CHINESE ACTIVITIES IN BALOCHISTAN
by B.Raman
There has been an increase in Chinese activities in
Balochistan since Gen.Pervez Musharraf, the self-styled Pakistani Chief
Executive, seized power on October 12,1999.
Even before the military take-over, the Governments of
Mrs.Benazir Bhutto and Mr.Nawaz Sharif had awarded to Chinese firms
contracts for the exploitation of the gold-copper reserves at Saindak in
Balochistan and part of the natural gas reserves of Sui.
However, the Saindak project has been lying idle since
1995 due to the bad law and order situation in Balochistan, the hostility
of the Balochi nationalists and shortage of working capital. In 1998, the
Nawaz Sharif Government had started negotiations with a consortium of
Western banks for a credit to re-start the project, but the banks withdrew
from the negotiations after the Chagai nuclear tests.
During the five-day visit of the Chinese Prime Minister,
Mr.Zhu Rongji, to Pakistan from May 11, China agreed to re-open the
project with an investment of US $ 40 million. The project would be given
on lease to the Metallurgical Corporation of China (MCC), for US $ 500,000
per month for 10 years, with the produce being equally shared by the
Chinese Corporation and Pakistan.
The Nawaz Sharif Government had awarded to a Chinese
petroleum firm, the Bureau of Geophysical Prospecting (BGP), a one
million-dollar contract for a seismic survey over 178 kilometres in Sui.
This was the first time that the Chinese had entered gas and oil
exploration activities in the country, which were till then largely in the
hands of American and French firms.
However, the BGP has halted its operation after the
military take-over after having failed to get assurances from the Balochi
sardars of the area for the security of its staff. A four-member BGP team,
headed by its Chief Operating Officer, Han Rue Min, had called on the
Balochi leaders to seek their assurance for the security of the company's
staff. The leaders reportedly turned down the Chinese request.
Thereafter,
Mr.Yousuf Abdullah, Secretary, Petroleum, in the Federal Government, had
met the Balochi leaders, but they turned down his request too.
Even in the past, there had been attacks on Chinese
experts working in Balochistan and, just before Mr.Zhu's visit, one person
was killed and three others, including a Chinese engineer, were injured
seriously when the survey team of a Chinese company was attacked in the
Sunny area of Sibi district, 160 km northeast of Quetta in Balochistan, on
May 7. Suspected militants of the Balochistan National Liberation Front
(BNLF) fired rockets at the vehicle of the survey team, reportedly as a
warning to the Chinese not to help the Musharraf regime until the demands
of the Balochis were met.
BNLF cadres again struck after Mr.Zhu's departure when
major parts of Balochistan, including Quetta, went without natural gas for
more than 24 hours on May 19 following a blast in the main Sui Southern
Gas pipeline the previous night.
Concerned over the increasing activities of the Balochi
nationalists and pressed by the Chinese for an improvement of the law and
order situation, the military regime established contact with the
traditional Balochi leaders before Mr.Zhu's visit and sought their
co-operation in improving the situation in Balochistan.
Sardar Akhtar Mengal, former Chief Minister of
Balochistan, confirmed on May 12 that the Balochistan Minister, Agha Abdul
Qadir, had approached his father, Sardar Ataullah Khan Mengal, in London
and sought the co-operation of the Balochis for the exploitation of the
mineral wealth of Balochistan and that Sardar Ataullah had set certain
conditions for co-operation. The conditions included the immediate release
of Nawab Khair Bukhsh Marri, the Balochi nationalist leader, immediate
issue of an ordinance for the transfer of oil, gas and natural resources,
including metallic and non-metallic minerals, portfolio from the federal
Government to Balochistan and other provinces, allocation of substantial
percentage from the income generated from oil, gas and other minerals for
the development of the areas where these resources were found and priority
to the local people in the recruitment of personnel to work in these
projects.
Despite this, during Mr.Zhu's visit, the Chinese
pledged US $ 240 million for the development of the Gwadar port in
Balochistan and another of US $ 200 million for the construction of a
coastal highway linking Karachi and Gwadar. The "News" quoted
Pakistani official sources as saying that China was seeking
"sovereign guarantees" from Pakistan before finalising its
commitment to assist in the construction of the Gwadar port.
The decision to develop Gwadar in order to reduce the
dependence on Karachi and to cater to the external trade of the Central
Asian Republics (CARs) and the Xinjiang Province of China was taken by the
first Nawaz Sharif Government in 1992. It had also decided to construct a
second naval base at Ormara, also in Balochistan.
