Gwadar Port: Symbol of Prosperity
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By Khuzaima Shahid
Pakistan currently operates two major international deep-sea ports: Karachi Port and Port Qasim. Their capacity expansion programmers are unlikely to keep pace with the expected growth in demand in the coming years, necessitating the need for a third port to fill the gap.
Karachi Port, in particular, has significant physical limitations and will be unable to grow at the same rate as national demand growth in the coming decades. These limitations are primarily due to its location within Karachi, which has experienced rapid growth in recent years.
Although Port Qasim has a large physical space for expansion, its potential development speed is hampered by its upstream location, which is more than 40 kilometers from the open sea, resulting in long turnaround times for visiting ships. This is not a problem for cargoes linked to industries near the port, but it has cost implications for cargoes with origins and destinations elsewhere. In light of this, it was deemed appropriate to construct and inaugurate a third deep-sea port for Pakistan in order to ensure that future national development is not hampered by a lack of national port capacity. Compared to the potential rapid growth in demand for port capacity, it is critical to continue expanding Gwadar port capacity over the coming decades.
The Sultan of Oman agreed to hand Gwadar over to Pakistan for Rs. 5.5 billion, at the time equivalent to US$2 billion, which was largely paid by Aga Khan IV. In 1948, Makran acceded to the newly created Dominion of Pakistan and was made a district – but Gwadar at that time was not included in Makran.
Gwadar Port Authority (GPA) was established as an organization, after promulgation of the GPA Ordinance No. LXXVII of 2002 dated 17 October 2002, for construction, operations, management and maintenance of Gwadar Deep Water Port. Gwadar Port is the second great monument of Pak-China friendship after Karakoram Highway linking Pakistan and China.
Gwadar is a port city on the south western Arabian Sea coastline of Pakistan in Balochistan province. It is the district headquarters of Gwadar district. The Pakistan Government annexed Gwadar into Balochistan province on the 1st of July, 1977 as district headquarters of a newly formed Gwadar district and as the winter capital of Balochistan province in 2011.
Gwadar has an area of approximately of 15210 square kilometers. Its coastline is approximately 600 kilometers long. Gwadar district is divided into four Tehsils, namely Ormara, Jiwani, and Pasni.
Agreement with China:
On February 18, 2013, Pakistan awarded a Chinese state-owned company the contract for building and running the Gwadar Port. According to the contract's specifications, the port would remain Pakistan's property but be controlled by the Chinese government's China Overseas Port Holding Company (COPHC).
President Asif Ali Zardari of Pakistan, Chinese Ambassador Liu Jian, a number of federal ministries and members of parliament, as well as senior government officials, all attended the contract signing ceremony on February 18 in Islamabad. The transfer of the concession agreement from the PSA to the COPHC was also commemorated during the occasion.
As an auspicious development in Pakistan-China relations, President Zardari commended the contract's award to China and expressed his optimism that it would open up new economic prospects for Pakistan and Balochistan.
"Gwadar will soon be a hub of trade and commerce in the region," the president was quoted as saying by the spokesman. "It holds the key to uniting the countries of Central Asia and adds new momentum to Pakistan-China relations."
He emphasized the port's strategic value to China and the Central Asian republics as well as its ability to boost regional economic integration.
He said that the establishment of a commercial corridor would bring the Chinese provinces of Xinjiang and Tibet closer to Pakistani ports than any other Chinese port.
The port's potential seems good on paper. Currently, it has enough room for two or three huge ships with a 50,000 deadweight tonnage capacity. It will be able to dock 150 ships and 400 million tons of cargo by 2045. The Pakistani government claims that a working Gwadar port—the nation's third deep sea port—will satiate the "growing demand for trade" that the two current ports of Karachi and Qasim are "unlikely to maintain pace with" on its own.
Gwadar being the flagship project of China’s Belt and Road Initiative has attracted eyeballs from all across the world especially after the new master plan of Gwadar was made public in late 2019. Gwadar is on its way to become the trade, economic and tourism hub of South Asia. High paid jobs, tax-free environment, high-tech industries, mega shopping malls, luxury resorts, and Pakistan’s largest international airport, are all included in the blueprints that will see Gwadar become one of the largest cities in both Pakistan and the world, similar to Dubai or Singapore. Phase 1 of the Gwadar Port and Free Zone, covering 60 acres of land, has already been finished, opened for business, and 46 businesses have already registered. More than 100,000 metric tones of Afghan cargo have been handled at the port since January 14, 2020, when processing of Afghan transit cargo began at Gwadar. As of July 2021, PM Imran Khan began ground on Gwadar Free Zone Phase 2, which is 35 times larger than the first phase and covers over 2200 acres. It is anticipated that the Gwadar Free Zone and Port will produce $10 billion in yearly economic activity and 12,000 new jobs over the next three years. It will also include the construction of Makran coastal highway joining the cities of Karachi that is a 675 mile long stretch for the transport of cargo to other cities and a number of other projects are underway for the better road network and easy access from other citied to the port. in this regard the Asian Development Bank has provide $500 million dollars for the completion of the projects. Gwadar has been put on a development fast-track after PM Imran Khan’s visit in July 2021 where he launched 10 mega development projects, including Phase Two of Gwadar’s Free zone and a mega water desalination plant, solving Gwadar’s fresh water problem once and for all.
