China will bag a 91% share in gross revenues from Gwadar port, in Pakistan’s Balochistan province, and 85% from the surrounding “free zone,” under a 40-year deal finalized by Pakistani authorities with the China Overseas Port Holding Company.
The numbers were revealed by Pakistan’s federal minister for ports and shipping, Mir Hasil Bizenjo, in the Pakistan Senate last Friday. He also disclosed that Pakistan will pay back US$16 billion in loans obtained from Chinese banks for the development of Gwadar port, the free-trade zone and all communications infrastructure, at rates of over 13%, inclusive of 7% insurance charges.
The project forms part of the US$56 billion China-Pakistan Economic Corridor (CPEC). Business figures say China will recoup its entire CPEC expenditure in the first four years out of earnings from Gwadar port –which was inaugurated a year ago – and the free zone.
Bizenjo added that the Chinese port holding company will operate the port over the next 40 years through a BOT (build-operate-transfer) arrangement. Pakistan will take over the port’s operation, along with responsibility for infrastructure maintenance, after the expiry date.
The minister’s disclosure comes on the heels of persistent demands from lawmakers for details of the long-term agreements inked with the Chinese authorities to be revealed, amid accusations that the federal government had attempted to sweep them under the carpet.
“Such deals need input from the private sector and the government should have involved the trade organizations before signing deals of national significance”
Most senators are of the belief that the long-term agreements are heavily tilted toward China. Raza Rabbani, who is chairman of the Pakistan parliament’s upper house, bowed to pressure from lawmakers and directed the Senate Standing Committee on CEPC to look into whether Pakistan’s national interests are undermined by financial obligations entered into via the agreement with China.
Pakistan Tehreek-e- Insaaf Senator Mohsin Aziz, who could not be reached for comment by Asia Times, is of the view that the long-term contracts entered into in relation to CPEC most certainly do undermine the national interest. “Such deals need input from the private sector and the government should have involved the trade organizations before signing deals of national significance,” he told the Senate, adding that the private sector would have been able to negotiate better deals for Pakistan than its bureaucrats.
Business leaders are indeed skeptical of the agreement’s 40-year term, stressing, in particular, that the infrastructure, roads, machinery and plant is unlikely to remain in workable condition in four decades. By the time Pakistan takes over responsibility for its maintenance, they say, it will need significant upgrading.
Muhammad Ishaq, a leading importer and one-time director of the Khyber Pakhtunkhwa Board of Investment & Trade (KPBOIT) told Asia
Times: “The hefty share in the revenue of port and free economic zone is not the only issue which will deal a severe blow to economy. The government also allowed contractors and sub-contractors associated with China Overseas Port Holding Company an exemption from income and sales taxes, and federal excise duties, for a period of 20 years, besides a 40-year tax holiday granted for imports of equipment, material, plant, appliances and accessories for port and special economic zone.”
He added that major shares of the earnings from the port and free zone would go to Chinese companies, while Pakistan will struggle to service costly loans obtained from Chinese banks. The 2,282-acre free zone, he said, will include factories, logistics hubs, warehousing facilities and display centers that will all be exempt both from customs duties and from provincial and federal taxes.
A classic "unequal treaty" like the western colonies in China in the past.
the maximum planned capacity of Chabahar is 10 million to 12 million tons per annum, that of Gwadar will be 300 million to 400 million tons once it reaches complete capacity and it is also projected as a city of 2 million residents once it is ready. If things go according to plan and the port operates full capacity, Gwadar could outstrip all of India’s 212 ports that collectively handle 500 million tons a year. This give edge Gwadar over all ports in the region and making endia and emirican worried.
That Port rightfully belongs to the people of Baluchestan which was part of Afghanistan before the British India placed the arbitrary infamous Durand line
The chinese CAN ONLY EMPOWER you to work harder + exploit all possibilities to earn more $$$ ..so the PAK people will eventually pay all of it in FUTURE ( if work hard ? I have doubts…lazy bunch ! )…but given INDIA’S case …it’s own people who ENSLAVE them YOU are IN forever !!!
Awais Malik No no… As far as Pakistan’s major export (terror) is concerned, it has a surplus with every country in the region…
But Pakistan has trade deficit with every one
Its difficult to reason with people who is brainwashed by western medias to see anything china does with suspicion. They feel they are the owner and entitled to the project without having to pay for it. They forgot conveniently that without the infrastructures there would be little economic productivity in the areas, its a wasted land with insurgency and high rate of unemployment. Look at it more objectivively, visit the ground, and not just parroting the views put forth by distractors.
Sir Rameez
Britain took Hong Kong from China for 200 years. Then after 200 years, when China got it back, Hong Kong was barely recognizable.
I think, CPEC is a real game CHANGER. And Pakistan is ready.
Compared to five years ago, Pakistan now has increased energy supply, better law and order, over 100m literate people (And 200m population), a good road infrastructure and a strong banking system. The only thing missing is POLITICAL STABILITY. But then political stability is found WANTEDin many countries these days. As long as the business community remains sensibly, things will improve.
Times ahead are going to be quite exciting for us PAKISTANIS and the world constantly looks for new growth opportunities.
Let’s gear up.
Sam Ontoor Pakistan is not willing to even import tomatoes from India..So forget about establishing power grid connection.. arrogant Pakistanis still want to be pampered by the world.. a hangover from fleecing USA of $32 billions!
To confront the Big snake that has been biting at the Wahhabi terrorists, the Saudi Wahhabi regime will have to string along the Pakistan who is also nuclear like its new ally, Israel.
With Xi as the Pivot of CPEC, all Pakistani are now beginning to see the light at the end of the long tunnel to Economic development and progress.
China is the worst partner in the world
There will certainly be lots of reviews of this major event. Not all will be positive.
I would like to believe that ‘a stable Pakistan’ is in best interest of everyone, even in India’s interest. With Chinese stake in CPEC, stability will come.
China has already colonized Pakistan & 2nd innings is to annex pak with china .
Cut is better to see a stable and prosperous Pakistan than one that is unstable ready to fall apart for the sake of peace in S. Asia. CPEC will do that! I think Former PM needs to be applauded for his foresight about the project!
Salimullah Khan: In international trade it is the net gain or loss is important. On the whole , India is a gainer however marginally!
Salimullah Khan Our trade deficit is covered by highest remitence sent by Indians abroad. And also by service sector, mainly IT/ITES which is not counted among the export.
We give Foreign Aid to many countries, including some of the "Developed" countries, and we are not out there begging shamelessly across the world.
Will there be toll tax from Gawadar to Khunjrab ? Who will collect.?
Luca Taramelli To hug is any day better than to get – – – – – d . Dirty people I always meant LOOTED…..
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The Philippines should learn a lesson or two in this Pakistan-China raw deal before entering any build, build contracts that would plunged the Philippine economy into debts fron high interest Chinese banks.Remember that Pakistan is a nuclear armed country while the Philppines is not.