Iran's Chabahar vs Pakistan's Gwadar

[Riaz Haq]

Chabahar port in Iran is only about 100 miles from Gwadar port in Pakistan. Both are natural deep sea ports in the Arabian sea.

Gwadar Extends into Deep Sea with East & West Bays

Eastern Half of Gwadar Port

Gwadar port's planned capacity when it is completed will be 300 to 400 million tons of cargo annually.  It is comparable to the capacity of all of India's ports combined annual capacity of 500 million tons of cargo today.   It is far larger than the 10-12 million tons cargo handling capacity planned for Chabahar.

Completed Gwadar Berths & Cranes

To put Gwadar's scale in perspective, let's compare it with the largest US port of Long Beach which handles 80 million tons of cargo, about a quarter of what Gwadar will handle upon completion of the project. Gawadar port will be capable of handling the world's largest container ships and massive oil tankers.

Gawadar port is being built in Pakistan by the Chinese as part of the ambitious $46 billion China-Pakistan Economic Corridor (CPEC) that will eventually serve as Hong Kong West for  growing Chinese trade with the Middle East and Europe.  CPEC will also enable Pakistan to bypass Afghanistan to trade with Central Asia through China across China's borders with Tajikistan, Kyrgyzstan and Kazakhstan.

Gwadar Port Authority Building

Chabahar is ostensibly an Indian effort to build a port in Iran to bypass Pakistan for India's trade with landlocked Afghanistan and other Central Asian states.  Prime Minister Modi has committed $500 million investment in Chabahar, a tiny fraction of the Chinese commitment for Gwadar. A trilateral agreement was recently signed in Tehran by Indian Prime Minister Modi, Iranian President Rouhani and Afghan President Ghani.

Trade with Afghanistan through Afghan-Iran border in the West will probably remain a pipe dream given that 1) most of Afghan population lives in east and south close to the border with Pakistan and 2) Afghanistan has very poor infrastructure making it very difficult to move cargo across land from west to east and south of the country.

Big Chinese Ship Docked at Gwadar

Pakistan suspects that India's real objective in Iran is to locate its intelligence agents under the cover of Chabahar port construction workers to sabotage China-Pakistan Economic Corridor (CPEC) and support Baloch insurgency to destabilize Pakistan. These suspicions were strengthened when Indian spy Kulbhushan Yadav, operating under the fake name Husain Mubarak Patel, was arrested in Balochistan in March this year. Yadav confessed he was operating as an undercover RAW agent from his base in Chabahar, Iran.

If Iran does nothing to stop Indian covert activities from its soil against Pakistan, Iran-Pakistan relations could suffer irreparable harm. Efforts to sabotage CPEC will not please China either, and the Chinese are far more important to Iran as trading partners than India. This should give pause to hardline anti-Pakistan sectarian elements in Tehran.

https://www.youtube.com/watch?v=BsYDpMY35U8





Related Links:

Haq's Musings

Gwadar as Hong Kong West

China-Pakistan Industrial Corridor

Indian Spy Kulbhushan Yadav's Confession

Ex Indian Spy Documents RAW Successes Against Pakistan

Saleem Safi of GeoTV on Gwadar

Pakistan FDI Soaring with Chinese Money for CPEC

[Riaz Haq]

A newer and increasingly common option in conventional power projects involving Chinese contractors is a project finance structure
such as a BOT (build-operate-transfer). Under a BOT, developers set up and arrange loans to a special purpose vehicle (SPV) in the host country. Some 70-80% of the capital costs of construction will come from these loans, and the remainder will be provided by the developers through equity and / or other loans.

The SPV then enters into all the contracts needed for the project, including an engineering procurement construction (EPC) contract with the contractor. If the funding is from China, this EPC contract will almost always be with a Chinese contractor.

Conventional power projects are seen as particularly 'bankable' BOT projects, because the technology is usually tried and tested and there is a high likelihood that performance requirements will be met. These projects also do not generally require significant land acquisitions, or need extensive underground works, reducing the risk of delays and unforeseen problems. Many jurisdictions, in fact, now have standard form power purchase agreements and implementation agreements that offer to allocate project risks between the offtaker, the government and the developers in a split that is attractive to many lenders.

