UAE Wants to Lease Karachi Port Terminals for 50 Years

The United Arab Emirates wants to lease the Karachi Port terminals for 50 years.

Abu Dhabi Ports Company has offered to pay Pakistan a $50 million advance payment for all the fixed equipment and infrastructure at the port terminals. According to the terms of the proposed deal, the UAE company will pay an $18 per cross-berth royalty fee and $3.21 per square meter cost, reported Express Tribune.

According to the draft Operations, Maintenance, Investment, and Development Agreement between the Karachi Port Trust (KPT) and Abu Dhabi Ports, the KPT will receive around $23-24 million per year based on the latest cargo traffic estimates.

Every 3 years, there will be a 5 percent upward revision, with the first adjustment to be made three years after commencement of operations. In addition to paying Rs. 2 billion in lawsuit fees, the UAE company has agreed to invest $100 million over the next five years.

If the deal is approved, Abu Dhabi Port will reserve the right to adjust its container handling prices at any moment. However, if the fee rise exceeds 15 percent, the UAE government will seek permission from Karachi Port.

The deal in principle calls for a 50-year term, but some cabinet members recommended two terms of 25 years each. Other suggestions made in this regard offered to settle disputes in connection with this Agreement by arbitration as per rules of the London Court of International Arbitration. The arbitration will also take place in London, United Kingdom.

The agreement is likely set to be signed today (Thursday), awaiting official approval of the offer by the federal government.

This comes after the Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT) on Wednesday decided to constitute a committee to negotiate the draft Framework Agreement between the UAE government and Pakistan, under Inter-Governmental Commercial Transaction Act 2022, to further strengthen the relations between the two countries in the maritime sector.