UAE group to operate Karachi port for 50 years

Under terms of agreement, firm will manage, operate and develop KGTL, berths 6-9 at Karachi Port’s East Wharf

By
Our Correspondent
Russian oil cargo carrying discounted crude is anchored at a port in Karachi on June 13, 2023. — Online
Russian oil cargo carrying discounted crude is anchored at a port in Karachi on June 13, 2023. — Online

  • UAE group will manage, operate and develop KGTL.
  • Berths 6-9 at Karachi Port’s East Wharf leased to group.
  • It will also invest $220m towards infrastructure development.


KARACHI: The United Arab Emirates (UAE)-based AD Ports Group has signed a 50-year concession agreement with the Karachi Port Trust (KPT) to "manage, operate and develop" the Karachi Gateway Terminal Limited (KGTL), a statement by the company read.

In the first 10 years of the deal, the group will also invest $220 million (Rs63.129 billion) for infrastructure development.

The agreement comes at a time when a cash-strapped Pakistan is looking for external financing to cushion its deteriorating economy.

"Under the terms of the 50-year concession agreement, a Joint Venture between AD Ports Group, as a majority shareholder, and Kaheel Terminals, a UAE-based company has been formed to manage, operate and develop the Karachi Gateway Terminal Limited (KGTL), berths 6-9 at Karachi Port’s East Wharf," the group's statement said.

The JV will undertake significant investments of $220 million in infrastructure and superstructure over the next 10 years, with the bulk of it planned for 2026. The development works will include the deepening of berths, an extension of quay walls and an increase in the container storage area.

As a result, the terminal will be able to handle Post Panamax class vessels of up to 8,500 TEUs (Twenty-Foot Equivalent Units) and container capacity will increase from 750,000 to 1 million TEUs per annum. The expansion and enhancement will further cement the terminal and Karachi’s position as a key player in the maritime industry.

"The AD Ports Group is delighted to embark on this landmark concession agreement with Karachi Port Trust, which exemplifies AD Ports Group’s strategy of investing in key maritime trade routes for the UAE, replicating our successful integrated business model in regions that offer long-term, sustainable growth prospects," Captain Mohamed Juma Al Shamisi, managing director and Group CEO, AD Ports Group, said.

The agreement has the potential to unlock a new chapter of growth and progress for both the UAE and Pakistan, enabling to strengthen ties with key trading nations and leading to increased economic growth and prosperity, according to Shamisi.

“We foresee significant opportunities ahead. Together, in line with our wise leadership’s vision, we will redefine the maritime landscape and create value for all stakeholders,” he added.

The terminal’s operations are all dollarised with no foreign exchange exposure to the Pakistani rupee. Historically, the terminal has been generating revenue of around $55 million and EBIDTA (earnings before interest, taxes, depreciation, and amortisation) or around $30 million annually.

"The UAE and Pakistan have a strong and long-standing relationship, which is experiencing continuous growth in the areas of trade and investment due to our leadership’s commitment to further strengthen ties," Maritime Affairs Minister Faisal Subzwari said.

The signing of the agreement, he added, underscored both the nation’s shared vision for the development of port infrastructure and set the stage for a prosperous global maritime ecosystem.

The UAE was Pakistan’s number one regional trading partner in 2021, accounting for over 405 of Pakistan’s trade with Arab countries, with non-oil exports from the UAE to Pakistan valued at nearly AED 4.8 billion ($1.3 billion) in 2022, according to Pakistan’s ministry of foreign trade. Additionally, re-exports from the UAE to Pakistan amounted to AED 10.6 billion (US$2.9 billion), reflecting a 7.7% growth compared to 2021.

Karachi Port Trust Chairman Syed Syedain Raza Zaidi was of the view that the agreement between AD Ports Group and KPT marked a significant milestone and holds big potential for the growth and development of Karachi Port. "By joining forces, we are paving the way for a thriving container terminal that will enhance efficiency, attract investment, and stimulate the economy," he said.