[CPEC] China Eximbank pledges government concessional loan for the Gwadar Port Berthing Areas and Channels Dredging Project

Project narrative

According to the Gwadar Port Authority, in December 2015, the Gwadar Port Berthing Areas and Channels Dredging Project worth PKR 2.8 billion was "underway". The China-Pakistan Economic Corridor (CPEC) website reports that the estimated cost of this USD 27 million project will be at least partially financed by a China Eximbank Government Concessional Loan (GCL). The face value and borrowing terms of this loan are unknown. As of September 2021, AidData has not identified any evidence of China Eximbank signing a final financing agreement for this project. The natural sedimentation of the port means that continuous dredging is required for sufficient depth to be maintained for larger vessels. The purpose of this particular dredging project is (1) to help the Gwadar Port Authority (the port's operator) construct additional terminals and (2) for smooth shipments to and from the existing berthing facilities. Under the Concession Agreement with Chinese Overseas Port Holding Company Limited (COPHCL), construction of breakwaters and dredging works are the responsibilities of Gwadar Port Authority. Maintenance dredging occurs periodically in order to maintain the current depth and provide landfill for port projects. Based on the CPEC website's (and Gwadar IQRA Associates' website) project description, as of December 3, 2018, an implementing contractor had not been selected yet and dredging plans were still under review. COPHCL has submitted a draft business plan to the Pakistan Ministry of Ports & Shipping for feedback. Moreover, a draft memorandum of understanding (MOU) for a joint technical and commercial feasibility study was still being reviewed by concerned ministries. According to the 2020-21 and 2021-22 Government of Pakistan public sector development plans, the feasibility study was a new scheme funded entirely by Pakistan. As of September 2021, it is unclear if works have began. In February 2023, China Harbour Engineering Company Ltd (CHEC) signed an agreement with Gwadar Port Authority (GPA) to begin the dredging project. The operations were to last 12 months. The original plan was for the dredging process to be done in two to three phases leading to allocations of Rs 1 billion in the 2022-2023 budget, however it was decided the dredging would be done at once with a final project cost at Rs 4.7 billion. CHEC began de-silting activity April 7, 2023 and a completion ceremony for the project was held March 8th, 2024. Gwadar Port, a deep warm-water harbor 470 km from Karachi, is strategically located on Indian Ocean near the Persian Gulf, Strait of Hormuz, and the oil rich Middle East. China has been providing financial support to the Government of Pakistan for developing this port since 2001. China Harbor Engineering Corporation (CHEC) implemented Phase I of construction. Prime Minister Shaukat Aziz inaugurated the Gwadar Port on March 20, 2007. On May 16, 2013, the port was taken over by China Overseas Ports Holding Company Limited (COPHC) under a 40-year concession agreement. In November 2015, over 2,000 acres adjacent to Gwadar was given to China for industrial development including terminal operations, marine services, a free trade area and an international airport.