The United Arab Emirates (UAE) has expressed interest in leasing control of the Karachi Port terminals in Pakistan for a period of 50 years through a negotiated deal. This transaction, if finalised, would potentially be the first foreign lease of a Pakistani port without a competitive bidding process.
Pakistan currently faces challenges such as record inflation, fiscal imbalances, and critically low reserves. The decision to hand over the Karachi port is seen as a means to generate emergency funds under a law enacted last year.
According to the Abu Dhabi Ports Company’s proposal, Pakistan will get an upfront payment of $50 million for fixed equipment and infrastructure. The proposed terms include an $18 royalty fee per cross-berth and a $3.21 fee per square metre, both subject to approval by the federal cabinet.
Based on current projected sea cargo traffic, the Karachi Port Trust is expected to receive around $23 million to $24 million annually under this agreement, according to a member of the cabinet committee involved in discussions regarding the draft Operations, Maintenance, Investment, and Development Agreement between the Karachi Port Trust (KPT) and Abu Dhabi Ports.
Finance Minister Ishaq Dar presided over a meeting of the Cabinet Committee on Inter-Governmental Commercial Transactions to discuss the arrangement. The Karachi Port Trust and the UAE government agreed to create a committee to negotiate a commercial deal during the meeting. The committee, which has been constituted by Pakistani authorities, would be in charge of finalising a draught agreement for operations, maintenance, investment, and development within a government-to-government framework with a chosen UAE agency.
The final details of the draft agreement were being fine-tuned at the time of reporting, with the expectation that it would be signed upon Pakistan’s formal endorsement of the offer.