Pakistan's Karachi port, facing financial difficulties, has entered into a lease agreement with the United Arab Emirates (UAE) for a sum of $220 million. The deal, announced on Thursday, is expected to provide a much-needed boost to Pakistan's struggling economy, which is burdened by crippling debt. The UAE's AD Ports Group, in partnership with Kaheel Terminals, will take over the operation of four berths at Karachi Port Trust (KPT) for the next five decades. This joint venture aims to make significant investments in infrastructure and superstructure over the next decade, including the deepening of berths, extension of the quay wall, and expansion of the container storage area.
By implementing these plans, the terminal's capacity will increase from handling 750,000 to a million containers annually. The improvements will also enable the port to accommodate larger vessels capable of carrying up to 8,500 containers. The majority of the development is scheduled to take place in 2026.
The UAE has been a significant contributor to Pakistan's economy, providing grants, loans, and direct investments. The country has previously assisted the Pakistani government in averting a default on its debt. The AD Ports Group, which holds the exclusive authority over port development and regulation in Abu Dhabi, has signed a 50-year concession agreement with KPT to manage and operate the Karachi Gateway Terminal Limited (KGTL) at the port's East Wharf. In the first decade of the joint venture, the UAE company plans to invest $220 million.
Pakistan's trade relations with the UAE have also been substantial. In 2021, the UAE was Pakistan's largest regional trading partner among Arab countries, accounting for over 40% of its trade. The non-oil exports from the UAE to Pakistan reached nearly $1.3 billion in 2022, according to Pakistan's Ministry of State for Foreign Affairs. The latest agreement between the UAE and Pakistan is expected to further strengthen their economic ties and contribute to the development of Karachi port as a key trade hub in the region.
