Is CPEC Development Focus Shifting From Gwadar to Karachi?

China has agreed to invest $3.5 billion in Karachi, according to Pakistani and Chinese officials. In a separate announcement earlier, Saudi Arabia said it is moving its planned $10 billion petrochemical complex from Gwadar to Karachi.  These announcements have triggered speculation that the focus of development of China Pakistan Economic Corridor (CPEC) is moving from Gwadar to Karachi. 

Karachi Port, Pakistan

The Karachi project dubbed "Karachi Coastal Comprehensive Development Zone project" or KCCDZ    includes additional new berths to Karachi port, development of a new fisheries port and a 640-hectare special economic zone near the port. The project also envisages building a harbor bridge connecting the port with the nearby Manora islands, according to Nikkei Asia

Gwadar Port City

Saudi decision to shift the $10 billion petrochemical plant from Gwadar to Karachi was triggered by the fact that there is no oil pipeline nor a rail line planned to support it at Gwadar. Karachi already has well-developed roads, rails, telecommunications and pipeline infrastructure for connectivity with the rest of the country. 

Map of Submarine Cable Connections to Karachi, Pakistan. Source: Te...

There are 10  submarine cables currently connecting or planned to connect Pakistan with the world: TransWorld1, Africa1 (2023), 2Africa (2023), AAE1, PEACE,  SeaMeWe3, SeaMeWe4, SeaMeWe5, SeaMeWe6 (2025) and IMEWE. PEACE cable has two landing stations in Pakistan: Karachi and Gwadar. SeaMeWe stands for Southeast Asia Middle East Western Europe, while IMEWE is India Middle East Western Europe and AAE1 Asia Africa Europe 1. PEACE cable is the latest. It is a privately owned submarine cable that originates in Karachi, Pakistan and runs underwater all the way to Marseilles, France via multiple points in the continent of Africa. 


Gwadar East Bay Expressway, Pakistan

China already has a lot invested in Gwadar.  Krzysztof Iwanek, head of the Asia Research Center at Warsaw's War Studies University, told Nikkei that the challenges of developing a major port in an underdeveloped area like Gwadar must have been factored in by China from the outset. "[I]t may be assumed that Chinese involvement in Gwadar may be at least partially strategic. Karachi, in turn, is Pakistan's most important port, and, hence, Chinese involvement there may be of purely economic nature," Iwanek said.

My own view is that Gwadar remains very important to China for strategic reasons. Gwadar sits very close to the strategic Strait of Hormuz that is used by tankers carrying the bulk of China's and the world's energy imports.  Karachi is the fastest and most economical route to making CPEC operational but it does not diminish the long-term importance of Gwadar for China. 

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Comment by Riaz Haq on March 1, 2023 at 10:48am

‘Gwadar to have university soon’

https://www.thenews.com.pk/print/1044324-gwadar-to-have-university-...

Islamabad : The great news for the youth of Gwadar is that 500 acres of land have been acquired for the establishment of the University of Gwadar, the ground-breaking ceremony of which is expected soon may this month or next one. Gwadar University will be affiliated with Shanghai Maritime University and a Maritime Centre of Excellence will also be built in it. Moreover, a lot of money is being allocated to the CPEC project for the development of Gwadar.

The largest development project spearheaded by China in Pakistan ever since 2015 is known as the game changer, China Pakistan Economic Corridor (CPEC). Quite fortunately, it started from Gwadar seaport, the deepest sea area in the world located on the Arabian Sea in the South of Gwadar District of Baluchistan. People of Pakistan, especially from the undeveloped province of Balochistan, had attached a lot of hope to it, rightfully so, because Chinese companies had begun the development work on Gwadar city and seaport as early as November 2016.

The development of Gwadar and Baluchistan, however, kick started serious problems for India and its lobbies in America and Iran. For this reason alone, their intelligence agencies planned to sabotage the CPEC project.

As per reports, there have been 12 attacks on officers and other personnel working on Chinese projects so far, in which many Chinese have been killed and injured. Among these attacks, the most notable were the bombing of the Quetta Serena Hotel that targeted the ambassador of China; the attack on the Dasu Dam in which more than six Chinese residents were killed, and the suicide bomb attack of a Baloch woman on the Chinese teachers of the Karachi University Confucius Centre.