It has taken Chinese contractors some time to get used to EPC contracts under project financed structures, as these tend to be tough on the contractor. Rates of delay and performance liquidated damages, and the caps on these, are generally much higher, and the contractor's rights to additional time and cost are limited. Many of these rights have to match the power purchase agreement that the SPV has negotiated with the offtaker. However, the upside for the contractor is that the developers are often willing to pay a higher contract price in return for the contractor taking on these additional risks.

Where the finance for the project is coming from Chinese banks, the Chinese contractor may enjoy stronger bargaining power, although that is not always the case. There are plenty of Chinese contractors with the skills needed to build these power stations, and developers will often use the threat of switching negotiations to a competing contractor to get their way in negotiations.

Evolution to investment

Even before the launch of OBOR, the larger and more experienced Chinese contractors had begun the transition from a traditional contractor business model to a 'contractor plus investment' model. Now, the signs are that a significant proportion of OBOR projects will involve Chinese contractors making investments in the projects that they are engaged to construct, and conventional power projects have been among the first to use this structure.

The China Pakistan Economic Corridor (CPEC) has been among the first to see innovative project structures. The Thar Coal Block II project involves the development of an open pit coal mine and 660MW mine mouth power station through two SPVs set up by a consortium of Pakistani and Chinese investors, including a major Chinese contractor who will act as both EPC contractor and SPV equity participant. Project finance loans, including conventional RMB and Rupee Islamic tranches, are provided by syndicates of Pakistani and Chinese lenders including Habib Bank, United Bank, China Development Bank, Industrial and Commercial Bank of China and Construction Bank of China.

- See more at: http://www.conventuslaw.com/report/chinas-one-belt-one-road-policy-...

[Riaz Haq]

Wiki Loves Earth shortlists top 10 photos in #Pakistan round

http://www.dawn.com/news/1263551/wiki-loves-earth-shortlists-top-10...


You may remember the international photography competition Wiki Loves Earth from last year, in which a Pakistani photographer's capture of Shangrila Lake won the best international picture in 2015.

Wikimedia Foundation, the California-based non-profit organisation which runs Wikipedia, has organised the global photography competition again this year, and the best pictures from Pakistan to go onto compete at the international stage have been selected.

The competition, aimed at documenting the world’s natural heritage under the free license of Creative Commons, recently concluded in Pakistan after receiving an overwhelming response.

Over 1,200 contestants in Pakistan sent in over 8,000 photographs making it the country with the third-largest number of submissions and the greatest number of participants.

Wiki Loves Earth 2016 has seen more than 7,000 participants from 26 countries, with over 75,000 photographs submitted throughout the month of May.

The best thing about the competition is that all the photos have a free license and can be re-used for any purpose, as long as the user attributes the photographer.

The contest was first run in Ukraine in 2013 and has since spread globally.

It is described as the 'sister competition' to Wiki Loves Monuments, which is recognised by the Guinness Book of Records as the largest photography competition in the world.

Pakistan became a part of the competition for the first time last year and achieved the first position amongst 28 participating nations.

The international winners of Wiki Loves Earth 2016 are yet to be announced, but the top 10 pictures to represent Pakistan as decided by Pakistan’s jury are below:

Duiker Peak, Hunza. — Photo by Mudassir Ahmed

Nanga Parbat, Diamer. — Photo by M. Awais

Phandar Valley, Ghizer. — Photo by Muzaffar H. Bukhari

Katpana Desert at Skardu. — Photo by RgyalChan Karim

Naran, Kaghan Valley. — Photo by Talha Hanif

Chitral National Park. — Photo by Tahsin A Shah

Rama Lake, Astore. — Photo by Faiza Lalwani

The Karakoram mountain range, Astore Valley. — Photo by Najeeb Mahmud

Siri Paye, Shogran, Kaghan Valley. — Photo by Adeel ur Rehman Mughal

The Karakoram mountain range, Hunza Valley. — Photo by Irfan Tahir

[Riaz Haq]

$46 billion #CPEC: Projects worth $30b already under way, says Minister Ahsan Iqbal. #Gwadar #Pakistan

http://tribune.com.pk/story/1113820/46-billion-cpec-projects-worth-...

