Port of Prosperity
Pakistan is today looking at a mega development project that could prove to be a game-changer in the region.
The Port of Gwadar located on the southern coast in Balochistan (Pakistan’s largest province) has immense geo-strategic significance since it facilitates the three most commercially significant regions of the world – the Middle East, Central Asia and South Asia. The Balochi word Gwadar means ‘Doors of Wind’, It started as a small fishing village but today it has developed into a deepwater port that will have the potential to become a strategic trading epicenter very soon. Gwadar is located at the face of the Iranian Plateau and is a doorway to the oil rich Persian Gulf. It also gives easy access to the natural resources of the Central Asian States. Through Gwadar, Pakistan can take advantage of its geostrategic location and further develop its status in the international community.
What makes Gwadar so special? It has deep with a warm water coast overlooking three different regions. When fully operational, it can be used as a significant trade corridor. This is why the development of Gwadar port has received the attention of investors not only in Pakistan but also from all over the world, particularly Central Asia, Afghanistan, China, Japan and Singapore. The challenge is to make viable strategies, programs and policies and efficient decisions to convert Gwadar into a comprehensive and competitive project.
Earlier, the US played a key role during Pervez Musharraf’s government in handing over the development of Gwadar Port to the Port Authority of Singapore (PAS), denying China
a chance to have access to a warm water, deep-sea port on the Arabian Sea just opposite the Gulf of Oman, an important route for oil tankers going from the Persian Gulf to Japan and western countries. The port can serve as a gateway to the Strait of Hormuz and can compete with UAE ports by improving existing links to the Caspian region and providing a better trade route to the landlocked region.
Sadly, however, the port operations by PAS did not produce the expected results since the latter failed to make the port properly operational, causing a loss of billions of dollars in port and cargo handling as well as freight on the import and export of goods. Later, the control of the port was given to Chinese authorities and an agreement was signed with the China Overseas Port Holding Company in 2013 that transferred operational rights from PAS.
Soon afterwards, a massive capital injection was made by the Chinese authority to expand the port and develop several energy projects. Under the Early Harvest Programme, China will pump some $46 billion by 2017 into a host of projects including coal, solar and wind energy units. An investment of $35 billion is anticipated in energy schemes, which will generate 23,000 megawatts. The Lahore-Karachi Motorway, expansion of the Gwadar Port and integrated infrastructure development in Gwadar will bring a further investment of $11 billion.
The fact is that Gwadar Port’s development could provide some much-needed relief to the underdeveloped province of Balochistan where rampant unemployment and the absence of proper infrastructure is causing unrest. Despite being the first gas producing province of the country, poverty is pervasive there and several areas still don’t have any gas. Many countries today eye this oil, gas and metals rich province which has an important geopolitical position in the region. Of the planned Chinese investment, Balochistan has a share of 38 per cent aimed at generating economic activities including infrastructure development, creating jobs for the locals and bringing an end to anti-state activities.
Meanwhile, Gwadar Port will help save millions of dollars in demurrage costs for importers since oil suppliers and several other companies are paying a huge amount in demurrage charges to shipping companies at the two ports in Karachi. This is mainly because of congestion at both the main Karachi Port and at Port Qasim where ships are often required to wait for several days before they get a berth.
Despite its on competing port at Chabahar, just a few hundred kilometers from Gwadar, Iran has also shown an interest in the development of Gwadar, expressing a desire to set up the world’s largest oil refinery there with capacity of 400,000 barrels per day at a cost of $8 billion. It has also expressed interest in establishing power plants at the port. Sadly, however, US pressure against the Iran-Pakistan pipeline led to delays in the refinery project which could have easily met Pakistan’s oil needs – in fact, there could have been enough surplus for export to China. The latter meets 50 per cent of its oil needs from the Middle East -- the supply line runs to China over 10,000 km through the Dubai-Shanghai-Urumqi route. Had the oil refinery at Gwadar been set up, the refined crude oil could have been exported to China through the shortest possible route – Dubai-Gwadar-Urumqi – spanning about 3,600 km. For this, an oil pipeline has been proposed through the energy corridor up to western China via the Karakoram Highway and the Khunjrab Bypass.
As part of the Pak-China Economic Corridor that will turn Pakistan into a hub of regional cooperation, the Gwadar Port will be connected through road, rail and fibrelink to China to enhance trade between the two countries. Oil and gas pipelines are also a part of the corridor over the long run, which will boost economic activities in Balochistan.
Work on the port has received a boost after the initiation of CPEC (China-Pakistan Economic Corridor) which is a development megaproject aimed at connecting the Pakistan coastline to China’s northwestern autonomous region of Xinjiang, via a network of highways, railways and pipelines to transport oil and gas. And Gwadar Port is the centre point of this project.