The CPEC projects include the construction of 8,000 km of roads from the coastal area of Gwadar to connect the entire district with Balochistan and Sindh.

The most important issue in Gwadar is the electricity supply. So far, the electricity is supplied through the Iran-Turbat transmission line, which is 17 megawatts. However, the 100-MW power project from Iran will be completed this year. Rupees 50.2 billion have been spent on this project and 3,600 solar panels have been distributed to remote areas. As many as 10,000 more panels will be distributed. The 300-MW power plant coal project is to be completed by 2025. All this development work is being done by a Chinese company through CPEC projects.

The limited nature of water resources is another overwhelming issue in the area. Chinese company started work in this regards costing around Rs11 billion through which the issue is being expected to be resolved. The 100 per cent of funds have been allocated to the provincial government for border markets in Gabad, Mand and Chirhi. They will be connected to the M-8 Coastal Highway.

M-8 Section (Awaran) will connect Gwadar Port with the North through the Eastern, Central and Western alignments of CPEC. Gwadar will be connected to the North through the east, central and west alignments of CPEC routes. In the health sector, Pakistan China Friendship Hospital (PCFH) Gwadar, a 70-bed hospital, is functioning here in Gwadar. However, in phase 2, this hospital will be handed over to Indus Hospital and another 100 beds will be provided.

Besides this, as per reports, some 2,000 boat engines have been distributed to fishermen of Gwadar in December 2022. On the other hand, the illegal trawling of Sindh fishermen in Gwadar is a major controversy. However, after the 18th Amendment, this has become a provincial issue.

Comment by Riaz Haq on March 18, 2023 at 1:36pm

From #Karachi with love: exploring #Pakistan’s annual #flower show run by Pak #Horticulture Society at Karachi Boat Club: Big-headed yellow marigolds; purple & white stocks & annual carnations displayed with a distinctive style.
https://www.ft.com/content/862f41d1-1b47-4e17-91b8-54fbaaceb427



I have just been exploring links forged by flowers in dry south Pakistan. I was there on separate business, my life-long object of study, Alexander the Great. In 326-325BC he conquered his way down the Indus river valley, but he never planted a garden. He banned a curved fruit that was new to the Greeks and was thought to be upsetting his soldiers’ stomachs. It was probably a banana. Obedient to Alexander I never eat bananas.



Between lectures on his legend and localised study of his campaign, I have explored aspects of their setting, all new to me, and noticed how joined-up gardening links us to Pakistan. I was set on my path by a tree.

In the exclusive Karachi Boat Club, a fine old tree surveys the lawn, beautifully groomed for the members’ benefit. On its trunk a notice proclaims: “I have closely witnessed the evolutions of the upper middle classes of this metropolis for more than a century.”

If trees could talk, what would the plane trees in Berkeley Square be telling us about changes in London’s high society?



“Music and the playing of military bands,” the tree’s notice continues, “reminds me of the RAJ ERA when such parties were most prominent.” The tree is a bodhi tree, like the one under which the Buddha is said to have attained enlightenment.



Seeking sociological enlightenment, I looked at the gardening round the club’s lawn. Postcolonial petunias; big-headed yellow marigolds; purple and white stocks and annual carnations were displayed with a distinctive style: single plants of each had been planted in a painted clay pot, and then the pots were massed by the dozen to make lines and curves.

In the paved courtyard of the Gymkhana club in Hyderabad, plants in individual pots are banked up into a circular centrepiece which is a blaze of colour. I watched while the club’s gardeners took each pot to a tap in order to water it. At home I sometimes plant a spare petunia in a single pot, but it never reaches such a diameter. I need to give it some Pakistani care.

Admiring these bright variations on mere flowerbeds, I widened my social survey. I went to a popular gathering, the Pakistan Annual Flower Show, run by the Horticulture Society of Pakistan. As it began in the first spring of Pakistan’s existence, this year is its 75th anniversary. For three days, visitors flocked to Seaview and the AK Khan park, which commemorates Abdul Karim Khan, a founding genius of the show in 1948.

What a delight to see plants in profusion, packing individual nurseries’ tents and spilling out on to the grass while a military band played favourite Pakistani tunes. The show occupies a space that measures up to the Royal Hospital site of London’s Chelsea Show and the crowds are as dense as on any of Chelsea’s days. So much is on sale throughout, from excellent foliage plants to roses, including a superb flat-petalled crimson and a prizewinning red with white streaks called Double Delight.