The New Gwadar International Airport (NGIA), the $ 246 million Greenfield airport being built at an area of 4,300 acres would be operational by September 2023.
COPHC launched a large-scale tree-planting program, aimed to enhance Gwadar’s afforestation and improve the local’s living environment. They have established a plant tissue culture laboratory and a greenhouse to conduct the research, breed and planting of non-wood forest plants here and try to bring more benefits to the local people.
Sea politics are becoming increasingly complicated as a result of the shifting dynamics of the world's architecture and a greater emphasis on trade and economic growth. The deep sea and warm water port of Pakistan is Gwadar Port. It has two thirds of the world's oil reserves and is located near the mouth of the Persian Gulf, Strait of Hormuz. A tiny port was built between 1988 and 1992 during its building period. General Musharraf opened the port in 2007. Gwadar Port was managed by Port Singapore Authority (PSA) from 2007 to 2012; however, due to PSA's subpar operations, the port was transferred to China Overseas Port Holding Company (COPHC) in 2013. Since then, the building project has advanced quickly.
The construction of Gwadar city, Gwadar power plants, and Gwadar International Airport are the other projected projects that are currently being worked on. Even though the port is currently under development, seasonal cargo and commercial commerce have begun.
For Pakistan, the port is of crucial strategic and economic importance. After Karachi and Qasim ports, it is Pakistan's third-most important deep sea port. It is situated at a crossroads of global oil commerce and maritime shipping routes. Pakistan may use Gwadar as a centre for its foreign trade. Three geographical areas—Central Asia, South Asia, and the Middle East—would be linked by Gwadar Port. It would create new employment possibilities and aid in Baluchistan's growth. The mineral, hydrocarbon, oil, and gas resources of CARs will be accessible to Pakistan. Both foreign investment and tourism will be drawn to the port. It would offer foreign exchange reserves, free trade zones, and special economic zones (SEZ), all of which would contribute to Baluchistan and Pakistan's economic progress. Specifically in the region of Baluchistan, it would aid in boosting Pakistan's trade and commercial activity.
The Sea Lines of Communications (SLOCs) coming from the Persian Gulf and the Strait of Hormuz will be monitored by Pakistan with the aid of Gwadar. Gwadar will have control over the commerce routes and oil shipping lanes between South Asia, Africa, Central Asia, the Gulf, and the Middle East. Given that the port is farther from India's reach than the other two Pakistani ports, it will give Pakistan strategic advantage in its relations with that country. By charging a transit trade tax and maintaining foreign exchange reserves, Gwadar will give Pakistanis more employment possibilities and support national economic growth. Gwadar will increase Pakistan's cooperation with other nations in the oil and energy sectors. The growth of trade, tourism, the hotel industry, and state revenue will enhance the nation's economy. A significant number of foreign investors are drawn to Gwadar by its tax-free investment and trade opportunities, which spur new development initiatives and economic strategies.
Asia, the world's largest region, contains a huge number of landlocked nations, and travelling by land to reach the sea is very expensive. Such nations search for the shortest routes in order to conduct international trade. An example would be China, whose western region is located thousands of kilometres from its eastern seaports. China would get access to the closest port, Gwadar, through the Pakistan-China Economic Corridor (CPEC). While Gwadar is 2800 kilometers away from the Port of Shangai, Kashgar is 4500 km away. China would have access to Afghanistan and the Central Asian Republics thanks to the port (CARs). India may close the Strait of Malacca, but Gwadar would offer another sea route. As an alternative to routes through the Indian Ocean or the South China Sea, Gwadar can be used. As the Chinese Premier referred to Gwadar as a "Economic Corridor" during a bilateral visit to Pakistan in May 2013, Pak-China relations will improve. The same is true for Gwadar, which may act as a regional hub and open up improved commercial routes to the landlocked Caspian region.
The port is now dealing with a number of difficulties, including a lack of connectivity and underdeveloped infrastructure and supporting infrastructure. There are security issues that must be resolved. India is currently employing all available strategies to thwart the growth of the Gwadar port. With an investment of US $85 million, it is making significant investments in the Iranian port of Chahbahar. India is more eager to work on Chahbahar now that economic sanctions on Iran have been lifted because it views Gwadar port as a component of the Strings of Pearl strategy intended to surround India. India aims to lessen Chinese sway in the area. India is striving to downplay Gwadar's economic significance. Roads from Afghanistan to Chahbahar have been built, such as the Zaranj-Delaram route.
It is very evident that India will make every effort to obstruct the building of the Silk Road from Pakistan. It has already caused the CPEC project to be the subject of major security worries. However, Pakistan must take these issues seriously and move forward with construction of the Gwadar Port, which is essential for the country's economic growth, regional connectivity, and maritime development.
