— Cabinet committee approves outsourcing with revised agreement
ISLAMABAD: The Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT) has approved the outsourcing of operations for the Bulk and General Cargo Terminal at East Wharf in Karachi Port ostensibly to improve operational efficiency and encouraging global collaboration.
The decision was made after a meeting of CCoIGCT presided over by the minister of finance and revenue on August 9, 2023.
According to sources, Ministry of Maritime Affairs informed the CCoIGCT that the G2G Framework Agreement between the Government of UAE and Pakistan for the development of Bulk and General Cargo Terminal at East Wharf Karachi Port, approved by the CCoIGCT and ratified by the Cabinet, has been signed by Minister for Maritime Affairs Pakistan and Minister for Energy and Infrastructure, Government of UAE.
The CCoIGCT in its meeting held on 03-08-2023 while approving the Price Discovery Mechanism constituted Negotiation Committee under the chairmanship of Minister for Maritime Affairs. The recommendations of the Negotiation Committee were placed before CCoIGCT in its meeting held on 7th August, 2023.
The CCoIGCT discussed the recommendations of the Negotiation Committee in detailed and directed that the price discovery may be renegotiated with AD Ports on equity-based model with provision of Special Purpose Vehicle (SPV) in which the revenues be divided, based on equity and investment of each party and Negotiation Committee may submit revised report for consideration.
The CCoIGCT has made the following suggestions in light of these developments:
it is proposed that CCoIGCT may like to:
i. Approve recommendations of the Negotiation Committee containing terms, conditions & comparison mechanism for price discovery.
ii. The proposed initial agreement may be treated as commercial agreement and both the parties shall not deviate from its terms and conditions; and
iii. Recommend for approval of the Federal Cabinet as required in terms of Section-4(2) (c ) of IGCT Act, 2022.
The Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT) of the Cabinet considered the summary dated 9th August submitted by the Ministry of Maritime Affairs regarding ‘Outsourcing of Operations of Bulk and General Cargo Terminal East Wharf at Karachi Port” and approved the proposal subject to the following amendments in the terms and conditions of the commercial agreement.
a. The sponsor shall make upfront non-adjustable and non-refundable good will payment of US$ 25 million to KPT immediately after signing of commercial agreement.
b. The sponsor shall also make an additional up-front payment of US$ 25 million to KPT against revenue sharing to be adjusted as follows: 1st to five years US$ 3 while six and seven year US$5 million and total US$ 25 million.
c. The payment of entire KDLB charges including cess and wages as defined in the scheme shall be responsibility of the sponsor.
d. The Commercial Agreement shall be for a term of 25 years and thereafter may be renewable on mutually agreed terms and conditions.
e. Capital investment shall be made as per the plan agreed by the parties and commercial agreement.