Projects worth $30 billion out of a total portfolio of $46 billion have been initiated in the last one year, said Minister for Planning, Development and Reform Ahsan Iqbal, adding that there was no bureaucratic hurdle in the implementation of China-Pakistan Economic Corridor (CPEC) schemes.

The financing arrangements for $30 billion CPEC projects are either finalised or are at various stages of approval, said Iqbal while addressing a press conference a day after the National Economic Council (NEC) meeting.

The minister said that most of the $30 billion active portfolio is in the private sector while financing agreements of road infrastructure projects of the public sector have also been signed.

Iqbal said that making $30 billion CPEC portfolio active in a limited period of one year was a big success for the country and it shows that there were no bureaucratic hurdles in the way of swift implementation.

Govt accused of not sharing details of CPEC projects

Iqbal’s comments came amid pressure to set up a CPEC authority for swift implementation of the projects that started under Chinese president’s strategic initiative, One-Belt One-Road.

The purpose of the proposed CPEC authority is said to fast-track approvals and monitoring of these schemes. However, the federal government has already turned down the request on the ground that it would add another bureaucratic layer.

Iqbal said that Gwadar port projects including New Gwadar International Airport and Eastbay Expressway have been forwarded to the Chinese side for financial approval. He hoped that this process would be completed in the next three months and work would begin soon.

According to Iqbal, the government has allocated Rs125 billion ($1.2 billion) for carrying out work on CPEC schemes during the new fiscal year 2016-17. “However, the allocations remain far less than the actual requirements.

“An amount of Rs60 billion has also been allocated for two LNG-fired power plants being set up in Punjab,” Iqbal added, hoping that these two projects would be completed by May next year.

He said in the last three years, 610 projects costing Rs747 billion have been completed. The minister said that the 1,320MW Port Qasim power project would be completed by September next year while the Thar Coal mining projects would be operational by 2018.

To a question whether Chahbahar Port of Iran was a threat to Gwadar port, the Minister said that Pakistan does not feel threatened by any project.

PSDP review

For the outgoing fiscal year, the federal government had allocated Rs700 billion for PSDP spending while the four provinces allocated Rs814 billion, bringing the total outlay to Rs1.514 trillion. However, the Planning Commission on Monday informed the NEC that the spending would remain close to Rs1.401 trillion.

Iqbal insisted that the Rs114 billion lesser spending than approved budget was not actually a cut but a result of administrative weaknesses, legal issues and capacity constraints. Contrary to this claim, the International Monetary Fund had reported about a year ago that the federal PSDP spending would remain lower than the Rs700 billion allocation.

[Riaz Haq]

I hear a lot of big container ships sail back empty out of US ports. http://www.wsj.com/articles/at-u-s-ports-exports-are-coming-up-empt...

One of the fastest-growing U.S. exports right now is air.

Shipments of empty containers out of the U.S. are surging this year, highlighting the impact the economic slowdown in China is having on U.S. exporters. The U.S. imports more from China than it sends back, but certain American industries—including those that supply scrap metal and wastepaper—feed China’s industrial production.

Those exporters have suffered this year as China’s economy has cooled. In September, the Port of Long Beach, Calif., part of the country’s busiest ocean-shipping gateway, handled 197,076 outbound empty boxes. They accounted for nearly a third of all containers that moved through the port last month. September was the eighth straight month in which empty containers leaving Long Beach outnumbered those loaded with exports.

The empties are shipping out at a faster rate at many U.S. ports, particularly those closely tied to trade with China, while shipments of containers loaded with goods are declining as exporters find it tougher to make foreign sales. That’s at least partly because the strong dollar makes American goods more expensive.

Normally, after containers filled with consumer goods are delivered to the U.S. and unloaded, they return to export hubs. There, they typically are stuffed with American agricultural products, certain high-end consumer goods and large volumes of the heavy, bulk refuse that is recycled through China’s factories into products or packaging.

