ISLAMABAD, Oct 25: The second phase of Gwadar deep seaport construction is expected to be started before the year-end by the Singapore Port Authority (SPA) for which it is lining up new investment in the country.

“The government has taken a decision to allow the SPA to undertake the mighty second phase of the Gwadar Port preferably within this year,” Director General of Gwadar Development Authority (GDA) Ahmad Buksh Lehri told Dawn on Thursday.

He said that Phase-1 had cost $298 million and the SPA, the operator of the port which had been given a lease for a long period of time to run it efficiently, was currently working out its investment plan for the second phase.

The government, Mr Lehri said, had given to the SPA 16 acres of land which included a tax-free zone.

Answering a question, the GDA chief said that the SPA had successfully overcome initial problems and that the port was likely to be fully operational in December with three berths handling the ships. However, to handle big ships more berths would be required, he added.

He said that the SPA was being provided all the necessary equipment including cranes and buildings.

“New equipment, provided by the government, is also being installed by the SPA,” Mr Lehri said.

In reply to a question, he said that there was no law and order problem in Gwadar. However, he said that the Coastal Highway, which was damaged by the recent floods, should be repaired on a priority basis.

More warehouses and other equipment were also needed to enhance country’s foreign trade, he added.

Earlier, the Singapore-based operators were told to expedite the work especially after having received a 40-year tax holiday despite the concern expressed by other investors and the World Bank and Asian Development Bank (ADB).

The GDA director general said since the government had already been extending tax exemptions and tax holidays in various industrial and duty-free economic zones, the SPA was also offered a tax holiday.

He said export processing zones were also enjoying certain tax holidays and exemptions and there was nothing exceptional in the case of SPA, which was investing $550 million.

The Gwadar port located in Balochistan is being considered a future trading hub in the region because of being so close to the Gulf region.

Initially, it is expected to face competition from the Iranian port of Salalah, but after the completion of Phase-2 by 2010 at a cost of $840 million, it is likely to become one of the busiest ports in the region. It will provide warehousing, transhipment and industrial facilities for trade with over 20 countries including the Gulf countries, Iran, Central Asian states, India, China and East Africa.

The government has also planned some other concessions for the proposed Export Processing Zone (EPZ) to be located near the Gwadar port for local and foreign investors. There will be customs, sales tax and excise duty exemptions in the EPZ to promote substantial investment in Gwadar.

A number of foreign investors have shown interest in establishing mega refineries, building storage capacity and undertaking other businesses in Gwadar to help expedite the process of industrialisation in Balochistan.

Land for the new international airport has been acquired after giving due payments to the landowners. The government is said to have released about Rs4 billion for acquiring land for the proposed oil city. Prices of land in Gwadar have gone up.

With the completion of Gwadar port, a special industrial development zone, about 30km off the port, will also be set up on 4,000 hectares.

The federal government has also provided Rs700 million to Balochistan to meet water demand of the Gwadar Industrial Estate (GIE) for 15 years by installing a foreign-assembled desalination plant.

The water demand will be met partly by recycling the waste water (irrigation and industrial cooling) and partly by the desalination plant as there is no water resource available in the area.

The Balochistan government has provided 3,000 acres of land, of which 20 acres will be made available for free through the GIE to set up water desalination plant, intake work, storage tanks and other facilities.

There will be approximately 2,000 industrial units in the GIE creating 30,000 jobs. Most of the production will be export-oriented.