As we know that Gwadar is another Dubai emerging on the world’s map and so an issue arises that powerful Gwadar region threatens the strategic influence of Dubai and a cold economic war has been going in the Gulf of Oman. As Dubai is the major port in the Persian Gulf and because of its lack of natural resources it mostly earns its revenue from Tourism, Services and has been a business hub for the entire world. Dubai has become a multicultural city and millions of people spend their vacations in Dubai. So as the Gwadar port is progressing rapidly it threatens UAE that it would overtake Dubai and have negative effects on their economic situation. Gwadar is a serious rival to Dubai because of its location it will give china access to the Gulf countries and Central Asian countries have sea access. The sending of products become cheaper and save about 60 to 70% of revenue. It will have negative impacts on India and USA as well who have good relations with UAE and because of their enormous investment in the country it will also affect their economy and strongly opposes the operation of Gwadar port. This is changing geopolitical situation swiftly in South Asia. It has also negative impacts on the shipping traffic that pass through the Middle East. Iran also initially oppose the construction of Gwadar port and help India to build its port of Chabahar. Later Iran recognizes the significance of port and also joined the CPEC agreement between Pakistan and China so it export natural gas to China via Gwadar port and earn great revenue. So the Gwadar port brings good things for Pakistan economy which is suffering and other countries think that it will hamper their economic growth and they will not enjoy the leisure’s of life as before. Dubai is the most suffering Port from it as it will lose 70% of its businesses. India also strongly opposed the Gwadar port which reduces its trade with Dubai which is a strong strategic partner of Dubai. So Gwadar port has negative effects on these countries and they know once it will become operational it will have drastic effects on their economies and the likes of Afghanistan and Central Asian Republics will have a sigh of relief as they will get access to sea and trade will become much easier for these countries.
Work Done On Gwadar Port:
Gwadar port which is now under construction is close to the mouth of Persian Gulf below the straits of Hormuz. It is under progress and once completed in phases it will have a 200 meter long berths and a Ro-Ro facility. Gwadar port is a marvelous monument of Pak- China friendship and generates roughly about $10 Billion annual revenue. There will be free economic zones near the port and is expected to hold 1 Billion tons of cargo annually. It is also important as Karakorum highway. Once completed Gwadar will become a global trade center but there is a business scare in the port city because of the lack of infrastructure which hampers the economic development.
In April 2021, there is only one real activity conducted at the port by two small crabs that had made a gargantuan effort to haul them and towering cranes are still there to load and unload the shipping containers. The completion of the work will provide jobs to thousand ands of people and lowers the unemployment. There are special Economic Zones near Gwadar port and a $2 billion oil refinery would also be settled near the port to improve the businesses activities. As the port construction meant a lot to Pakistan economy but the progress speed is slow because of lack of electricity, road infrastructure, water, internet and cellular network of gas because of which the businesses does not flourish and investors are not showing much interest.
There are also some projects related to the port development and the $179 million Eastbay expressway which is an important road link connecting the free zone and the port. Work on water treatment plants are also underway and only 65% of work had been done until now. Pakistan is also facing serious challenges from political point of view which hinders the working on the port and is getting more complex. Gwadar is the third deep sea port of Pakistan and has not been able to fully operate. The partial operation is considered mere ceremonial due to flaws in policy making and also the lack of infrastructure is affecting the chain value. The security concerns from the construction of port due to some enemies of Pakistan are trying to put all their efforts to stop the construction and a wave of security concerns have brought to the region.
Attacks have been attempted on the workers and halt the construction process of the port. It is a discouraging factor for the investors and the issue should be resolved on urgent basis. In recent times, there has been improvement in the progress of construction of port and the construction of infrastructure like roads are improving the situation and we hope that the completion of the port will bring economic stability to the devastating economy of the Pakistan.
By its completion it will bring employment opportunities to the poverty-stricken people of the coastal city and it would pave a way for the access of central Asian countries to the sea and the relations between the countries are getting better and Pakistan can generate much revenue from them by giving them access to the sea and providing them short trade route. It would also boost the domestic tourism in the country in the country because of scenic beaches of Gwadar port once its construction complete and become fully operational.
Gwadar is the third largest deep sea port in the world. It will compete with Dubai by offering cutting-edge infrastructure to attract investment, manufacturing, tourism, and communities.
In this regard, Gwadar Port is strategically and militarily significant for both Beijing and Islamabad. Furthermore, Gwadar Port in Pakistan's Balochistan Province can serve as a geostrategic hub for China's commercial, political, and military activity in the North Indian Ocean. High-paying jobs, a tax-free environment, high-tech industries, mega shopping malls, luxury resorts, and Pakistan's largest international airport are all part of the blueprints that will see Gwadar become one of the world's largest cities, comparable to Dubai or Singapore. It has the ability to change the future of Pakistan but unfortunately we are unable to work on it or we aren't promoting it due to our political instability. Pakistan's economy relies heavily on Chinese imports. The Gwadar port will be the closest port for Chinese imports to enter Pakistan's mainland. This will give Pakistan's economy a much-needed boost.