ISLAMABAD: Pakistan has established a negotiation committee to finalize an agreement with the United Arab Emirates (UAE) regarding the transfer of its Karachi port terminals.
This development could be the first intergovernmental transaction under a recently enacted law aimed at raising emergency funds amid an economic crisis.
The meeting of the Cabinet Committee on Inter-Governmental Commercial Transactions chaired by by Finance Minister Ishaq Dar decided to form the committee responsible for negotiating a commercial agreement between the Karachi Port Trust (KPT) and the UAE government.
The committee has endorsed a five-year framework agreement for handing over four berths of the Karachi port terminal to the government of the UAE.
The UAE has sought the control of the Karachi Port terminals on lease for 50 years in a negotiated deal. According to the offer made by the Abu Dhabi Ports Company of the UAE, Pakistan will get $50 million upfront price for the fixed equipment and infrastructure.
The UAE company will pay $18 per cross berth royalty fee and $3.21 per square metre fee. The Karachi Port Trust will get about $23 million to $24 million per annum at the current projected sea cargo traffic.
The intergovernmental framework agreement has been finalized to create favourable conditions for the operations, maintenance, upgrading, investment, development, and advancement of the container terminal at Berths 6 to 9, East Wharf, Karachi Port Trust.
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The committee held a meeting attended by the CEO of the Abu Dhabi Port, Abdul Aziz Al-Balushi, and the Advisor to Sheikh Ahmad Al Makhtoom, Mustafa Ahmad.
Pakistan aims to reach a deal to hand over the terminals to Abu Dhabi Ports (ADP), a subsidiary of the Abu Dhabi Ports Group. The UAE government expressed interest in acquiring the Karachi port terminals, under the administrative control of the Pakistan International Containers Terminals (PICT).
The approved framework agreement specifies that the Karachi Port Trust (KPT) and the Abu Dhabi Ports Company will coordinate to implement the agreement. They will enter into a commercial agreement for technical, economic, and commercial terms to operate the Karachi port terminals.
In case of dispute, both sides will try to resolve the issue amicably. If the dispute remains unresolved, it will be resolved through mutual negotiations remaining within respective protocols or any other way specified in the subsequent agreements.
The framework agreement has a life span of five years, which can be extended. However, termination of the framework agreement will not adversely affect the commercial agreement to be signed between the KPT and the Abu Dhabi Ports.
