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Thursday, April 18, 2024

Pakistan takes steps to reach deal with UAE on KPT


Pakistan has formed a negotiating committee to finalize an agreement with the United Arab Emirates (UAE) on the transfer of its Karachi port terminal. The development could be the first government-to-government deal under a recently enacted law aimed at raising emergency funds.

The meeting of the Cabinet Committee on Inter-Governmental Commercial Transactions led by Finance Minister Ishaq Dar decided to form a committee to negotiate a commercial agreement between the Karachi Port Trust (KPT) and the UAE government.

The negotiating committee has been mandated to draft agreements for the operation, maintenance, investment and development of Karachi Port Terminals under intergovernmental arrangements with designated UAE institutions.

Maritime Affairs Minister Faisal Sabzwari will lead the negotiating committee tasked with finalizing the framework agreement. Other members include officials from the Ministry of Finance, Foreign Affairs, Special Assistant to the Prime Minister, Chairman of Karachi Port Terminal and General Manager of KPT.

Pakistan intends to hand over the port terminal to Abu Dhabi Ports (ADP), a subsidiary of Abu Dhabi Ports Group. Last year, the UAE government expressed interest in acquiring the Karachi port terminal previously managed by Pakistan International Container Terminals (PICT).

PICT, a subsidiary of ICTSI Mauritius Limited, ultimately owned by International Container Terminal Services Philippines (ICTSI), operated the Karachi Terminal from June 2002 until the most recent 21-year concession expired.

PICT could face legal challenges based on the franchise agreement, but the company’s chief executive was not available for comment.

To raise funds, the coalition government last year introduced the Intergovernmental Business Transactions Act, which allows for accelerated sales of state assets. Pakistan is in desperate need of additional funds as its agreement with the International Monetary Fund (IMF) expires.

Initially, the UAE refused to provide the loan, instead urging Pakistan to sell the stake. However, they later pledged $1 billion, which has yet to be paid.

While the new law facilitates the quick sale of assets, the government may need to hire a “transaction advisor or advisor” to determine the price, as described in Section 4(e) of the Commerce Act.

Given that it would be the first deal of its kind, and given the challenges posed by the outgoing operator, sources advised the government to proceed with caution in finalizing the deal with the UAE.

Initially, it was planned that the terminals would be managed by the Karachi Port Trust, but it was determined that they lack capacity and will therefore continue to operate under the PICT until June 30.

The government aims to reach a new deal with the UAE before the deadline.

According to a statement from the finance ministry, a cabinet committee reviewed the maritime ministry’s summary on the management of PICT operations. Notably, ADP, which is owned by the UAE government, has expressed interest in operating the container terminal.

The Cabinet committee also decided to form another committee headed by the Maritime Minister to negotiate a draft framework agreement between the UAE and Pakistani governments. The agreement aims to strengthen bilateral relations in the maritime sector under the Intergovernmental Commercial Transactions Act 2022.

The new committee will meet within this week and it is possible that a framework agreement could be hammered out quickly to complete the deal, the sources said.

To read the full text, please visit www.tribune.com.pk


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