Nurseries have joyful banners on their tents: “we do rockeries and manures” or “we are the Blossoming Nursery for rented plants”. Orange awnings brighten the scene, lit with those mainstays of Pakistani staging, lines of bare lightbulbs.

----------

Much of the audience was middle class: how have flowers’ uses evolved elsewhere in society? Outside Karachi I was securely escorted to a great evening occasion, a Friday celebration at the famous shrine in the westerly town of Sehwan. It is the resting place of the 13th-century Sufi saint, Lal Shahbaz Qalandar, and is a place of pilgrimage from far and wide.

Inside, red-robed dancers twirled to the beat of hand drums before thousands of packed spectators, entranced by the music and the rhythms, boys and men in the front, girls and women in the side chapels.

Comment by Riaz Haq on May 21, 2023 at 4:03pm

AD Ports Group inks MoU to develop Karachi Port

https://www.seatrade-maritime.com/ports/ad-ports-group-inks-mou-dev...


Abu Dhabi’s AD Ports Group has reached an agreement with Pakistan to develop and enhance port projects in the country, after a senior UAE delegation visited Karachi.
Peter Shaw-Smith | May 19, 2023


“The UAE aims to foster economic growth in Pakistan by signing an MoU with the Karachi Port Trust (KPT),” AD Ports Group said. “The MoU paves the way for enhancing bilateral cooperation and increasing efforts in the development, expansion, and digitalisation of port projects within Pakistan.”

AD Ports Group said the collaboration encompasses a wide range of initiatives and projects aimed at enhancing port infrastructure, optimising operational efficiencies, and embracing digitalisation. The group will leverage its technical expertise to conduct feasibility studies and analysis, to ensure commercial success of the project.

Related: AD Ports Group expands dry bulk fleet, moves into tankers

“We aim to leverage our group’s extensive experience and capabilities to transform Karachi Port’s Container Terminal into a premier hub for transshipment as well as imported and exported cargo,” said Captain Mohamed Juma Al Shamisi, CEO and Managing Director of AD Ports Group.

“In line with [the UAE’s] economic diversification, we anticipate that this collaboration will propel Karachi Port towards becoming a global hub of global trade and reinforce its significance as a key player in the trade and maritime industries, further stimulating economic prosperity in the region.”


"This partnership with AD Ports Group is a significant milestone for Karachi Port Trust. By combining our strengths and expertise, we are poised to unlock unprecedented growth opportunities for our port and the wider trade community,” said Syed Syedain Raza Zaidi, Chairman Karachi Port Trust.


“Together, we will work towards transforming Karachi Port into a world-class maritime hub that can effectively meet the demands of the evolving global trade landscape."

AD Ports Group’s move into Pakistan is not the UAE’s first foray into Pakistan. DP World has been operating Qasim International Container Terminal (QICT) for several years.

“The Muhammad Bin Qasim Port Project is the one of the largest port privatisation projects in Pakistan and is a testament to the Government’s commitment to providing the international trade community with a world class port facility supported by the latest technologies and second to none efficiency,” it said.

Qasim International Container Terminal started operations in 1997. “Today the capacity of Terminal 1 and Terminal 2 is 1.38m teu. Over the last 25 years of operations the terminal has grown and now handles more than 650 vessels annually,” DP World said.

Hutchison Ports also operates in the Port of Karachi.

Comment by Riaz Haq on June 22, 2023 at 11:08am

UAE offers to acquire Karachi Port terminals
According to the offer, the UAE company will pay $18 per cross berth royalty fee and $3.21 per square meter fee

https://tribune.com.pk/story/2422989/uae-offers-to-acquire-karachi-...


According to the offer made by the Abu Dhabi Ports Company of the UAE, Pakistan will get $50 million upfront price for the fixed equipment and infrastructure. According to the offer, the UAE company will pay $18 per cross berth royalty fee and $3.21 per square meter fee.

These terms are subject to the approval of the federal cabinet.

The Karachi Port Trust will get about $23 million to $24 million per annum at the current projected sea cargo traffic, according to a member of the cabinet committee that discussed the draft Operations, Maintenance, Investment and Development Agreement between the Karachi Port Trust (KPT) and Abu Dhabi Ports.

