KARACHI, Feb 5: The government appears to be indecisive about the status and role of Gwadar port, and shipping circles are not clear whether it will be a hub port accommodating mother ships for trans-shipment trade or merely a feeder port catering on to the needs of the hinterland.

The issue came up during a presentation given by a government official to a gathering of experts from shipping circles and ports. He downplayed the trans-shipment role of Gwadar. Instead, he assigned priority to industrial free zone, petrochemicals and storage. This is not an issue as simple as it looks, because there is a huge difference between the two categories of ports. Engineering, infrastructure and back-up requirements for the two differ widely, as do the port development costs. The two types of parts also demand different marketing skills.

Why did the government spend millions of dollars on a deep draft up to 14.5 metres when it did not want Gwadar, strategically located outside the Strait of Hormuz, to be a hub port? The question is going the rounds ever since an official of the Gwadar Port Authority indicated this during a seminar organised by the Pakistan International Freight Forwarders Association.

More intriguing is the role of relevant authorities which advertised for bids from port operators regarding the draft at 11.5 metres while the actual draft was planned to be 14.5 metres. This perhaps was meant to block certain bidders, alleged some people in port and shipping circles. Some experts are of the opinion that its strategic location and importance in the region demand lots of care and thorough investigation regarding linkages and interests of the entities to be allowed access to it.

They have reservations about endowing pilotage to a foreign firm because, according to them, this should be the responsibility of the Gwadar Port Authority owing to the port’s importance for national security. It should be the GPA’s responsibility to determine the category of vessels being brought into the port for berthing, whether warships or merchant ships.

Though officials are not ready to divulge details of contracts, it is generally perceived that a major part of fee charged by consultants is being used for marketing the port. Some experts maintain that marketing of the port should be the responsibility of operators and not of consultants.

Another area of uncertainty concerns the government’s reluctance to give priority to trans-shipment, meaning that no shipping line would commit itself to Gwadar port and only feeder vessels will call there. This will definitely provide relief to Dubai and Salalah ports which had reasons to feel threatened by the potential of Gwadar.

The 50-year lease period for Gwadar is another factor worrying the experts who say that nowhere in the world a long-term contract is of more than 25 years, mid-term for more than 10-15 years and a short-term contract for more than 5-7 years.

Even in cases where a port is given on ‘build, operate and transfer’ (BOT) basis and operators bring in all the required equipment, the maximum lease period never exceeds 20 to 25 years – in no case 50 years as has been the case with Gwadar port.

As for revenue factors, the experts believe that the revenue-sharing formula goes against the interest of the port. By moving away from the conventional method, the negotiators seem to have overlooked the fact that in case of the port stopping operations there would be no revenue. According to the experts, the GPA or the national exchequer will bear the cost of navigational channel maintenance, dredging, security and fire-fighting, all of which are of permanent nature.

The port, by all standards, is more suitable for trans-shipment cargo because of its location on the world sea route. It would cater to the needs of the Central Asian states through Iran as the first border post is a mere 70km away from the port.

Iran has the entire infrastructure along with rail and road links, while on the Pakistani side the National Highway Authority has already built a road from Gwadar to the Iranian border.

Above all, the country’s cargo which at present comes through Dubai and Salalah as transhipment cargo will then directly land at Gwadar to be carried by road to Karachi and other parts of the country. This will not only save freight and time but will also enable Pakistani exporters and importers to compete in the world market, the experts said.