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Tuesday, July 23, 2024

Cabinet approves framework agreement with UAE


Islamabad/Karachi: The Federal Cabinet has approved a framework agreement between the governments of the United Arab Emirates (UAE) and Pakistan, under which control of four berths will be handed over to Abu Dhabi Ports and Terminals Operator (ADP) for 25 years , for another 25 years.

The terminal operator will invest US$102 million over the next five years, while KTP’s US$50 million liability will be covered by an advance payment of US$50 million.

Prime Minister vows all possible support for UAE investors

According to sources, on June 21, 2023, the Ministry of Maritime Affairs notified the Cabinet Intergovernmental Committee on Commercial Transactions (CCIGCT) forum, based on its recommendations, the Federal Cabinet approved the framework agreement on June 21, 2023 between the UAE Government and the Government of Pakistan. The framework agreement, which was received electronically through the Ministry of Foreign Affairs, was signed during the period and by the Minister of Energy and Infrastructure of the UAE Government.

The ministry further added that the Cabinet Committee on Intergovernmental Commercial Transactions (CCIGCT) at its meeting on June 19, 2023 established a negotiating committee to negotiate the commercial agreement between KPT and AD Ports, which is composed as follows: (i ) Minister for Maritime Affairs (Chairman); (ii) SAPM on Government Efficiency; (iii) Additional Secretary (ME), Ministry of Foreign Affairs; (iv) Additional Secretary (CF), Ministry of Finance; (v) Chairman, KPT; (vi) Finance, KPT General Manager; (vii) General Manager, Legal, KPT; (viii) GM P&D, KPT.

CCIGTR noted that the negotiating committee met on June 19, 20 and 21, 2023 under the chairmanship of the Minister of Maritime Affairs.

The negotiating committee reviewed and discussed the draft terms and conditions of the transaction and negotiated the operation, maintenance, investment and development agreements. The ministry said the negotiating committee employed a comprehensive price discovery “terms and conditions comparison mechanism”.

Two separate analyzes were performed for internal and external price discovery. Variables used for comparison included contract duration, royalties, ground rent, host port investment, Karachi Dock Labor Board fees (KDLB) and investment provided by the port operator, it added.

The Forum was informed that, for internal price discovery, the terms and conditions of PICT (former operator of KPT) were compared with the rates offered by AD Ports and found to be favorable. It is said that for external price discovery, the terms and conditions of three similar terminals were compared with those offered by AD Ports.

The first external terminal, KICT, is located at the same port (KPT) as the terminal considered in the proposed transaction. The second outer terminal QICT1 is located in the nearby port (Port Qassim) and the third outer terminal QICT2 is also located in Port Qassim. The rates and terms/conditions offered by AD Ports prevail over the terms and conditions of all external terminals.

The term of the contract with AD Ports is 25 years, renewable for a further 25 years on mutually agreed terms and conditions. KPT’s liabilities will be covered by an upfront payment of US$50 million. AD Ports will invest $102 million over the next five years.

The ministry/KPT said that PICT pays US$16.01 million in royalties every 3 years, indexed at 5%. In comparison, AD Ports offered $18 million effective from the date of the commercial agreement, a higher price than the previous operator had offered.

The Forum was informed that the price negotiating committee stated that the value of the container terminal assets to be handed over to AD Ports and the liabilities assessed for KDLB was approximately US$40 million, and that AD Ports had provided US$50 million, of which it would be paid upfront to KPT.

It was further informed that the Board of Directors of KPT, meeting BR No. 468, considered the Letter of Intent (LoI), Agreement and Business Proposal for the acquisition of the rights to operate, maintain and develop containers at Berths 6 to 9 of KPT East Terminal and approved by the Federal Government be approved afterwards.

While endorsing the Negotiating Committee’s recommendation, the Ministry seeks the approval of the Cabinet Committee on Intergovernmental Business Transactions to recommend further approval to the Federal Cabinet.

After detailed discussions, the Cabinet Committee on Inter-Governmental Commercial Transactions submitted by the Ministry of Maritime Affairs on the Recommendation of the Negotiation Committee for the Commercial Agreement between KPT and AD Ports UAE approved the agreement.

Karachi Gateway Terminal inaugurated: Karachi Gateway Terminals Limited (KGTL), a joint venture between UAE’s Abu Dhabi Ports Group and Karachi Port Trust (KPT), was inaugurated here on Thursday to improve infrastructure and facilities at one of Pakistan’s major ports .

Sindh Governor Kamran Khan Tessori inaugurated the terminal and unveiled the plaque at a ceremony held at KPT.

ADPG CEO Captain Juma Shamsi and KPT Chairman Syed Sayedain Raza in the presence of Federal Maritime Affairs Minister Faisal Sabzwari, Sindh Chief Minister Syed Murad Ali Shah, United Arab Emirates Energy and Infrastructure Minister Suhail Mohamed Al Mazrouei, Investment and Foreign Trade Minister Thani Dr. Bin Ahmed Al Zeyoudi, UAE Ambassador Sheikh Ahmed Darmouk Al Maktoum, Consul General in Karachi Bahit Atik Remeti, Diplomatic Officials, elected representatives and senior officials also attended the event.

Addressing the ceremony, Sindh Governor Kamran Khan Tessori said Karachi Gateway Terminal Ltd will help modernize the terminal by introducing state-of-the-art facilities. He lauded the UAE’s investment in key port operations that will also help stabilize Pakistan’s economy.

Addressing the signing ceremony, Union Maritime Minister Faisal Sabzwari assured the employees of job security and said that no employee will be allowed to lose their jobs and all 634 top to bottom employees will be employed in Abu Dhabi Beaport Group is responsible for managing, operating and developing the project. KGTL.

He said that when Pakistan needs help, especially in the event of a disaster in the country, the UAE always stands with Pakistan, and the Pakistan-UAE joint venture is another sign of friendly relations between brotherly countries, which will change people’s perception of Pakistan. Negative perception of the economy.

Shamsi said that the KGTL terminal will become an important port for local and even regional and global commerce, reduce costs, improve efficiency, and have a major impact on the Pakistani economy and bilateral relations between Pakistan and the United Arab Emirates.

He said that the UAE is currently Pakistan’s largest trading partner in the Middle East, and the bilateral trade volume will reach US$9.3 billion in 2022. In addition to opening up new trade and development channels, the terminal will further increase this scale.

He said Abu Dhabi Ports Group will invest in infrastructure, rail and digital solutions to make operations easier and thereby reduce operating costs.

KPT chairman Syed Seyedain Raza Zaidi hoped that the project’s multi-million dollar upfront investment and expansion of port terminal infrastructure will help boost revenue and gradually transform Karachi into a regional trade hub.

Copyright Commercial Recorder, 2023


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