In order to reach an agreement with the United Arab Emirates (UAE) for the transfer of its Karachi port facilities, Pakistan established a negotiating committee on Monday. Under a provision passed last year to obtain emergency money, this activity may represent the first intergovernmental transaction.
The meeting of the Cabinet Committee on Inter-Governmental Commercial Transactions was presided over by Finance Minister Ishaq Dar. According to the resolution, the cabinet committee resolved to form a committee to negotiate a business deal between the Karachi Port Trust (KPT) and the government of the UAE.
In accordance with the decision, the negotiating committee has also been given permission to complete a draft operation, maintenance, investment, and development agreement under the government-to-government agreements with an agency designated by the UAE for the transfer of the Karachi port terminals.
The Minister for Maritime Affairs, Faisal Sabzwari, will serve as chair of the negotiating group formed to draft a framework agreement. The special assistant to Prime Minister Jehanzeb Khan, the additional secretaries of Finance and Foreign Affairs, the chairman of the Karachi Port Terminal (KPT), and the KPT general managers are among the members of the committee.
Pakistan hopes to come to an agreement with Abu Dhabi Ports (ADP), a division of the Abu Dhabi Ports Group, to transfer ownership of the terminals. Last year, the Pakistan International Containers Terminals (PICT), which has administrative responsibility over the Karachi port terminals, had shown interest in selling them to the UAE government.
The International Container Terminal Services Incorporated, a business with its corporate headquarters in the Philippines, is the ultimate parent corporation of the PICT, which is a division of ICTSI Mauritius Limited.
Ten ports and terminals in the UAE are owned or managed by Abu Dhabi Ports, a division of AD Ports Group.
The PICT ran the Karachi terminals for 21 years, starting in June 2002 and ending last Saturday. The PICT does, however, have the first right of refusal under the Concession Agreement, subject to certain restrictions.
According to sources, the PICT may face legal difficulties because of the concession arrangement. The CEO of the business was unavailable for comment.
The Intergovernmental Commercial Transactions Act, passed by the coalition government last year, aims to sell public assets quickly in order to earn money. After its agreement with the International Monetary Fund (IMF) expired, the nation is in desperate need of new funding.
At first, the UAE had resisted giving Pakistan credit and had pressured it to sell shares. It subsequently pledged $1 billion, which has not yet been paid up.
Despite the fast-track route provided by the new legislation, the government may still need to hire “transaction advisors or consultants” in order to determine prices in accordance with section 4(e) of the Commercial Act.
According to sources, the government must exercise special caution while finalizing a contract with the UAE since it would be the first transaction of its type and because the departing operator is causing some difficulties.
The KPT was originally supposed to manage these terminals, but the cabinet committee was notified that the KPT lacked the capability and that the PICT should be granted control of the terminals’ operations until June 30.
By then, the administration hopes to have the new agreement with the UAE finalized.
A summary of the Ministry of Maritime Affairs’ administration of PICT operations was reviewed by the cabinet committee, according to a handout from the Ministry of Finance. The cabinet committee was made aware that the UAE government-owned ADP has shown interest in running the Container Terminal.
In order to further improve ties between the two nations in the maritime sector, the cabinet committee also decided to form a new committee to negotiate the draft framework agreement between the governments of the UAE and Pakistan under the Inter-Governmental Commercial Transaction Act 2022. The Secretary of Maritime Affairs will serve as the chair of this committee.
According to sources, the new committee will meet this week, and it’s possible that in order to close the deal, the framework agreement will be completed as soon as possible.