ISLAMABAD: Pakistan has established a negotiation committee to finalize a deal with the United Arab Emirates (UAE) for the handover of its Karachi port terminals. This transaction, if successful, would be the first intergovernmental transaction under a law enacted last year to generate emergency funds.
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The Cabinet Committee on Inter-Governmental Commercial Transactions, chaired by Finance Minister Ishaq Dar, convened a meeting where it was decided to form a committee to negotiate a commercial agreement between the Karachi Port Trust (KPT) and the UAE government. The negotiation committee has been authorized to finalize a draft agreement for the operation, maintenance, investment, and development of the Karachi port terminals under the government-to-government arrangements.
Minister for Maritime Affairs, Faisal Sabzwari, will lead the negotiation committee, which includes representatives from the Ministries of Finance and Foreign Affairs, the Prime Minister’s Special Assistant Jehanzeb Khan, the Chairman of Karachi Port Terminal (KPT), and the general managers of KPT.
Pakistan intends to hand over the terminals to Abu Dhabi Ports (ADP), a subsidiary of the Abu Dhabi Ports Group. The UAE government had expressed interest in acquiring the Karachi port terminals, previously under the administration of the Pakistan International Containers Terminals (PICT), last year.
PICT, a subsidiary of ICTSI Mauritius Limited, operated the Karachi terminals for 21 years, with their tenure ending last Saturday. However, PICT retains the right of first refusal based on certain conditions stipulated in the Concession Agreement.
There may be potential legal challenges from PICT based on the concession agreement, according to sources. The CEO of PICT was not available for comment.
Last year, the coalition government enacted the Intergovernmental Commercial Transactions Act to expedite the sale of state assets for fund generation. Pakistan is in urgent need of additional funds following the expiration of its agreement with the International Monetary Fund (IMF).
While the new law provides a fast-track channel for asset sales, the government may need to engage transaction advisors or consultants for price discovery under section 4 (e) of the Commercial Act.
Sources suggest that the government must exercise caution in finalizing the deal with the UAE since it will be the first transaction of its kind, and the outgoing operator is posing challenges.
Initially, the plan was for the Karachi Port Trust to manage these terminals, but it was concluded that KPT lacks the capacity, and the operations should be entrusted to PICT until June 30th.
The government aims to conclude the new deal with the UAE by that time.
A statement from the Ministry of Finance indicated that the cabinet committee reviewed a summary from the Ministry of Maritime Affairs regarding the management of PICT’s operations. The committee was informed of the interest shown by ADP, owned by the UAE government, in operating the Container Terminal.
Additionally, the cabinet committee decided to establish another committee to negotiate a draft framework agreement between the UAE and Pakistan under the Inter-Governmental Commercial Transaction Act 2022. The purpose of this committee is to enhance bilateral relations in the maritime sector, and it will be headed by the Secretary of Maritime Affairs.
Sources indicate that the new committee is expected to convene within the week, and efforts will be made to finalize the framework agreement promptly in order to conclude the deal.
