By Azhar Ahmad
After waiting for more than five years of despair and despondency, a breeze of hope and anticipation is finally blowing from the coast of Makran. It is learnt that the negotiations to the current port operator/ Concession Holder, the Port of Singapore Authority Gwadar Pte Ltd, have finally agreed to transfer their shares to a Chinese company. This is good news for the entire country, particularly the people of Balochistan, and it is hoped that the government will now spare this project of its usual expediencies.
Gwadar is a picturesque port city on Pakistan’s western seaboard, Makran coast. The city is part of the now turbulent Baluchistan province and is located about 500 km west of Karachi, the main port of Pakistan. Despite its strategic location and historical importance, Gwadar has remained generally obscured from the limelight until recently. It became an international hot subject when Pakistan decided to pursue its longtime desire of constructing an international port at Gwadar. And the fact that China decided to help Pakistan build the port galvanized the politics of the region. All regional and extra-regional players have since shown great interest in the port (and in fact, the entire province) for a mix of reasons- most paramount among those being economic and security. Pundits have elucidated on the port’s potential as a gateway of trade and prosperity, not only for Pakistan but for the connecting regions as well. It is prophesized to open up vistas of opportunity for the Central Asian Republics, China and even Russia, connecting these regions to the rest of the world and allowing easy flow of energy resources of the region. There are, also a few who feel threatened from the envisaged competition that the port may generate, and there are still others who are worried for security reasons, particularly the access of China. Although, both China and Pakistan, have clarified that the port is being built for entirely economic reasons.
Despite its strategic location, connecting three important regions of the world, Makran coast has been one of the most neglected and underdeveloped of the areas. Historians have traced the history of Makran to the time of Prophet Dawood (AS), when people entombed themselves in the small cairns (known locally as dambi) to avoid famine. The attempts of Cyrus and Semiramis to march through the country, attempts later emulated by Alexander, have also been recorded by ancient authors. Persia’s famous poet Firdousi has mentioned this place, in Shahnama, as the battleground between the Iranian and Turanian Kings. Makran, according to recorded history, formed part of the possessions of Iran during the reign of King Kaus, who is said to have travelled across Makran from where he took a boat to other parts of his dominion. Makran (as well as Gwadar) has also been mentioned by great travelers such as Ibn-e-batuta, Marco Polo, Turkish admiral Sidi Ali and also finds a mention in the folklore ‘sassi pannu’. The details of these expeditions, however, indicate the inhospitable nature of the weather and the terrain, which discouraged all invaders to find permanent residence in this area. This remained the major reason for non-development of the Makran coast in the past.
It appears from different historic accounts that Gwadar was the chief port on the entire Makran coast which handled all the trade of this area. Being the only functional port on the Makran seaboard, and due to its prime location, Gwadar attracted attention of the British in the middle of the nineteenth century. It became a fortnightly port of call for the British steamers bringing mail and goods for the adjoining areas. The first Indo-European telegraph was laid along the Makran coast and in 1863 Gwadar was linked with Karachi.
In 1783 Mir Nasir, Khan of Kalat handed over Gwadar city to Sultan Said of Oman as a gesture of goodwill, for the latter’s maintenance during his exile. However, after the Sultan regained throne of Oman, he refused to hand over control of Gwadar back to the Khans of Kalat. Thus, Gwadar remained under the Omani suzerainty till 1958, when the government of Pakistan, appreciating its strategic importance and contiguity to Pakistan, purchased it from Oman for $ 10 million.
Gwadar was identified as a probable port location way back in 1964. However, the development of a major deepwater seaport was finally approved in 1994; and it took another eight years before the project was finally launched in March 2002. Phase I of the Gwadar port was completed by the Chinese help in 2005/06. It cost $ 248m, out of which $ 50m was contributed by the government of Pakistan and the rest by the Chinese government. After completion of first phase, the port can handle bulk carriers of up to 50,000 DWT (Dead Weight Tonnage) and containers of up to 25,000 DWT. Phase II envisaged further expansion of the port with more berths, enhancing the capacity of the port to handle 100,000 DWT bulk carriers, 200,000 DWT oil tankers, and Ro-Ro ships. At that time the development work of Phase II was estimated to cost $ 849m, a large part of which was again offered by a Chinese consortium, and the project was to be completed by 2010. However, the phase could not be started to this date.
