Pakistani cabinet committee agrees to AD Ports Group bid for Karachi terminals: Pakistan’s Cabinet Committee on Inter-Governmental Commercial Transactions has approved AD Ports Group’s bid for a concession at Karachi’s port, according to a Finance Ministry statement, just days after it had rejected essentially the same terms for being below expectations. The committee had greenlit the framework agreement for the concession in late July.

The details: The agreed-to terms will see Pakistan receive 15% of gross revenues and about 40% of net revenues earned by the terminals it has conceded to Abu Dhabi’s port operator, Pakistan’s Maritime Affairs Minister Faisal Sabzwari said, according to the country’s daily Express Tribune. Under the revenue sharing model set out in the agreement, Pakistan will net an estimated USD 1.2 bn over the concession agreement’s 25-year lifetime. The terms are the best possible for Pakistan, Sabzwari reportedly told Express Tribune.

AD Ports will also take on Karachi Dock Labour Board’s (KDLB) ’s “liabilities” as part of the agreement , according to the ministry statement, without clarifying the nature of those liabilities.

What has changed? The statement now mentions an additional upfront, non-refundable payment of USD 25 mn AD Ports has tacked onto the agreement as a show of goodwill, according to the ministerial statement. Another USD 25 mn — “adjustable against revenue sharing” — will be due over the next seven years at a rate of USD 3 mn annually for the first five and USD 5 mn for the remaining two years.

The back and forth: These terms were less than adequate a few days ago when Pakistan’s cabinet directed negotiators to “re-engage” with their Emirati counterparts and seek a better price. Pakistan’s cabinet subcommittee had directed negotiators to push for an equity-based profitsharing model, a cabinet member reportedly told the Express Tribune. However, when the committee met on Wednesday they were advised by negotiators that the revenue sharing model negotiated earlier would earn Pakistan proceeds that were 37.5% higher, the daily wrote, citing government sources.

AD Ports will pour some USD 230 mn in investments into the terminal: AD Ports will undertake improvements worth USD 130 mn to the terminals’ infrastructure in the first five years of the agreement, the Express Tribune reports. A further USD 100 mn investment is slated 22 years down the line.

The timeline: AD Ports Group will start rolling out improvements to the port’s facilities in September, the Finance Ministry statement added.

It’s still not clear whether the agreement involves one or two terminals: Official ministry statements say the agreement involves the handover of one general bulk cargo terminal, though Pakistani reports mention an additional terminal that is reportedly set to be equipped to process foods, fertilizers, and other commodities.

What’s next? The draft agreement should now be on its way to the cabinet for final approval, according to the Express Tribune.

This is the second Emirati-Pakistani agreement in as many months: Late June saw both governments sign a 50-year concession agreement to hand AD Ports Group control to “manage, operate, and develop” another terminal at Karachi’s port.

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