Pakistan Refuses UAE’s Offer to Develop Karachi Port Terminals
Pakistan has declined United Arab Emirates’ (UAE) offer to develop two terminals of the Karachi port in exchange for $1.2 billion over 25 years. The Finance Ministry of Pakistan stated that the amount offered by UAE is insufficient and its value will decrease over time. The Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT) has reviewed the offer and directed the Ministry of Maritime Affairs to renegotiate with UAE authorities to increase the price.
Pakistan Will Hold Talks with UAE Again
The net present value of UAE’s offer is around $1.2 billion, which falls short of the government’s expectations. The negotiating committee will engage in further discussions with UAE authorities to improve the conditions proposed. The agreement for the development of the terminals is between Karachi Port Trust (KPT) and Abu Dhabi Ports. Abu Dhabi Ports aims to take over the bulk and general cargo terminal on the east bank of Karachi port and develop it.
UAE Was Offering Less Money to Pakistan
Initially, UAE offered just over $800 million for the deal, but later increased it to $1.2 billion. This payment will be made over a period of 25 years, with the current value amounting to $50 million per year. Pakistani officials mentioned that if the government desired, it could have opted for a transparent bidding process, resulting in a higher sum. However, negotiations with UAE were preferred.
Pakistan’s Karachi Port Trust, which earns approximately Rs 3.1 billion in revenue annually from these terminals, is running at a loss of around Rs 57.5 crore after paying interest and operating costs. As a result, the government has decided to give control of the terminals to UAE. This is the second major port terminal deal between Pakistan and UAE in less than two months.
The decision to refuse UAE’s offer comes at a time when Pakistan is facing significant economic challenges. The Shehbaz Sharif government aims to expedite the agreement before dissolving the National Assembly. The Karachi Port Trust had previously approved a framework agreement with UAE for two additional terminals and the development of a new multipurpose cargo terminal.
News Summary:
- Pakistan refuses UAE’s offer to develop two terminals of Karachi port in exchange for $1.2 billion over 25 years.
- Pakistan considers the offered amount insufficient and its value will decrease over time.
- The Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT) directs renegotiation with UAE authorities to increase the price.
- UAE initially offered $800 million, which was later increased to $1.2 billion.
- The Karachi Port Trust is running at a loss and will hand over control of the terminals to UAE.
- This is the second major port terminal deal between Pakistan and UAE in less than two months.
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