By Staff Reporter
KARACHI: Pakistan is set to lease four terminals of its Karachi Port to a state-owned company of the United Arab Emirates for 50 years in a deal that will bring $50 million upfront and about $24 million in annual fees.
Shariq Amin Farooqui, a spokesman of Karachi Port confirmed that an agreement between the Karachi Port Trust (KPT) and Abu Dhabi Ports, an affiliate of the Abu Dhabi Ports Group of the UAE, is expected to be signed later today, subject to the approval of the federal cabinet.
The deal will mark the first foreign transaction of Pakistan’s port assets without a competitive bidding process, under a law that allows inter-governmental commercial transactions.
Pakistan did not appoint any independent consultant for price discovery, which is required under the law, according to a member of the cabinet committee that discussed the draft agreement.
Under the agreement, Abu Dhabi Ports will pay $50 million within 45 working days for the fixed equipment and infrastructure of berths 6 to 9 of Karachi Port. It will also pay a royalty fee of $18 per cross-berth revenue move and a site fee of $3.21 per square meter per annum for containers.
The fees will be indexed by 5 percent every three years. The UAE company has also promised to invest $100 million in five years and pay Rs2 billion ($12.4 million) in litigation charges.
Abu Dhabi Ports will have the right to revise its container handling charges from time to time but will need KPT’s permission if the increase is more than 15 percent.
Any dispute arising out of or in connection with the agreement will be settled by arbitration in London, according to the draft agreement.
The deal will give Abu Dhabi Ports the rights to operate, maintain and invest in the terminals at berth No. 6 to 9 East Wharf at Karachi Port Trust (KPT) for 35 years, according to a draft of the agreement seen by Reuters.
The UAE company will also have the option to list up to 49 percent of its shares on a Pakistani stock exchange, subject to regulatory approvals.
Pakistan will retain the right to take over the terminals in case of a national emergency or security threat and will not put the UAE firm at a disadvantage compared to other terminal operators at Karachi port, the draft said.
Karachi Port is Pakistan’s largest and busiest seaport, handling about 60 percent of the nation’s cargo. It has an annual capacity of 5 million twenty-foot equivalent units (TEUs) of containers.
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