Last month, however, Long Beach and the Port of Oakland both reported double-digit gains in exports of empty containers. So far this year, empties at the two ports are up more than 20% from a year earlier.


Long Beach’s containerized exports were down 8.2% this year through September, while Oakland’s volume of outbound loaded containers fell 12.7% from a year earlier in the January-September period.

“This is a thermometer,” said Jock O’Connell, an international-trade economist at Beacon Economics. “The thing to worry about is if the trade imbalance starts to widen.”

Trade figures released Tuesday in Beijing underscored China’s faltering demand. China’s imports fell 20.4% year-over-year in September following a 13.8% decline in August.

As of June, U.S. exports of scrap materials were down 36% from their peak of $32.6 billion in 2011.

The diminished demand for the industrial material reflects economic weakness that goes beyond China, said Paul Bingham, an economist with the Economic Development Research Group Inc. It also suggests slowing consumer demand in Europe, he said.

The U.S. trade gap has expanded sharply in recent months as exports have slipped, growing 15.6% in August to a seasonally adjusted $48.3 billion, according to the Commerce Department. U.S. exports fell 2% in the month to their lowest level since October 2012.

Outbound empties have mounted this year at other big gateways, too. In August, the Port of Los Angeles, the country’s largest single container port, handled more than 225,000 empty outbound containers, counted in twenty-foot equivalent units, a standard maritime industry measure. That was 21% more than a year earlier. The Port Authority of New York and New Jersey expanded its empty-container exports nearly 31.5% in the first eight months of this year, and empties outnumbered loaded container exports over that time.

[Riaz Haq]

#China Grants $260m for #Gwadar International Airport in #Pakistan #CPEC http://crss.pk/story/china-grants-260m-for-gwadar-airport/ …

China is granting Pakistan some $260 million for the construction of the Gwadar International Airport on the Arabian Sea, national media reported Tuesday.

Government officials shared this information with the Parliamentary Committee on China-Pakistan Economic Corridor (CPEC) in a recent meeting at Islamabad, the daily Express Tribune said. The entire amount of $ 260 million is a grant from the Chinese government, the parliamentarians were informed. (http://tribune.com.pk/story/1136476/infrastructure-gwadar-airport-c...)

Gwadar, also being developed as a deep-sea port, is the culmination of the CPEC – the first initiative under China’s One Belt One Road (OBOR) trade connectivity plans – that will connect Kashgar in west Chinese province of Xinjiang  through a nearly 3000 km route.

Gwadar is located in the ethnic Baloch part of the southwestern Balochistan province, where a low-intensity Baloch nationalist movement has been stoking unrest.

This airport would be able to handle the largest of passenger planes including the A380 Air Bus and Boeing 747-400.

Additionally, the Chinese government has given another grant of $10 million for the construction of the Pakistan-China Vocational and Technical Training Institute to help locals acquire skills.

These grants are part of  $ 46 billion infrastructure investment and communications’ development plan under the CPEC. It includes construction of highways, industrial zones, and energy projects across Pakistan.

[Riaz Haq]

Li Ka-Shing’s 2nd #Pakistan Container Terminal to Start Operations at #Karachi Port Soon http://bloom.bg/2bcCjyH via @markets

