Government expedites outsourcing of the KPT terminal

ISLAMABAD: On Thursday, the government appointed a five-member committee to negotiate commercial terms with the United Arab Emirates for outsourcing the bulk and general cargo terminal and associated infrastructure at Karachi Port’s east wharf to a UAE-based port operator through government-to-government negotiations without a competitive bidding process or price discovery.

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The decision was made at a Cabinet Committee on Intergovernmental Commercial Transactions meeting chaired by Finance Minister Ishaq Dar.

The price negotiation committee, led by Minister for Maritime Affairs Syed Faisal Subzwari and consisting of the chairman of the Karachi Port Trust (KPT) and three general managers, will immediately begin negotiations with Abu Dhabi Ports (ADP) on Friday (today) in an effort to sign an agreement and complete the transaction before the government’s term expires in approximately 10 days.

The meeting was informed that on July 24, the cabinet transactions committee endorsed the Framework Agreement Committee’s recommendations and the resulting G2G draught Framework Agreement for ratification by the federal cabinet. The cabinet subsequently ratified the decision, and the agreement was then electronically signed by representatives of the governments of Pakistan and the UAE.

In accordance with Section 4(2) of the Inter-Governmental Commercial Transactions Act of 2022, the following steps were to choose a price discovery mechanism, draught a commercial agreement, and form a committee to negotiate terms, conditions comparison mechanism for price discovery and submit its recommendations to the transactions committee for approval.

The KPT also suggested some benchmarks for valuation and price discovery, such as the terms of the agreement, the construction and reconstruction cost of the terminal, its life span, maximum cargo handling capacity, quay wall length, per-tonne royalty, land rent per metre, storage fees, upfront payment, and the amount and type of investment.

Consequently, the cabinet transactions committee authorised the price discovery mechanism proposed by the KPT and established a panel led by Mr. Subzwari.

Date of publication in Dawn: August 4, 2023

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