PORT of Singapore Authority (PSA) International has taken control of the multi-billion dollar Gwadar port for a period of 40 years under the concession agreement signed on February 6 between the Gwadar Port Authority (GPA) and the Singaporean firm. The GPA will receive revenues from the PSA over a period of 40 years.

Under the concession agreement, the port operators have been exempted from all local and provincial taxes for 20 years. Balochistan government will be deprived of revenue as local and municipal taxes have also been waived. Critics say that Balochistan will lose revenue and would not be the primary beneficiary of this mega seaport project. When all taxes stood waived, what would Balochistan get from the project? On revenue generation side, the Gwadar project is out of its domain..

The province already lacks revenue-yielding and provincial tax levying authority. It has to excessively depend upon the resources received from federal government through NFC award. For generating only a paltry sum of Rs1.6 billion annually on its own,, the province has a fragile fiscal base with a heavy debt burden. It was anticipated that the port project would strengthen the fiscal base and then gradually widen the revenue base of the province. It did not happen.

It was also expected that operation of the port would help create a middle class. Currently, there is no infrastructure, no industry, no viable road network, no technical training centres and quality education institutions.. The province has no skilled and trained labour to utilise its natural resources.

The government, however, believes that free zone, which would be set up along the port, would contribute to harnessing of the province’s potential in natural resources and development of heavy and large-scale industries, petrochemicals and manufacturing. The port would provide large-scale employment, and value of land would further increase, and there would be other income generating activities for local people. But there is no infrastructure – water, electricity, roads and adequate settlements for living or development of industrial zone..

Ironically, tax-exemption decision has come from the poorest province that has been managing to run its affairs on loans and subventions. It has been in throes of financial crisis since1970 when it got the status of fourth province of Pakistan. Its pressing financial needs and obligations have currently thrown it in the vicious cycle of interest payments.

Officials, however, say that the Gwadar port would earn handsome revenue of $40 billion, which would be shared with Balochistan. According to Federal Minister Ports & Shipping the province would be given its due share, talks for which are under way between the federal and provincial governments. He said government efforts were specifically aimed at reducing poverty in the province, and announced that all employment of grade 1 to 16 would belong to locals, who would also be given a sizeable quota from within upper grade officers.

Despite the officials’ claim, the lack of skilled personnel in the province is likely to go against the interest of local people who may be deprived of having jobs in the Gwadar project for lack of skill and expertise.

In some ways, the local people would be primary beneficiary of the Gwadar project. The value of land, barren or cultivable, will skyrocket in Gwadar in particular and in Mekran in general after completion of the port and a score of projects related to this mega project. Their immovable properties and estates in coastal Balochistan would make them rich overnight. The provincial government has allotted land for the construction of warehouses in Gwadar and directed the authorities concerned to complete construction work along with all required facilities before making the port operational. The plots have been allotted in the industrial zone of the port city for construction of warehouses to facilitate importers and exporters.

Gwadar’s development as free port on lines of Dubai certainly promises massive investment (both foreign and domestic), greater generation of employment opportunities and more development projects in different sectors of provincial economy.

The project will revolutionise the communications sector in Balochistan. It will entail a multi-directional network of road communication in the province. The federal government has focused on strengthening infrastructure in the province, as 35 per cent budget of NHA is being spent on building a network of roads and highways, which would open up more income generation and employment opportunities in the province. An amount of Rs40 billion is being spent on the development of road networks across Balochistan aimed at connecting the port with the entire region. Gwadar would be connected with Afghanistan through Surab- Quetta and Chaman.

Balochistan is rich in mineral resources. With the development of its seaport, it will have enormous opportunities to exploit its mineral resources, which have so far have remained untapped. The seaport and its related planned regional highway projects will help the province become a “world-class mining centre.”

Whereas, the local people have attached great expectations from the development of the port, they also have serious reservations about the fast track development process in the port city. The ongoing process of economic development is viewed from different angles in Balochistan due to the close nexus of politics. The divergent perceptions about the development process have given rise to hope and hype, doubt and certainty and jubilation and frustration in Balochistan.

The long history of neglect and discrimination against Balochistan and the military operations undertaken in the past have turned it into a sensitive province. The development amid political instability may not be sustainable. A political solution to the crisis is inevitable. What is immediately needed is to assuage the Baloch grievances and resolve all issues through political reconciliation.

For many reasons, the inauguration of the port has been rescheduled. The main reason for delayed inauguration is the worsening law and order situation in Balochistan. The prevailing security environment in the province cannot attract foreign investment in Gwadar. There is a need to address the major concerns and genuine grievances of the local population.