DUBAI – Pakistan has signed a 50-year concession agreement with Pakistan for the terminal operation of Karachi Gateway Terminals Limited (KGTL), better known as Karachi Port. United Arab Emirates’ Abu Dhabi (AD) Ports Group said on Thursday that the debt-ridden country is struggling to raise much-needed funds and repay the International Monetary Fund (IMF).
According to an announcement by AD Ports Group on Thursday, the agreement was entered into through a joint venture (JV) between AD Ports Group, its major shareholder, and UAE-based Kaheel Terminals, a company created to manage logistics and operations.The two members of the joint venture signed an agreement Partnering with the Karachi Port Trust (KPT), a Pakistani federal government agency that oversees the operations of the Karachi Port.
Saeed Saidan Raza Zaidi, chairman of the Karachi Port Trust, said the landmark agreement brings “tremendous potential” for the development of the Karachi port.
“By joining forces, we are paving the way for a thriving container terminal that will increase efficiency, attract investment and stimulate the economy,” he said in a written press statement.
AD Ports Group did not disclose the dollar value of their offer to KPT. The group announced that the joint venture will invest heavily in infrastructure development over the next 10 years, most of which are scheduled to be completed by 2026.
Sheikh Thani bin Ahmed Al Zayoudi, UAE Minister of State for Foreign Trade, attended the signing of the agreement and praised the benefits it will bring to the UAE.
“Strengthening container traffic within Pakistan will secure vital supply chains and boost our (UAE) non-oil trade to break $7 billion by 2022,” Sheikh Thani tweeted on Thursday.
According to reports, the terminal generates approximately US$55 million in annual revenue, with a net profit of US$30 million after deducting taxes, interest, etc. ad port group.
The Karachi Port agreement follows the signing of a Memorandum of Understanding in May to drive growth and strengthen bilateral ties between the UAE and Pakistan. AD Ports Group also signed three MoUs with the Pakistani government to improve transport infrastructure and reduce logistics costs.
Thursday’s deal is one of many lifelines the UAE has offered Pakistan to help the troubled country overcome its financial woes.
In January, UAE President Sheikh Mohamed bin Zayed met Pakistani Prime Minister Rahim Shebaz Sharif for a two-day visit, just two weeks after Sharif visits Abu Dhabi to seek UAE help Islamabad is going through an economic and energy crisis.UAE agrees $1 billion loan to Pakistan During his visit to Abu Dhabi, Sharif postponed a previous $2 billion loan.
In the same month, a nationwide power outage in Pakistan left nearly 220 million people without power.
Pakistan’s economy is now reported to be close to collapse, with the currency plummeting, inflation rising, economic losses from catastrophic floods estimated at more than $30 billion according to the World Bank, energy import reserves depleted, and periodic blackouts across the country.
Foreign exchange reserves fell to a key level of $4.3 billion in January, enough to cover three weeks of imports, according to the country’s central bank.
this IMF has been working with Pakistan Create a bailout package to overcome the financial crisis and avoid default. Pakistan signed a $6 billion deal with the International Monetary Fund in 2019, with plans for an additional $1 billion a year later. As of May, however, the IMF was refusing to release the first $1.1 billion disbursement until it received confirmation from Pakistan’s allies, mainly the UAE, Saudi Arabia and China, that they could provide financial support.
Faisal Niaz Tirmizi, Pakistan’s ambassador to the UAE, told UAE state media that the UAE is Pakistan’s largest trading partner and that the bilateral trade volume between the two countries this year is expected to be higher than that in 2021-2022. doubled to $10.6 billion.