Billionaire Li Ka-shing’s Hutchison Port Holdings Ltd. is set to start its second Pakistan terminal after a five-year delay, giving mega vessels access to the coastal city of Karachi for the first time.
Hutchison’s terminal operations in South Asia’s second-largest economy will commence before the end of this year, as agreed with the Karachi Port Trust, the company said in an e-mailed reply to questions on Monday.
Li’s company, a unit of his Hong Kong-based flagship CK Hutchison Holdings Ltd., is tapping into expanding growth in Pakistan as China plans investments valued at $46 billion in power plants and road projects. Prime Minister Nawaz Sharif’s government is targeting an annual growth rate of 7 percent next year as the country is set to complete an International Monetary Fund loan program next month.
“Pakistan has been lagging behind big time and now we are moving into the future with this terminal being one of the deepest in the region,” Abid Butt, chief executive officer of Karachi-based freight company e2e Supply Chain Management Ltd., said by phone. “The port can become a transshipment location given India is congested and located better than Dubai’s Jabel Ali.”
Hutchison Port shares gained 1.2 percent to 0.440 Singapore dollars as of 9:01 a.m. in Singapore trading. The stock was down 18 percent this year as of the close Monday.
Karachi Delays
More than half of the nation’s total trade is done through transshipment, said Butt. However, roads around the port in Pakistan’s biggest city will need to be expanded to accommodate cargo from the world’s largest ships, he said.
South Asia Pakistan Terminals Ltd. will handle as much as 1.7 million twenty-foot equivalent units a year and increase the nation’s container handling capacity by more than half, according to a person familiar with the matter, who asked not to be identified as the plans are private.
Hutchison’s port will begin operations in the last week of October and will aim to handle 250,000 twenty-foot equivalent units in the first year of operations and increase that to more than 2 million in five years, the person said.
The commercial operations of the terminal with a depth of 16 meters was initially expected to start in 2011, four years after the agreement. Bureaucratic wrangling and a slowdown in road construction and dredging delayed the port operator’s plans, the person said. Some road works and dredging are still not complete, the person said.
‘Leftover Dredging’
“Most of the work is done and the leftover dredging and road work will be complete before the launch,” said Shafiq Faridi, spokesman for the Karachi Port Trust said by phone.
Pakistan handles about 2.5 million twenty-foot equivalent, including Hutchison’s first venture Karachi International Container Terminal that started in 1998.

[Riaz Haq]

Published: 27 Jun 2016
Pakistan Vision 2025 seeks to enhance the national transportation infrastructure by establishing an efficient and integrated transportation and logistics system. Establishing industrial parks and developing SEZs along the China–Pakistan Economic Corridor (CPEC) will strengthen the transportation network and logistics infrastructure. Road freight transportation contributed over 90% of the goods transported by land. Rail freight is likely to gain share due to modernization and expansion. High priority is given to road network development. Private sector participation in logistics infrastructure development is likely to gain momentum, and transportation and warehousing are likely to lead logistics industry growth during 2016–2020.

The potential opportunities in the logistics industry in Pakistan, is estimated at approximately US $ 30.77 billion in 2015. Key targets set in the national development initiatives for the transportation sector include reduction in transportation costs, effective connectivity between rural areas and urban centres, inter-provincial high-speed connectivity. Also high priority is given for the development of integrated road/rail networks between economic hubs (including air, sea and dry ports) and high capacity transportation corridors connecting with major regional trading partners

Up-gradation of all major airports to trans-shipment hubs, development of cargo villages, modernization of rail transport, E-commerce, CPEC related investments in industrial centres and Special Economic Zones (SEZs) will serve as primary macro drivers for logistics sector growth. CPEC related projects intend to upgrade and modernize road transport and related logistics infrastructure such as logistics park and establishment of cargo villages at major airports. Hence, high priority is given for road network development; private sector participation in logistics infrastructure development is likely to gain momentum.

Storage and Warehousing demand from CPEC related industrial corridors are likely to derive increased storage and warehousing requirements including cold chain logistics, establishment of Cargo Villages Ports will facilitate goods traffic to central Asian countries and evolve as a major transhipment hub in the region.

Freight forwarding opportunities expected to increase due to increasing trade activities through Karachi and Port Qasim. Trade reforms expected to increase volume of trade with increase in inter and intra-regional trade. Development of new port at Gwadar generates demand for warehousing, special economic zone, road and railway infrastructure network. As the connectivity and linkage improves, this port will emerge as one of the major transhipment hub in the region - transhipment goods to China, Central Asian countries

Energy and Transportation sectors are expected to see high growth due to increased investment relating to CPEC and National Transportation Plans between 2016 and 2020. This is expected to growth of transportation and warehousing segments between 2016 and 2020.

http://www.frost.com/sublib/display-report.do?id=9AB2-00-57-00-00&a...

