'Gwadar can become a Shenzhen-level city in ten years,' Dostain Khan Jamaldini, Chairman, Gwadar Port Authority

BR Research recently visited Gwadar to get a look and feel of CPEC projects in the famous fishing district. There we also had a detailed sit-down with Dostain Khan Jamaldini, Chairman, Gwadar Port Authority (GPA). Mr. Jamaldini started his civil services career in 1990.

He has served on many top positions in Balochistan, including Secretary Finance, Secretary Energy, Secretary Religious Affairs, Joint Chief of Economics, and Chief, Planning and Development. Mr. Jamaldini has been serving as Chairman GPA since 2013. Following are edited excerpts from our extended discussion on issues related to the planning and development of the Gwadar Port and the Gwadar Free Zone:

<B>BR Research: Development of Gwadar Port has been on the policy radar since almost a quarter century. Why did it have to wait for a major bilateral investment to come back to life?</B>

<B>Dostain Khan Jamaldini:</B> The thinking to develop Gwadar as a port city came in 1964, when it was realized that the port in Karachi was not enough for foreign trade and it was too close to the Indian border. But for decades, progress lacked due to operational and funding difficulties. After all, it was a project located more than 600 kilometers from the nearest big city, Karachi.

When a national effort to integrate the Makran Division with the rest of the country started in the 70s, it was decided to build airports in these areas first, as the thinking went that building road connectivity would take time. That is why, despite the poverty and under-development in these areas, you will see many airports, about five, for a very low population base, in the Makran division. That was a planning decision, in part influenced by Pakistanis moving to the GCC region for labour. Port development, however, continued to suffer.

Gwadar Port came into focus again in the early 90s, during the first Nawaz Sharif government, when KPT was given the task to develop it. The PC-I of Gwadar Deep Sea Port Project was approved by ECNEC in 1999. Finally, work started in 2000 with the financial support from the government of People's Republic of China. But the fact was that the whole Gwadar region was disconnected from the rest of the country and the port was being built in a city, which had major issues of water and electric supplies and had no road and rail connectivity. However, to support the port and the city a number of infrastructure projects were initiated during 2000s. Except the Makran Coastal Highway (N-10), all the remaining connectivity and basic infrastructure projects either remained slow in implementation, or shelved. It was only from early 2014 that the implementation of these projects restarted.

<B>BRR: Now that the port project is at the heart of CPEC, what does the potential look like?</B>

<B>Jamaldini:</B> Gwadar Port is currently a small port, but the area that it straddles can potentially house more than 120 berths. That's the promise. An international bidding took place in 2006 that resulted in the port's 2007 master plan, which identified a potential of more than eighty berths. Now the China Overseas Ports Holding Company Limited (COPHCL) is working on project feasibility and design of the first expansion of the port so that they can build more berths in less area. The concession area granted to the Chinese is about 21 to 22 kilometers sea-front area. Another potential expansion area of 29 kilometers lies outside this concession area. The master plan recommends building multipurpose, container, dry and liquid cargo terminals and handling facilities around this area. This is a comprehensive and massive port development project.

<B>BRR: Why do we not see operational activity at the port?</B>

<B>Jamaldini:</B> Technically speaking, the current multipurpose terminal is operational with ability to handle container, break-bulk and loose dry bulk cargo, as well as vehicular shipment through its Roll-on/Roll-off facility. However, there are some issues that need to be addressed before the port can become fully operational in commercial sense.

Connectivity is one issue. The development of the Eastbay Expressway is absolutely critical to port operations. Currently a 50,000-60,000 tons cargo from a single urea ship fills up the whole city with some 3,500 trucks, which take about ten days to leave the city. The port cannot become operational in a situation where roads are not developed and there is no railway line. Then there is the utilities situation, where electric supply is not adequate and required amount of water is not available. Also, production and consumption base is absent in its immediate hinterland area, though we have already started creating a base for industrial production and consumption within Gwadar port via Gwadar Port Free Zone.

<B>BRR: Were there any specific timelines for development of connectivity and utilities for port's use?</B>

<B>Jamaldini:</B> Yes, with coming up of China Pakistan Economic Corridor (CPEC), we have agreed on timelines on implementation of different projects of Early Harvest Phase (which is the pre-short term phase of CPEC). Since CPEC is a bilateral project; there are some procedural delays on both sides. The Eastbay Expressway was approved in 2015 and it was supposed to complete in 30 months, but the project has not started yet. It is a similar situation with the new airport project, which has a 36 month timeline. Also with water and power supplies it is the same situation and the Chinese have been asking us to fast-track utilities for port development. The coal-fired 300MW power plant, which we have been urging the Ministry of Water and Power to start on a war footing since 2015, is still on paper. The Pakistan-China Vocational Training Institution (PCVTI) project was supposed to complete in two years, but it is still in a project-finance feasibility-study stage by the Chinese side.