----

Berths 6 to 9 are being handed over to the UAE government firm for a period of “50 years from the commencement date, as may be extended in accordance with this Agreement”, according to the draft agreement.

Although the agreement mentions 50 year one terms, some of the cabinet members were of the view that Pakistan should give two terms of 25 years each.
Any dispute arising out of or in connection with this Agreement is proposed to be settled by arbitration in accordance with the rules of London Court of International Arbitration, by one or more arbitrators appointed in compliance with the rules, according to the draft agreement. The place and seat of arbitration will also be London, United Kingdom.

The Abu Dhabi Ports -- an affiliate of the Abu Dhabi Ports Group of the UAE-- will pay an upfront amount of $50 million within 45 working days. Pakistan will charge a $3.21 per square meter fee for containers per annum in respect to the area of site in occupation of the UA, according to the offer.

From the Commencement Date, the Abu Dhabi port will pay to KPT a royalty at the rate of $18 per cross berth revenue move, excluding sales tax. There will be indexation of five 5% after every three years. First indexation shall start after three years from the commencement date.

The UAE company has promised to make $100 million investment in five years in addition to paying Rs2 billion litigation charges.

The Abu Dhabi Port will have the right from time to time to revise its container handling charges. However, in case the increase in fee is more than 15%, the UAE government would seek the permission of the KP.

---

The KPT board has already ratified the commercial agreement for the approval of the Federal Government. The Framework Agreement was approved by the Cabinet on Tuesday, immediately after the cabinet committee recommendations without discussing it.

According to the draft of the Operations, Maintenance, Investment and Development Agreement, the UAE company will also have the right to be listed on a stock exchange in Pakistan and to issue and sell shares not exceeding 49%of its paid-up share capital to the public.

Pakistan will have the right to take over the terminals in the event of any national emergency or under supreme security conditions.

----
The UAE government will obtain Pakistan’s prior clearance before appointing any foreign national for working at the terminal. Pakistan will have the right to refuse clearance but purely because of security reasons.

Pakistan will also have the right to establish another container terminal facility at Karachi Port only when the aggregate container traffic at Karachi Port exceeds by more than 80% of five million TEUs and establish further terminals each time the aggregate annual container traffic at Karachi Port increases by 500,000 TEUs.

At any time such thresholds are reached, KPT shall first enter into good faith negotiations with the Dubai company to allow them to establish such additional terminal facility. If such discussions are not concluded within a period of two months, KPT can expand the port.

Comment by Riaz Haq on August 21, 2023 at 10:47am

Why fears of a Chinese naval base at Pakistan’s Gwadar port are overblown

https://www.scmp.com/comment/opinion/article/3231705/why-fears-chin...


China’s continued investment in the port, despite its lacklustre performance, has raised suspicions that it is intended for use as a Chinese navy base
However, despite its strategic location, the port is not as attractive as the ones in Karachi and Ormara, nor does Islamabad seem interested in a permanent Chinese naval presence

By Riaz Khokhar


On August 14, a roadside bomb targeted a convoy carrying Chinese engineers in Gwadar, Pakistan. While none were injured, the continued presence of Chinese workers in Gwadar, despite recurring terrorist attacks, might puzzle casual observers.
By accepting Pakistan’s 40-year lease proposal for the Gwadar port’s construction and operation in 2013, Beijing also signed up to the inherent risks of working in Balochistan, a province marred by insurgency. The choice underscored a prioritisation of strategic interests over purely economic ones.
Despite Gwadar Port operating since 2008, it has seen minimal economic activity. While trade activity at Karachi Port and Port Qasim averaged 41 and 48 million tonnes respectively between 2020 and 2023, Gwadar Port reported under 100,000 tonnes.
This disparity, combined with persistent Chinese investment despite obvious risks, has bolstered the idea that Beijing may be helping Pakistan construct a larger naval facility at Gwadar for potential access and use by the Chinese navy.

In the early 2000s, Pakistan began reaching out to China to help build a naval base at Gwadar. By 2005, Pakistan’s naval chief had envisioned it as the nation’s third naval base, complementing the Karachi base and the Jinnah base at Ormara.
Gwadar is seen as a probable location for a Chinese naval base due to its strategic position near the Strait of Hormuz and ability to host large warships. It is anticipated that Chinese navy warships will dock at Gwadar for repairs and replenishment, as they have in Karachi in the past. This would address China’s ability to sustain a fleet in the Indian Ocean and may allow Beijing access to regional maritime data.
However, to what extent will this potential be realised? Key considerations include the nature of China’s intelligence operations concerning US naval activities and whether Pakistan would allow the Chinese navy permanent access to its bases.