The Jinnah naval base at Ormara, situated 240 Kms from
Karachi and constructed at a cost of Rs. 4.5 billion, was inaugurated by
Gen. Pervez Musharraf on June 22,2000. It is meant to provide berthing
facilities to eight ships and four submarines with space for small
auxiliary units. The 3.5km-long approach channel leads to a turning basin
and both have been dredged by 10 meters.
Speaking on the occasion, the General accused India of
aspiring to dominate the Arabian Sea and the Indian Ocean and of building
up a navy much beyond its requirements. He said that India's
"hegemonistic designs" had serious political, economic and
military implications for Pakistan and that it had, therefore, become
imperative for the Pakistan Navy to build an alternative to its Karachi
naval base. He lauded the performance of STFA, a Turkish company, in
constructing the base in time.
Under the plans drawn up in 1992,the Karachi Port Trust
was to fund 60 per cent (US $ 120 million) of the Gwadar project's
estimated US$200 million first-phase development cost. This was to have
involved the construction within two years of three 200-metre multipurpose
berths capable of handling 50,000 DWT cargo ships and oil tankers of up to
100,000 DWT. The rest of the money was to have been raised externally.
The Nawaz Sharif Government cancelled the contract
signed by the Benazir Government with an Omani firm in 1995 for the
construction of the deep-water Gwadar port and, instead, awarded the
contract to the US-based Forbes and Company, which was to not only
construct the port, but also run it after the construction. However, the
project remained a non-starter due to the post-Chagai economic sanctions.
During their separate visits to Beijing last year, Gen.
Musharraf and Mr.Shaukat Aziz, the Finance Minister, had urged the Chinese
to assist Islamabad in the construction of this project and reportedly
promised, in return, berthing facilities for the Chinese Navy not only in
Gwadar, but also in Ormara and also facilities for a Chinese monitoring
station on the Mekran Coast of Balochistan to intercept the communications
of the US military bases in the Gulf.
In response to this, a Chinese delegation led by the
then Chinese Minister for Communications, Hu Xijie, visited Pakistan for
preliminary discussions in November last. During his stay, he offered an
oil tanker to the Pakistan National Shipping Corporation (PNSC) and
reviewed the working of several Chinese construction companies, which were
already engaged in completing highway projects in Pakistan such as the
Indus Highway, the Chablat-Nowshera Highway and the Karachi Northern
Bypass. There was also discussion with the Pakistani authorities on
Chinese assistance for the Mekran coastal highway project.
Pakistan has a coastal belt of about 700 kilometres in
the south of Balochistan facing the Arabian Sea. The area from Hub (near
Karachi) to Jiwani (near the Pak/Iran Border) is called the Mekran Coast.
There are four ports on this coast-- Ormara, Pasni, Gwadar and Jiwani.
The
access to these ports from inland is now difficult due to the
non-availability of roads.
The Mekran Coastal Highway would connect Lyari, North of
Karachi, with the Pakistan town of Gabd on the Iran border. It is proposed
to be constructed in the following three sections:
* Lyari-Ormara including link to Ormara Town (248
kilometres)
* Ormara-Pasni including link to Pasni (197 kilometres)
* Pasni-Gwadar-Pak/Iran border including link to
Gwadar, Jiwani (208 kilometres).
Gwadar, which is at a distance of approx. 650 kilometres
from Karachi and 900 kilometres from Ratodero near Sukkur, is presently a
small fishermen's town. However, it has an airport which links Gwadar with
Karachi, Turbat, Jiwani and Muscat (Oman) by regular flights. A road track
exists which connects Gwadar to Karachi and Ratodero.
It was as a follow-up to the discussions of November
last that Mr.Zhu announced the Chinese financial pledges for the
development of the Gwadar port and for the construction of the coastal
highway, subject to satisfactory feasibility studies.
The visit of Mr.Zhu was followed by a visit to Pakistan
by Rear Admiral Zhang Yan, Deputy Commander, North Sea Fleet, China, from
May 21 during which he visited Karachi, Ormara and Gwadar. He also
addressed a ceremonial parade at the Karachi naval dockyard held to
commemorate the 50th anniversary of Pakistan-China diplomatic relations.
Welcoming the Chinese visitor, Rear Admiral Shahid
Karimullah, Commander of the Pakistan Fleet, said:"Since the
induction of PNS Nasr, the fleet tanker from China, our mutual relations
had improved at a steady pace. Development of Jalalat- type missile boats,
equipped with state-of-the art anti- ship missile, acquisition and
successful testing of surface-to-air missile system on board Type-21
destroyers are the hallmark of our developing naval relations."
THE PORT OF GWADAR --An
Explanatory Note
The annual maritime traffic in Pakistan is forecast to
increase from its present 41 million tons to 120 million tons by 2020.
