Dubai Ports makes a quiet exit from Gwadar venture

MUMBAI: After the National Security Council (NSC) raised concerns over the Indian operations of Dubai Ports World (DPW), the world’s third-largest port/terminal operator, has quietly walked out of the development of Gwadar Port in Pakistan. In its recent report, NSC had said that the port operator’s strategic association in Pakistan is a matter of concern for India as the port is sponsored by the Chinese government.

Sources said DPW, which currently operates five ports/terminals in India, after its mega takeover of P&O Ports early this year, could not afford any adverse report from NSC, since it manages assets worth over $1billion in the country, and is looking for more investments. DPW is in talks with the Adani group to take over the second container terminal at Mundra (Gujarat), where it is already operating the first terminal.

Ganesh Raj, senior vice-president & managing director (India sub-continent), DPW, said, the company stayed away from bidding for Gwadar, but added, “the decision was taken based on the pure economics of the project.” A few other port operators such as Port of Singapore Authority (PSA) and Globe Marine Services (GMS) of Saudi Arabia are believed to be bidding for the project, deadline for which expired last week.

The port, which is currently into the Phase-II development, has been sponsored by the Chinese government, which is discussing with its Pakistani counterpart to build a rail route and an energy pipeline linking the two countries. The joint plan is to make Gwadar a landing point for international cargo headed to Western China through Balochistan. The port is expected to be operational in March next year.

A couple of months ago, DPW had emerged as the strong frontrunner to take over management of Gwadar port, subsequent to an announcement of a mega $10-billion construction programme in June 2006. The investment plan had been announced in Islamabad jointly by UAE prime minister Sheikh Mohammed Bin Rashid Al Maktoum and Pakistani PM Shaukat Aziz.
The first agreement covered the development of infrastructure and industrial projects, the second was targeted at building free zones and modern ports to be managed by DPW.

Chinese government is believed to have contributed almost $200 million for the first phase of the $1.6-billion Gwadar project, with Islamabad adding a further $50 million. Earlier, DPW was keen for a 30-year concession and a complete management control in the company, and had sought control over development, management and operations of Gwadar’s Phase-II development.

India has been a top priority for DPW. Apart from its existing operations at Nhava Sheva, Mundra, Chennai, Vizag and Kochi, DPW has committed $450 million for a minor port-cum-SEZ at Kulpi in Bengal.