Pakistan court hears challenge to PSA port deal

Monday, 13 December 2010 00:01 - - {{hitsCtrl.values.hits}}

Islamabad (Reuters): Pakistan’s Supreme Court last week began hearing a regional government’s challenge to a deal with a Singapore company to run a strategic port in which China has a substantial investment.

The chief minister of Baluchistan, the southwestern province where Gwadar port is located, is seeking the cancellation of the contract with Singapore state-owned PSA International Ltd on the grounds that it is a “one-sided” deal.

“In the contract, the federal government did not consider the reservations of the Baluchistan government, nor were we taken into confidence,” advocate general Salahuddin Mengal, who represents the Baluchistan government, told the court.

“We ask the court to order the federal government to scrap, cancel the contract.”

Authorities have dismissed speculation that the port would be handed to Chinese control, after China provided 80 percent of the initial #248 million development costs.

But analysts suspect China would push for a major say over the port to back its bid to expand its influence in the Indian Ocean. This would upset India, which has already expressed concern over China’s influence in the region.

Pakistan, struggling to revive its debt-laden economy, is keen to become a conduit for trade to landlocked Afghanistan and Central Asia. It has three major ports -- Gwadar in Baluchistan and two at Karachi, 450 km (280 miles) to the east.

Under the Gwadar deal, former President Pervez Musharraf’s government gave management and operational control of the deep-sea port to PSA, owned by Singapore sovereign wealth fund Temasek Holdings , in February 2007 for 40 years.

Under the agreement, the Baluchistan government, which has been battling a decades-old low-level revolt by nationalists for provincial autonomy, was to develop a free-zone for warehouses and export processing zone and establish road and rail links.

Baluchistan Chief Minister Mohammad Aslam Raisani has said PSA International Ltd had neither brought in trade nor expanded the port. But there were no plans to hand the port to China.

Pakistan gets only 9 percent of the port’s total revenue.

In September, Pakistan’s naval chief asked the government to review the contract for the same reasons. Gwadar, 70 km (45 miles) east of the Iranian border and on the doorstep of Gulf shipping lanes, was conceived over a decade ago with hopes it would handle transhipment traffic for the Gulf.

Shanghai Port acquires 25% stake in Zeebrugge Port

SHANGHAI International Port Group (SIPG) has acquired 25 per cent shareholding of Zeebrugge port, its initial step in the company’s internationali-sation programme.

Following the new investment, SIPG was relocating Shanghai port management to Zeebrugge, said SIPG Secretary, Mr Jiang Haitao.

It would promote exchange between the latter port and Shanghai, and assist to lift the business for both terminals.