dhabi Ports. Pakistani authorities had finalized the draft agreement by the time this story was filed. The agreement is expected to be signed today (Thursday) if Pakistan formally approves the offer.
The cabinet led by Dar hastened the transaction in accordance with the 2022 Act on Intergovernmental Commercial Transactions, which exempts the government from the tendering process. The government did not appoint an independent consultant for price research, which is required by law. Pakistan needs large foreign inflows, but these small transactions will not necessarily solve the problem.
6–9. According to the draft agreement, berth No. 1 will be transferred to a state-owned company of the United Arab Emirates “for a period of 50 years from the start, which may be extended according to the agreement.” Although the agreement mentions 50 years in one term, some members of the cabinet were of the opinion that Pakistan should be given two terms of 25 years each.
Any dispute arising out of or related to this Agreement is proposed to be settled by arbitration under the rules of the London Court of International Arbitration by one or more arbitrators appointed in accordance with the rules of the draft agreement. The venue and seat of the arbitration shall also be London, United Kingdom.
Published in EDP BLOGS on June 22, 2023.
