Pakistan had identified Gwadar as a port site as far back as 1954 when Gwadar was still under Omani rule. After 200 years of Omani rule, Pakistan purchased Gwadar from Oman for $3 million on 8 September 1958. Most of the money for the purchase from Oman came from donations, with Prince Sultan Mohammad Shah, the reigning Aga Khan of that time, being the leading contributor. Pakistan-Oman agreement had two important clauses: all Balochistan would form catchment for recruiting Omani forces and the resources of Gwadar would be further developed. Resultantly, the Baloch people constitute a major part of Omani forces. At that time, Gwadar was a small and underdeveloped fishing village with a population of a few thousand, now it is a sprawling township with a population of 80,000.
In this era of globalization no country could afford to live in isolation. Pakistan is actively pursuing various regional connectivity projects like TAPI, CASA 1000, IP, Torkham-Jalalabad-Kabul motorway, ECO container project etc. During the mid-1950s Pakistan approached the United States and in mid-1970s it approached erstwhile USSR for developing Gwadar port, but both did not show any interest. Ultimately, it is the all-weather friend China that has come up to realize this project. Phase I of Gwadar Port was developed by the Government of Pakistan at a cost of USD $248 million. Phase II at the projected cost of USD $932 million is under construction. China has been instrumental in design of the project. China is providing approximately 80% of the cost of the port in the shape of grants and soft loans. Over 500 Chinese experts and workers are working on the project.
The benefits of Gwadar projects are by no means likely to remain restricted to China and Pakistan as the entire region is destined to benefit from it. A trans-regional facility is propping up that will drastically cut down distances between various destination, create new routes and provide port access to a number of landlocked countries of Asia, through shortest land route. Gwadar port is a warm-water, deep-sea port, it would remain functional throughout the year. It is a major transit destination in the Chinese concept of One Belt One Road, and a vital node of Pakistan Economic Corridor (CPEC). Seeing the relevance of the project, Iran, Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan have shown their willingness to join the CPEC project. In February 2013, Iran announced that it would set up a $4 billion oil refinery in Gwadar. Gwadar has the potential to acquire the status of a centrepiece as a gateway to the Strait of Hormuz and improving the exiting links to the Caspian Region, Long-term Planning Document of CPEC aims at inducting any investor—coming from any corner of the World—who wants to be a partner and use this Gateway.
Gwadar Port is owned by the Gwadar Port Authority and operated by state-run Chinese firm — China Overseas Port Holding Company (COPHC). The Chief Minister Balochistan is the Ex-officio head of this gigantic project. Incumbent CM Dr. Abdul Malik Baloch decided on October 11, 2015 to engage local people in major projects, including the China-Pakistan Economic Corridor (CPEC), to remove their sense of deprivation. The CM has directed to pay price of the land to owners before starting work on projects, land acquisition has been done at generous prices to benefit the local land owners, and compensation paid is many times over the market price. CM also opined that the CPEC would boost economic activities and create a large number of jobs in the region; and the people of Gwadar should be major beneficiary of the port and associated projects. “Balochistan is a very important province of the country and Gwadar is the heart of Balochistan. Therefore, the people of Gwadar are entitled to get all basic civic facilities,” he said. Since a major bulk of the two-way flow of goods between western China and Central Asia and Gwadar will pass using overland trade route of Balochistan, the province shall have a regular income of millions of dollars in transit fee.
A 50-bed hospital in Gwadar would be made functional soon. Other people friendly projects include setting up of girls’ colleges, water filtration plant for clean drinking water, making Gwadar city clean and providing facilities for fish export and cross-border trade. The Federal government is in the process of setting up facilities related to immigration, customs and trade in Gwadar, Mand, Panjgur and Mashkel areas.
Following the completion of Phase I, on 1 February 2007 a 40-year agreement was signed with Port Singapore Authority International (PSA International) for the development and operation of the tax-free port and duty-free trade zone. Wide ranging tax concessions were given to PSA International and on its part, PSA International was expected to invest US$550 million in five to ten years on creating the operational facilities. However, PSA International failed to keep its commitments and port operations could not take off. Therefore, on February 18, 2013 Pakistan awarded the contract for construction and operation of Gwadar Port to China. Under the contract, the port will remain the property of Pakistan but would be operated by the state-run Chinese firm, China Overseas Port Holding Company (COPHC). Once again Chinese government has come forward to help Pakistan in operationalizing a dormant port.
Currently, Pakistan has two main operating international deep-sea ports: Karachi Port and Port Qasim. During the coming years, their capacity expansion programmes are unlikely to keep pace with the expected growth in demand, resulting in a need for a third port to fill the gap. In particular, Karachi Port has significant physical limitations. These limitations result mainly from its location, within the city of Karachi. Though Port Qasim has a large physical space for expansion, its possible speed of development is hampered by its up-stream location, which is more than 40 km from the open sea, resulting in long turnaround times for visiting ships. Against this background, it was deemed timely to construct a third deep-sea port for Pakistan so as to ensure that national development is not hampered by a lack of national port capacity in the future.
Gwadar deep sea port is the second great monument of Pakistan-China friendship. Port is strategically important to China because it will enable China to move its trade goods more safely, reliably and faster. Currently, sixty percent of China’s oil is transported by ship from the Persian Gulf to Shanghai, at a distance of more than 16,000 kilometres. The journey takes two to three months. Using Gwadar port instead will reduce the distance to less than 5000 Km.
Although some analysts claim that China intends to establish a naval presence at Gwadar, others argue that China will be cautious about such a development. China may not wish to provoke a significant reaction from both the United States and India. And with a Pakistan Navy Base at Ormara and Pakistan Air Force’s Forward Operating Base at Pasni there is no need for additional naval or air base for protecting Gwadar port.
Development and operationalization of port is poised to usher in an era of prosperity for the people of Gwadar in particular and the entire Balochistan in general. Gwadar port is expected to generate billions of dollars in revenues and create at least two million jobs. According to the Eighteenth Constitutional Amendment, 7th National Finance Commission Award and “Aaghaz-e-Haqooq-e-Balochistan package, local populations shall be given priority for these jobs and major chunk of revenue would also go to the provincial government.
