Singapore Authority (PSA).

KARACHI (February 02 2009): Viability of the $250 million Gwadar Port project is in hot water, as the Ministry of Defence (MoD) has refused to transfer 584-acre "defence land" to Gwadar Port Authority (GPA) for establishment of the long-awaited Free Zone. Further, MoD has also turned down a request from the ministry of ports and shipping for a free-of-cost transfer of the said land to GPA, which as per Concession Agreement would hand over it to Port of Singapore Authority (PSA).
It must be recalled that under Concession Agreement the Government of Pakistan (GoP) was required to hand over 923 hectares (2281 acres) land to PSA, the concessionaire and operator of Gwadar deep sea port, by June 2008 on lease basis for developing a Free Zone at East Bay of Gwadar. According to well-placed sources, MoD commenting on a summary moved by the Ministry of Ports and Shipping to Prime Minister for allowing transfer of the said land to GPA, had cited "technical, strategic and geographical" reasons for its refusal.
They said the MoD had contended that as per Defence Land (Acquisition Custody and Relinquishment) Rules 1944 the land could not be transferred on gratis basis, as requested by the ministry of ports and shipping, to an "autonomous" body like GPA.
The defence ministry, the sources said, had also backed last year’s PN’s demand for the payment of Rs 7008 million (Rs 1200 million per acre) for the land in question.
In the support of its argument, the ministry said that the said land was transferred by the Government of Balochistan to PN in 1980 on ownership basis, they said.
However, showing generosity MoD had linked a free-of-cost transfer of the disputed land to Prime Minister’s approval in favour of ministry of ports and shipping, said the sources.
They said recently MoD had taken a "new stance" on the lingering issue and had said that out of 584 acres land, which is at present in possession of the naval forces, only 30 acres could be made available for the development of road-rail-link leading to the Free Zone at Gwadar Port.
They said according to MoD the remaining 554 acres land was "essentially required by Pakistan Navy from technical, strategical and geographical point of view".
According to sources the ministry of ports and shipping, where change of faces was rampant and had become almost a permanent phenomenon, may be in a difficult situation, as it had to convince the Prime Minister who had okayed recommendations of MoD on the fate of Free Zone land.
It may be recalled that former President (Musharraf) and Prime Minister (Shaukat Aziz) on February 2, 2007 had also directed hand over of the 584 acres land to GPA for the said purpose as soon as possible.