Gwadar: The Port Of Future

Gwadar is the future hub of commercial activities. It will change the traditional trade routes and trade patterns. New trading partners will emerge and will bring prosperity to the whole region. Gwadar will be proved as “The Port of Future.”

The Gwadar is the deepest seaport in the world, situated on the Arabian Sea at the entrance of straight of Hurmuz. It is the passage of 70% of world energy – oil and gas. The Middle East is a source of Energy – Oil & gas and meets 70% of world demand. In return, the Middle East the largest destination of global exports of all major industrial and agricultural nations. Middle-East heavily depends on imports and relies on imports fr almost everything. The oil and gas-rich nations are spending lavishly and import almost all luxury products from the developed world.

Gwadar is considered a link between the Belt and Road Initiative and the Maritime Silk Road projects. It is about 170 kilometers to the east of Chabahar Port in Iran, and 385 KMs from Muscat Oman, only 700 KM from UAE. Its strategic location will make a difference in future geopolitics.

Gwadar’s potential to be a deepwater seaport was first noted in 1954, and development work was inaugurated by Pervez Musharraf in 2007. In 2015, it was declared that the city and port would be further developed under CPEC at the cost of $1.62 billion to link northern Pakistan and western China to the deepwater harbor. The port will also be the place of much-needed floating imported-liquefied natural gas facility built as part of the more massive $2.5 billion Gwadar-Nawabshah segment of the imported-gas pipeline project. Building and development began in June 2016 on the Gwadar Special Economic Zone, which is being built on a 2,292-acre site adjacent to Gwadar’s port. In late 2015, for rapid development, the port was officially leased to China for 43 years, until 2059. China has shown interest in developing it on the same lines as Shenzhen; China is a success story of turning a small fishermen village into a dynamic metropolitan. Based on Shen Zhen’s experience, it is believed that the Gwadar will develop faster and better than Shenzhen.

Gwadar mapThe government of Pakistan has introduced incentive-based flexible policies to make Gwadar an international Freeport. Gwadar Port became formally operational on 14 November 2016, when it was inaugurated by Pakistan’s Prime Minister Muhammad Nawaz Sharif; the first convoy was seen off by the then Pakistan’s Chief of Army Staff, General Raheel Sharif. On 14 January 2020, Pakistan operationalized Gwadar Port for the Afghan transit trade.

Belt and Road mega initiative of China (BRI) will connect 40 regional-countries, generating a 2.4 trillion dollar GDP rising at 7% a year, conferring to The World Bank report. Gwadar is the deepest port globally, with 150 berths, connecting China, Central Asia, East Asia, South Asia, Eurasia, Russian, with warm waters on the Arabian Sea, which will provide unlimited opportunities for the whole region in their journey toward prosperity. It connects Africa and Europe too.

Although China is developing the Gwadar port, but many other countries have consented to invest in Gwadar, including Russia, Saudi Arabia, UAE, Kuwait, Qatar, Japan, Korea, Malaysia, Iran, Turkey, and some of European countries & America.

China is a major oil-consuming nation. It consumes 10.3 million barrels a day of oil. And the irony is that it imports this amount from several different routes. 51% of its oil is imported, passing through The Straits of Malacca through the Middle East. 82% or about 400 million dollars, of this 51% of the oil takes a long time to reach the refineries, mainly in Shanghai. Almost 120 days turnaround time for the refineries to collect their money after the entire process is over and the oil is shipped. With Gwadar Port, the total journey time will be 28 days until the oil reaches the Chinese refineries. In financial terms, it means that Gwadar alone can handle $60 billion of oil imports a year. It is only for oil, yet the total magnitude of over-all trade will be much more than this figure.

The Western-part of China bordering Pakistan is an autonomous region of Xinjiang whose GDP is at 1 Trillion Yuan growing upward historically at an unprecedented 11% annually. This robust economy bordering Pakistan with a road network of BRI connecting 40 different regional nations, including Pakistan, will create an estimated 2.4 trillion dollar economy. Iran now has joined the BRI family with an estimated investment of $620 billion over 25 years; trade and investment deal with China may grow further. Iran is our brotherly neighbor and will be connected to the rest of the world through the Gwadar Port.

Reposts are welcomed with the reference to ORIENTAL REVIEW.
Print Friendly, PDF & Email
3 Comments
  1. …just an excellent article, an “opening eyes” one. Many thanks..!

  2. MUHAMMAD BILAL

    A BEST, SHORTEST, SAFE & CHEEPEST ROUT FOR CHINA & OTHERS

  3. SAMIR SARDANA

    The Future is GWADAR – which is the gateway to CPEC and the EDGE for the LOGISTICS CORRIDOR VIA PAKISTAN !

