Unable to meet its forex requirements, Pakistan’s capital Islamabad is selling its public assets to third countries. Islamabad leased four of its berths 6-9 at Karachi Port’s East Wharf to a UAE-based company for USD 220 million.
Under the term of the 50-year concession agreement, the newly created Karachi Gateway Terminal Ltd. (KGTL) would manage, operate, develop port terminals and increase its capacity. The move marks the first inter-governmental transaction under a law enacted last year to raise emergency funds.
Leasing of terminal solves twin purposes. As it provides urgently needed forex, it also reduces the burden of providing forex for critical imports required for handling and developing the port. Though Islamabad was offering its assets since last year, no one showed interest. But now one of its friendly countries, the UAE has agreed to buy an interest in Karachi port to bail out the country at a time of unprecedented forex crisis. The ongoing political and economic uncertainties had kept foreign investors out of Pakistan.
Meanwhile, Islamabad has decided to lease out the first phase of the New Islamabad International Airport to international investors. Its plan to lease out other two international airports in Karachi and Lahore faced difficulties, mainly due to nonpayment of dues by Pakistan International Airlines and other pending dues. Moreover, the Islamabad airport has ‘clean’ transactions compared to other airports. It is a general knowledge and perception that Pak public assets are not clean for businesses and investments.