ISLAMABAD, July 31: The government has finalized arrangements to undertake the construction of second phase of Gwadar Port in May 2005 at a cost of $865 million (Rs51.9 billion).

Officials told Dawn here on Thursday that the ministry of communications had submitted a revised PC-1 to the Planning Commission for approval to start "Gwadar Deep Water Port Project" immediately after the completion of phase-1, which was likely to be completed by April 2005. The second phase will be completed by 2010.

The phase-2 will be executed by the private sector to accommodate 50,000 DWT container ships, 100,000 DWT dry bulk carriers and up to 200,000 DWT oil tanker, three container terminals (2010m quay length), one bulk cargo terminal (305m length), one grain handling terminal (305m length), one twin-pier oil terminal (688m length), breakwater (600m length), approach channel (16.0/20.0m deep), back up areas, craft & equipment and building, etc.

The phase-1 was currently being built by the public sector with the Chinese assistance at a revised cost of $298 million (Rs17.8 billion). It included three multipurpose berths (602m quay length), one service berth (100m length), 4.35 km navigable channel (11.6/12.5m deep), roads, plinths & transit shed, operational craft and equipment, including navigational aids and shore-based port buildings and allied facilities.

The officials said the completion of phase-2 will also help meet strategic needs and standby facility to the Port Qasim and the Karachi Port in case of emergencies. The construction of phase-2 will be completed on the basis of 'built operate own' and 'built operate transfer' basis.

However, if the private sector did not respond favourably, public sector financing will be required to develop phase-2 of the port.

The port will generate foreign exchange earnings as vessels registered under foreign flags are required to pay some portion of charges in foreign exchange through their local agents for cargoes. The amount of foreign exchange earned will not be reflected in the Gwadar Port account, but will contribute to national foreign exchange earnings. At the present rate of the KPT tariff, the foreign exchange percentage is estimated at 33 per cent of the charges payable to the port authorities.

The officials said that Gwadar had an edge over the Port Salalah of Oman and Iran's proposed upgradation of Port Chah Bahar. However, the Gwadar Port will have to compete with both the foreign ports. Gwadar is expected to serve as 'mother port' at the strategic location opposite to Straits of Hormuz and on the mouth of Persian Gulf, and provide port, warehousing, transshipment and industrial facilities for trade with over 20 countries, including Gulf states, central Asian republics (CARs), Iran, East Africa, Red-Sea countries and northwest parts of China and India.

With the completion of both the phases, a Special Industrial Development Zone (SIDZ) with an area of 4,000 hectare is proposed for setting up industries. The SIDZ is located on the north of Gwadar town at a distance of about 30 km from the port.

The Export Processing Zone (EPZ) has also been planned for assembling plant and other industries which are to be set up by prospective manufacturers for marketing in the region of Gulf and CARs.

An oil storage yard and refinery has also been proposed in the north of Gwadar town near the east bay for which an area of 1,000 hectares has been identified. Initially, a storage tank farm will also be constructed followed by a refinery in future.