    Energy security for PRC and the new ENERGY CORRIDOR – with the EXPORT thrust via CPEC = SALVATION OF PAKISTAN

    The export strategy of Pakistan,should be based on export of water,labour,earth,defense and LDC benefits.Any other model will fail,as competitive nations,with deep pockets,will offer financial,fiscal and asset subsidies,to offset any advantage,that Pakistan,has w.r.t labour cost and geography (besides excellent logistics,and regulatory structures). dindooo hindoo

    Setting up manufacturing capacities,to cater to the local Pakistani market and exporting the surplus,is not viable,as Pakistan does not have economies of scale (even to realise the geometric impact,of lower labour costs).Planning capacities on that model,leads to the DISASTER of the Indian NPAs,of 350-400 Billion USD,with exports dead,and the inability of Indians,to compete,with the PRC.

    Export of Water – is export of animal proteins,exotic fruits and vegetables and agri to the GCC,EU and other parts of the world.Water from the skies or the earth,by rarefaction or condensation or precipitation,in the form of hail,rain or snow,is purely a function of geography, in a time span of a few decades.Over a period of 3-4000 years,some disasters can occur,like the disappearance of Saraswati (in Pakistan) or the diversion of rivers etc.

    Thus,water captures the fertility and agro-ecoonomic opportunities and variety of Pakistani soil,and also,the geo-strategic location of Pakistan (w.r.t access to GCC,Ports,Cheapest Point of Purchase for UN/FAO/WHO procurements for Afghanistan etc.)

    In Pakistan,Water is a Perpetual Resource,UNLIKE in India.In addition,many nations in the EU allow a COO certificate linked to a Geography,in that exporting nation, to give ADDITIONAL DUTY/SUBSIDY AND QUOTA BENEFITS. These are agriculture and agri-derivatives,like wine.Pakistan is the prime candidate, for the same,for exotic fruits etc., which have valuable and critical,downstream applications,in the EU.

    Export of Earth – is export of minerals,which ALSO,includes industries like Cement (which is export of lime,limestone and coal).Once the Coal Fields of Pakistan,are tapped,then it would include sale of power,as the cheapest way to transport power,is at the speed of light,via a grid – especially,when the Grid is set up by other nations.

    Pakistani Mineral Resources are almost perpetual,and in areas with very low density of population and ample water.Thus the scope for TOLERATING pollution is higher – and so,like in Nuke Power – if some latitude is granted w.r.t pollution,wastes,effluents,safety and environment – mining costs can crash exponentially.For a Perpetual reserve,with an exchange rate of Rs 160/USD,it is akin to burying US Dollars, 1000 meters in the earth,and starving on top of the earth.For a nation,with finite reserves (in the short term),there is an opportunity cost,of exports – in terms of the fact that,in 2023 (say),prices of several ores might be 2-5 times,current rates – and so,they can raise USD,from bankers,liening the mining reserves.

    Export of Defense – In conjunction with the PRC and the PLA/PLN.PLAF,Pakistan can perfect the technique of customising and innovating Chinese Defense Technology,for their use,and exporting lower technologies or the excess capacities to Africa,Central Asia,LATAM,South America and the Middle East (excluding the quasi Nato nations).With Chines=se Financial Aid, extensive credits can be given.There are many nations in the world,which the PRC would NOT like to make defense exports to.

    Export of Labour – Pakistan needs to be practical,to use low cost manufacturing technologies,which are labour intensive and require moderate power consumption,and some pollutive impact.Low Capital Costs,will lower the Operating and Financial Risk,and the skilled but CHEAPER labour cost,can be exported OUT.There would be several such technologies,several products and several markets.

    LDC – Lastly,Pakistan has to maximise the LDC benefits,using Chinese Capital and SEZs – with an appropriate mix of Chinese Labour and Domestic Input Costs,in the SEZ units, so that the COO is Pakistan,and the LDC benefits are availed of.

    SEZs – The SEZ policy of Pakistan has to be synthesised with the LDC gains,to ensure that the costs to the SEZ,are the lowest among all LDCs in the world.However,the Costs are not to be evaluated,as the Nominal Costs.So the land lease and other charges, payable by the SEZ to the Pakistani State, might not be the lowest – but on a NET differential Mode,w.r.t the Reduction in Logistics costs,to the Pakistani SEZ,it should be the LOWEST in the world. Once that is done,then as a thumb rule, to keep the laws simple, FREE EXIM needs to allowed and all Inputs (including Power etc.) should be sourcable,w/o caveats.So a SEZ should be able to set up a IPP/CPP/RPP,anywhere in Pakistan,with any fuel,with nil duty and taxes and the lowest wheeling and banking charges. dindooohindoo

    Corporate Tax holidays should start AT THE CHOICE of the Investor,FROM THE YEAR after which the Brought forward losses,of the SEZ are exhausted.And the Tax holiday should be co-terminus,with that of the longest holiday,by any LDC.The period of limitation, for the Choice of initiating the holiday period,should be upto 5 years,from commercial operations.

    Basically,even if Pakistan waives the Wheeling charges etc.,it does not matter,as the aim is to bring in the ANCHOR and other Investors in the SEZ. Thereafter,the principles of Self Preservation by the SEZs,and its units,will ensure that,the State will find ingenious ways to earn revenue – provided that,1st the ANCHOR comes in,and then, that the SEZ and the SEZ units,make money !

Leave a Reply to ienotmikhail Cancel reply