Some progress is happening though. The government had approved the handover of land for the Free Zone project back in 2014. The Chinese were initially hesitant to take over the land because doing so would have started their lease period without connectivity and utilities in place. I convinced them to do so and now the project is under construction within its pilot phase area. Previously, the top concern of Chinese port operator, and other investors in Gwadar used to be security. But now Gwadar is peaceful. Thanks to the government and the army, a special security division has been raised and immediately its first brigade was moved to Gwadar during early 2016. At our insistence, the work on N85 and M8 was completed in record time by NHA and FWO. At our insistence, the Government of Balochistan has also started work on two dams and completed them - Shadi Kaur and Sawar Kaur dams.

But things need to go at a faster pace on utilities. With the 10-12 MW that we receive from the grid, we cannot run the port and the planned industries in Gwadar. One option was to import 100MW from Iran, but due to financial sanctions on Iran, that proposal is still on paper. The already existing transmission network can transmit another 30MW from Iran, and in fact, negotiations have just concluded on that proposal, but due to growing population in bordering areas, very little of the additional 30MW will reach Gwadar. The Chinese government instructed one of its state-owned companies to start the coal-fired power project on IPP basis and the honourable Prime Minister has directed the relevant authorities to complete the formalities so that the work is started before March 31, 2017. The project will take up to three years.

As for water, the two million gallon per day desalination plant, funded by the Federal Government and implemented by the Balochistan Government with almost one billion rupees, is no more operational due to a technical fault. We have asked the provincial government to rehabilitate the plant. For the new city, Gwadar Development Authority (GDA) has proposed and China has agreed under CPEC a complete water management project, which will have connectivity with the dams, have a five million gallon per day desalination plant, install a distribution system for the city, and make provisions for rainwater, water treatment, and sewerage. The project, which has three phases, will meet requirements for the medium term. Connectivity with dams will be overseen by GDA under local funding. The Chinese component will oversee the desalination plant, water distribution and water treatment within the city.

<B>BRR: So essentially, port operations are dependent on water, power, and transport connectivity.</B>

<B.Jamaldini:</B> Gwadar Port is a massive Greenfield project within a Greenfield city. The previous port development project had built a 4.5MW power project, which is functional and runs on expensive furnace oil. It also installed 100,000 gallons per day desalination plant, which is also functional. These two inputs are sufficient for the current port capacity, but for port expansion and Free Zone development, the port needs much more water and electricity. The whole concept of a functioning Gwadar Port will not materialize until you address these basic issues.

<B>BRR: What is the root-cause behind these many delays?</B>

<B>Jamaldini:</B> The basic reason, I will again stress, is the Greenfield nature of Gwadar. When they tried to build a deep-sea port in Karachi, they did it within an established port, which was located in a mega city where there was no shortage of labour, contractors, equipment, water and power supplies. And how long did it take for that port to come online? Well, that deep-sea port still hasn't come online. Pakistan's development planning has never really focused on maritime sector development. Focus has been on building roads, agriculture, and agro-based industries, as a result of which institutional and human capacity for maritime sector has lagged other sectors and this lacking is clearly exhibited in case of implementing mega Gwadar Project.

<B>BRR: What is the outlook on those three inputs in 2017?</B>

<B>Jamaldini:</B> We, the CPEC team, had thought that 2016 would be the year when things would move faster vis-à-vis Gwadar Port and Gwadar City. But that didn't happen. We need to keep in mind that CPEC is basically for trade and industrialisation - the port and the roads infrastructure is only there to facilitate. Pakistan's biggest economic bottleneck is energy right now. We saw that CPEC-related energy projects took off in 2015, and by 2018 Pakistan might have up to 7000-8000MW additional power in the system. We believe that energy projects have been getting the necessary attention, and perhaps 2017 would see more attention directed towards other projects.

We also need to understand that overland connectivity is essential for the functioning of the Gwadar Port. Road connectivity is seeing progress under CPEC. Gwadar needs land connectivity not only to Xinjiang but also to Iran, Afghanistan, and the Central Asia Republics (CARs). We are hoping that work on the Eastbay Expressway will start at the latest by March and on the new Airport by April. Under CPEC, we have agreed to start South-North connectivity by constructing Gwadar-Panjgur-Mashkail-Nokundi highway so that to connect Gwadar Port with the mineral-rich Chagai district in the short-term and later linking it with CARs through Afghanistan in mid-to-long term.

By using the water and power supplies available within the port, we have convinced the Chinese to start the next phase in the Free Zone area so that the businesses' applications can be processed this year and work on building a small industrial base can commence from May this year.

<B>BRR: Do you think that Nespak had the adequate technical and human capabilities to conduct the city's master plan back then? Also, is the port's 2007 master plan still relevant?</B>

<B>Jamaldini:</B> No, Nespak did not have the capacity when it worked on the City master plan back in early 2000s, although it prepared a dependable city development framework. But the 2007 Gwadar Port master plan is still relevant, as it is part of Gwadar Port Concession Agreement. In fact, the first phase of the master plan, which should have been implemented by now, we had started implementing it from 2014 by developing the things that are immediately allied to the port. These include setting up a small industrial setup, resolving immediate connectivity issues, providing water and electricity, and enhancing security. In short, Eastbay Expressway and Free Zone: these are the two priorities, which will help create activity on the port.