Due to some government expedience, it was decided to call international bids for port operations in 2006. The Chinese opted to walk out of the bidding process, and the contract was finally awarded to PSA Gwadar Pte Ltd, a subsidiary of the Port of Singapore Authority, with shares of NLC and AKD group. An extremely controversial agreement was signed on 05 February 2007, to lend the operations and management of Gwadar port, for 40 years, to PSA Gwadar Pte Ltd. The contract was awarded in such haste, that many a stake holders, including the navy (Chief of he Naval Staff being the Advisor to the government on Maritime Affairs), were not consulted. The agreement gave unprecedented concessions and autonomy to the company and immediately came under severe criticism by concerned quarters. In 2009, the task force formed by the President on ‘Maritime Industry’, showed grave concern and recommended cancellation of the agreement. In Sep 2010, the then Chief of the Naval Staff, Admiral Noman Bashir publicly called for the termination of the agreement. In December 2010, a group of concerned citizens submitted a petition in the Supreme Court, challenging the legality of the agreement and seeking its abrogation. The case is still pending before the honourable court.
It is worth mentioning that at the time of contract it was claimed that the company will invest $ 500m in development and expansion of the port within the first five years. However, after five years the company has failed to invest even 5% of the said amount. Moreover, the company’s main responsibility was to provide business to the port. Unfortunately, it has also failed to attract any ships to the port. Instead of taking action against the company for failure to fulfill its commitments, the government came to its rescue and diverted a number of Karachi bound ships to Gwadar. This diversion of goods not only caused undue burden on the national exchequer but also provided business to the company without investing efforts or money. The government has reportedly paid an additional Rs.2500 per ton as a cost of diverting the cargo from Karachi/ Port Qasim,
It is now learnt that the PSA Gwadar Pte Ltd has finally agreed to sell its share-holding to the Chinese and the new agreement is likely to be signed soon. This is very encouraging news. We have already wasted considerable time since completion of the first phase of the port and the second phase has been unduly delayed. Experts believe that Chinese are the only people with the right incentive and experience of working under the prevailing conditions in Gwadar/ Balochistan. However, the government must be very careful in drafting the new agreement and the unfavourable clauses must be addressed before handing over the operations of the port to the new team.
Gwadar lies at the cross-roads of three very important regions namely the oil-rich Middle-East, energy-hungry South Asia and resource-rich Central Asia. It has the potential to become transshipment hub-port not only for China, Afghanistan, Central Asia and Russia but will also be able to serve all the littorals of the North Arabian Sea including India. It is located very close to the mouth of the Persian Gulf and provides nearest access to the Central Asian republics. The southern tip of Xinjiang province is 4500km from Chinese ports located on the eastern coast but only 2500km from Gwadar, not to mention a sea travel of 10,000km from the Persian Gulf to the Chinese east coast. A common perception that it will somehow threaten the business of Dubai is also incorrect. Growing global need of natural resources and increasing trade between the Asian markets will require additional ports to share the burden. Only a small percentage of the huge Chinese trade, if diverted through Gwadar can change the destiny of this port city. However, the realization of this dream means not only the development of the port but also the requisite infrastructure ashore. Development of hinterland infrastructure is the key to the success of Gwadar and its ability to compete with rival ports such as Chahbahar, Salalah or Bandar Abbas. It is hoped that Gwadar will soon be on-track again, and this time the government will ensure its success by taking all the stake-holders onboard, particularly the Baluchis.
The writer is a retired naval officer doing his PhD dissertation on Gwadar.