Comment by Riaz Haq on August 21, 2023 at 10:47am

Why fears of a Chinese naval base at Pakistan’s Gwadar port are overblown

https://www.scmp.com/comment/opinion/article/3231705/why-fears-chin...

Intelligence gathering by Chinese entities or navy personnel at such facilities is hardly new. US Navy Lieutenant Commander Joseph McGinnis’ research highlighted the Karachi and Jinnah naval bases as primary choices for the Chinese navy due to their “superior repair, logistics, and military facilities”. If China were to use Pakistan-based facilities for overseas operations, these two bases would be prioritised.

Besides, Pakistan hosts most of its naval assets – much of them Chinese-supplied – at the Karachi and Jinnah bases. Chinese technicians have been present at the former for years and are likely to be at the latter too, given the relocation of strategic assets there since 2011.
Beijing would probably have been gathering intel on US naval activities in the Persian Gulf through its assets and personnel at these bases. If the US had reservations, it would have exercised its leverage over Pakistan to address them.
Additionally, such surveillance is hardly unique. Chinese firms operating ports in over 50 countries similarly monitor naval operations, according to Isaac B. Kardon and Wendy Leutert in their 2022 International Security article, “Pier competitor: China’s power position in global ports”.
Pakistan is likely to accept this trade-off in return for Chinese naval transfers, given the constraints on obtaining military equipment from the US and Europe. Islamabad aims to increase its intelligence, surveillance and reconnaissance (ISR) capabilities not only against India but against terrorists, who have previously targeted Pakistan’s naval strategic assets.

The Pakistani cabinet’s recent nod towards renewing the Communications Interoperability and Security Memorandum of Agreement with the US after its 2020 expiration indicates Islamabad’s interest in US military tech integrated with ISR features. If China offers similar tech, it might understandably want access for regional data collection.
Yet, this is vastly different from the Chinese navy deploying surveillance ships directly on the Pakistani coast. Currently, the Chinese navy primarily utilises its Djibouti base for noncombat and anti-piracy missions near the Gulf of Aden and Red Sea, up to North Africa. Having a foothold in Pakistan’s southwestern shores would significantly aid operations extending to the Persian Gulf.

Comment by Riaz Haq on August 21, 2023 at 10:48am

Why fears of a Chinese naval base at Pakistan’s Gwadar port are overblown

https://www.scmp.com/comment/opinion/article/3231705/why-fears-chin...


Islamabad has previously allowed port calls by the Chinese navy, including submarine visits. Pakistan’s chief of naval staff recently indicated an openness to more such visits, including from Chinese aircraft carriers.
Still, the primary role of the temporary deployment of Chinese navy personnel and warships on these bases has been to offer training to Pakistani navy officers and improve interoperability on Pakistan’s warships of Chinese origin. To date, the Chinese navy hasn’t established a consistent naval presence on Pakistani bases.

Pakistan would be wise to avoid granting the Chinese navy access to its bases for contingency operations, as this could one day translate into regional military actions or coercive diplomacy.
Instead, Islamabad seems to be leveraging the possibility of such port calls to secure support from the US. For example, the US has approved a US$450 million F-16 sustainment sale and supported an International Monetary Fund loan package.

There are two scenarios in which Pakistan might allow permanent Chinese navy deployments at its bases.
One, Washington’s support for Islamabad diminishes and punitive actions against Pakistan increase, coupled with amplified backing for India’s defence capabilities and potential military campaigns against Pakistan. In other words, unless Pakistan anticipates an irreversible breakdown in its strategic relationship with the US, it would be reluctant to permit a permanent Chinese naval presence.
Two, if China supersedes the US in economic, military and diplomatic dominance, and Pakistan secures guarantees from Beijing, then Pakistan’s expectation of US benefits or penalties may diminish, enabling more latitude in its decisions.
Riaz Khokhar is a research analyst on geopolitics and security of the Indo-Pacific region and a former Asia studies visiting fellow at East-West Center in Washington

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