Although Pakistan’s two ports, Karachi and Qasim, need to be modernized
to handle this increased traffic, there will also be a need to develop a
third port in Pakistan. The Government has approved the building of
Pakistan’s third port at Gwadar, which is at about 234 nautical miles
west of Karachi. This port will serve as a regional hub, handling traffic
to/from ports of Sri Lanka, Bangladesh, Oman, UAE, Saudi Arabia, Qatar,
Iraq, Iran, and landlocked countries like Afghanistan, Uzbekistan, and
Tajikistan.
Gwadar is currently a fishing town on the western end of
the Balochistan Coast, formed by a natural headland connected to the
mainland by a sand spit. The headland stretches east to west for about 13
km with the maximum width of 3 km. The east and west bays, created by this
feature, are generally protected from the southwest monsoon waves. Past
studies indicate that the east bay is more protected than the west. The
deepwater port site will take full advantage of the natural shelter of the
East Bay and will be located in the northern side of the headland with a
potential development area of some 500 hectares.
The primary objectives of the port are to:
* Provide port facilities at the strategic location
opposite to Straits of Hormuz and on the mouth of the Persian Gulf and
provide port, warehousing, transshipment, and industrial facilities for
trade with over 20 countries;
* Provide additional capacity to relieve congestion at
Pakistan’s two ports,Karachi and Qasim;
* Provide an alternative and economical access to
maritime trade for the northern region of Pakistan;
* Initiate the economic development of Balochistan by
establishing industrial zone, oil storage and refining facilities
adjacent to the Port; and
* Boost cargo trade for the export of the abundant
mineral resources of Balochistan, particularly from the Saindak
Copper-Gold Project.
To implement the project, the Government has formed the
Gwadar Implementation Committee (GIC) under the Ministry of
Communications. The project will be implemented in two phases:
* Phase I will involve the construction of three berths,
200 m each, with 350 m back-up area. There will be a five-km access
channel with 11 m water depth. This phase will also include the
procurement of cargo handling equipment and operation crafts, as well as
the development of port infrastructure and support facilities. The
Government will carry out this phase.
* The second phase, which is being planned, for
development through private sector participation, will involve the
following facilities:
* Container Terminal - 2 berths (300 m each)
* Bulk Terminal - 2 berths (300 m each)
* Ro-Ro Terminal - 1 berth (200 m)
* Oil Terminal - 2 piers (8 million tons/year each)
* Future container terminal - 2 berths (300 m each)
* Channel dredging (15.6 m to 20 m deep)
The GIC is working on implementing the first phase of
the project, which will provide three multipurpose berths and the related
infrastructure. It is intended that this initiative will provide a clear
demonstration of the Government’s commitment to the project and generate
a positive environment for the implementation of the Phase 2 components
under a BOO or a BOT basis.
The bids for Phase II components will be announced in
stages. The period of lease for Phase II project components is expected to
be 25 years, which is extendable further on mutually agreed terms.
It is expected that Phase II construction will be completed in 36 months.
The first phase construction is expected to cost $200
million. This stage will be undertaken and financed by the Government.
All
of the second phase components are being planned for implementation under
a BOO or a BOT scheme. The breakdown of Phase II cost by each
terminal is as follows:
* Container Terminal ---US $ 35 million
* Dry Bulk Cargo Terminal ---US $ 40 million
* Grain Terminal ---US $ 26 million
* Ro-Ro/General Cargo Terminal ---US $ 200 million
* Oil Terminal ---US $ 125 million
* Future container terminal expansion--US $ 100
million
* Total --- US $ 526 million
In general, the principal competitors of U.S. businesses
in Pakistan are European, Japanese, and South Korean firms. Financing is
usually the most important component of project implementation decisions
in Pakistan. These countries often offer more favorable credit
terms, making it difficult for U.S. suppliers to compete. Still the
U.S. port equipment suppliers, design and engineering firms, and
construction contractors have a strong competitive position, since U.S.
products and services are perceived to be of high quality. This
should be supplemented by an aggressive marketing position, following up
on bidding announcements. Teaming with local firms in these service
areas will be beneficial to achieving success.
U.S. companies are expected to be competitive in
providing the port with cranes and crane components, RTGs, forklifts,
tractor and trailer units, unloading/bagging systems, conveyor systems,
and security and environmental equipment. Opportunities also exist for
project design, engineering, and construction management services as well
as terminal operators.
(The writer is Additional Secretary (retd), Cabinet
Secretariat, Govt. of India, and, presently, Director, Institute For
Topical Studies, Chennai. E-Mail: corde@vsnl.com
)
