Outsourcing of operation of KPT to UAE: CCoIGCT approves ‘price discovery mechanism’

ISLAMABAD: A meeting of the Cabinet Committee on Inter-Governmental Commercial Transactions (CCoIGCT) has approved the price discovery mechanism for the outsourcing of the operation of the KPT to the UAE.

On a summary moved by Maritime Affairs, the CCoIGCT presided over by Finance Minister Ishaq Dar on Thursday was told that the Ministry of Foreign Affairs forwarded the UAE ambassador’s letter dated July 3, 2023, enclosing proposed G2G agreement between the government of the UAE and Pakistan for the development of bulk and general cargo terminal at East Wharf, Karachi port.

While considering the proposals of the summary, the CCoIGCT on July 14, 2023, constituted a framework agreement committee to be headed by the secretary Law and Justice Division for negotiation with the Government of the UAE on draft G2G Agreement and it was placed before the CCoIGCT for approval.

The CCoIGCT approved the proposal which was also ratified by the federal cabinet for the signing of the framework agreement.

The framework agreement was accordingly signed electronically by the representatives of the government of the UAE and the government of Pakistan and the next steps are to decide price discovery mechanism, framing of a commercial agreement and constitution of a committee to negotiate on the terms, conditions and comparison mechanism for price discovery and place its recommendations before the CCoIGCT for consideration and approval.

The meeting was told that the KPT has submitted the basis for price discovery mechanism with variables to be used to carry out the comparisons for price discovery on outsourcing of the operations of the terminal.

The mechanism and parameters for price discovery included(I)term of the agreement;(2) cost of construction or reconstruction of terminal;(3) life span of terminal;(4) maximum capacity to handle cargo;(5) length of quay wall;(6) royalty (per ton or fixed or gross revenue basis);(7) land rein per square meter in bonded area;(8) storage charges;(9) dock labour charges;(10) up-front payment (adjustable);(11) up-front payment (non-adjustable); and (12) quantum and type of investment.

The KPT also submitted the valuation of the Bulk and General Cargo Terminal at East Wharf Karachi Port as desired by the CColGCT.

The KPT proposed to the CColGCT that it may;(i) approve the price discovery mechanism containing variables to be used to carry out the comparisons for the purpose of price discovery by the Negotiation Committee to be nominated by the CColGCT;(ii) a committee may be constituted to frame a commercial agreement, and negotiate the terms, conditions and comparison mechanism for price discovery and place its recommendations in the next meeting of CColGCT for consideration and approval.

Copyright Business Recorder, 2023