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China set to take over reins of strategic Gwadar port in Pakistan

China appears all set to take over the reins of Pakistan's strategic Gwadar port in Balochistan with the Singapore Port Authority (SPA) and its partners intending to pull out of a 40-year management and development contract.

The SPA and its partners, the National Logistics Cell and AKD Group, have been allowed to quit the project after the government failed to transfer 584 acres at the mouth of the port that are currently in the possession of the Pakistan Navy.

"We have not been able to meet contractual obligations and resolve land issues. As a result they (SPA and its partners) have gone under duress and we issued them a no objection certificate yesterday to give up their contract," Ports and Shipping Minister Babar Khan Ghauri told a meeting of the Senate's Standing Committee on Ports and Shipping yesterday.

"Now the Chinese will take over Gwadar Port," Ghauri said.

He indicated that China will invest USD 10 billion to develop the port in Balochistan and manage its operations but did not give details.

After its development by the Chinese government at a cost of USD 288 million, Pakistan's only deep sea port was handed over to SPA under a 40-year agreement in February 2007.

The army-run National Logistics Cell and AKD Group of Karachi were party to the agreement, which covered the management, operations, maintenance and development of the port.

Ghauri said that while many people in Pakistan blamed international players for unrest in Balochistan and competing regional port operators for the lack of progress in the Gwadar port, it was "shameful" that a friendly foreign operator had to leave the port because of the navy's "changing positions" on vacating land despite a clear decision by the government.

He said the armed forces should not behave like "real estate companies" and realise that the land belonged to Pakistan.

Ghauri warned that if the 584-acre plot at Shamba Ismail was not immediately vacated by the navy and transferred to the port, even the Chinese would not be able to develop the project as a deepwater trans-shipment port.

The Chinese had turned down a request to take part in the bidding for operations of Gwadar before the agreement was signed with the SPA but they were now interested in the project, he said.

The three services had been allotted 25,000 acres to vacate land for the port but the navy had changed its position, he said.

The navy sought Rs 10 million per acre for land which it had purchased at Rs 180 and then demanded an alternative plot of 1,000 acres. It then increased the demand to 1,615 acres and finally to 2,200 acres, Ghauri said.

These demands were unacceptable and the Balochistan government is ready to provide 584 acres to the navy, he said.

The committee's chairman Fateh Mohammad Hassani said he had "reservations about the Chinese" as they had taken out white gold from the Saindak Copper-Gold Project by bribing two officials of an export processing zone.

There was no record of the extraction and the contract of the Chinese firm had been extended, he said.

A navy representative claimed the land issue was not the cause for SPA quitting the Gwadar project.

He told the committee that land at Shamba Ismail had been under the control of the navy since 1980 and it had been included in the port project without any consultation with the navy.

He said the land is important from a security point of view and its importance had increased after the recent attack on the Kamra airbase.

He said the premier had allowed the navy to retain the land in 2006 but it was ready to vacate it if it was provided 1,000 acres free of cost with an opening to the sea.

Balochistan's senior member for revenue told the committee that the navy was adopting contradictory positions and increasing its demand for land to 1,615 acres.

The committee asked the navy, the Balochistan government, the Ports and Shipping Ministry and Coast Guards to complete the transfer of 350 acres to the navy in three weeks and hand over Shamba Ismail land to Gwadar Port.

Otherwise, the committee would ensure that the land is surrendered under the Land Revenue Act to the provincial government.