[Riaz Haq]

#India and #Iran Slow to Develop #Chabahar Port as #China Builds Rival Hub at #Gwadar. #CPEC http://bloom.bg/2dHPVbw via @markets

When the leaders of India, Iran and Afghanistan gathered in Tehran in the spring for a ceremony marking India’s development of a strategic Iranian port, they recited Persian poetry and said their partnership would “alter the course of history.”
On a recent visit, roughly 13 years after India first agreed to develop the port of Chabahar, a single ship floated at the main jetty. Most of the cargo containers scattered in an asphalt lot bore the logo of the state-owned Islamic Republic of Iran Shipping Lines. In an adjacent harbor, a dozen wooden dhows, or traditional fishing boats, bobbed in the water.
Months after the ceremony in May and pledges by India to inject $500 million into the project, the much-heralded port of Chabahar remains a sleepy outpost – as well as a shadow of the Chinese-built port of Gwadar, 100 kilometers (62 miles) to the east across Iran’s border with Pakistan.
“What you’re seeing is the problem with many of the Indian commitments abroad,” said Sameer Patil, an analyst at Gateway House, a research organization in Mumbai. “Once a prime minister makes that commitment, the parties find it difficult to move the process forward. The Indian bureaucracy takes its sweet time.”

Chabahar was supposed to be an easy win: India would bankroll a hub to rival the China-Pakistan partnership at Gwadar, Iran would get a major ocean port outside the Strait of Hormuz and spur growth in its poor eastern region, and Afghanistan would gain road and rail links to a deep-water port that could boost its war-ravaged economy. But more than a decade on, the strategic asset is languishing, even as China sinks $45 billion into the China Pakistan Economic Corridor that winds down to Gwadar.

“The slowness comes from these small things,” said Mosadeghi, who heads the economic section at Iran’s embassy in New Delhi. “Both sides want to expedite this.”
For Prime Minister Narendra Modi, Chabahar could aid his goals of integrating South Asia’s economies and boosting India’s stature in the region. However, the slow pace of its development has drawn criticism.
“With China and Pakistan developing Gwadar just a few kilometers away, India cannot afford either delay or inattention to this vital port,” said Shashi Tharoor, a lawmaker with India’s opposition Congress Party and chairman of a parliamentary committee on foreign affairs.
Chabahar could be a linchpin for the region’s economy. It’s close to the western Indian ports of Kandla, Mundra and Mumbai and could help India’s farmers get cheaper access to fertilizers and other commodities from central Asia and beyond.

[Riaz Haq]

GWADAR: First Chinese ship finally arrived at Gwadar port that is center of $46 billion China-Pakistan economic corridor (CPEC) project between Beijing and Islamabad, Samaa reported Sunday.

The project is the beginning of a journey of prosperity of Pakistan. The economic corridor is about 3000 Kilometres long consisting of highways, railways and pipelines that will connect China’s Xinjiang province to rest of the world through Pakistan’s Gwadar port.

To strengthen economic activities at the port, Prime Minister Nawaz Sharif has recently unveiled five developmental projects for Gwadar.

These are Free Trade Zone, Business Complex of Gwadar Port Authority, Pak-China Government Primary School Faqir Colony, Sawar and Shadikor dams and Gwadar University.

Gwadar, the nerve centre of CPEC, is fast transforming into an international city. Gwadar has the potential to become a world class sea port and a place which is not only important for Pakistan, but also for the region and the world. – Samaa

http://www.samaa.tv/economy/2016/10/first-chinese-ship-docks-at-gwa...

[Riaz Haq]

Fast track completion of CPEC projects to change the infrastructure development landscape of the country

Western Route of China-Pakistan Economic will be completed by 2018. Gawadar-Quetta Road will be completed by next month, ahead of its scheduled time. Now Gwadar is connected with Quetta, Afghanistan, Central Asian states and rest of the country through this route. Work on Dera Ismail Khan-Quetta Road has also been initiated. Dera Ismail Khan-Burhan Road will be completed by year 2018. Special attention has been given to Sindh and Balochistan in CPEC projects.

http://www.radio.gov.pk/07-Nov-2016/fast-track-completion-of-cpec-p...