Unlocking Gwadar's Maritime Potential: A CPEC-Driven Shipbuilding Vision

The current facilities at Karachi Shipyard & Engineering Works (KS&EW) fall short of meeting Pakistan National Shipping Corporation's (PNSC) fleet requirements, the growing demands of Pakistan's economy, modern vessel needs, and emerging trade route requirements. KS&EW possesses two Graving Docks with limited capacity, one capable of accommodating 18,000 DWT and the other 26,000 DWT, along with three Shipbuilding Berths with varying capacities of 6,000 DWT, 15,000 DWT, and 26,000 DWT.

KS&EW's limitations became apparent when emergency repairs had to be performed on a 250,000 DWT vessel at Karachi's outer anchorage, as the vessel was too large to enter Karachi Harbour. This highlights not only the economic but also the national security significance of the shipbuilding industry. Expanding and upgrading KS&EW's existing facilities is imperative to meet the national flag carrier's requirements. Simultaneously, the prospects of CPEC, which are likely to increase demand significantly, underscore the importance of developing a state-of-the-art Shipbuilding, Repair, and Maintenance facility in Gwadar Gateway, set to become the future hub of shipping-related activities.

Shipbuilding is a capital-intensive, nation-building industry, dominated by China, South Korea, and Japan, mainly due to their strategic approaches, cost-effective labor, and government support. Despite having a few merchant ships and a significantly cheaper labor force compared to China, Pakistan has not exploited the shipbuilding sector. Most of its workforce seeks employment in the Middle East due to limited opportunities at home. To attract this workforce, a favorable financial package and opportunities must be offered, making the establishment of a new facility in Gwadar crucial. The success of this endeavor largely depends on the initiatives within the CPEC framework.

In March 2018, the Federal Cabinet approved a plan to establish a new shipyard in Gwadar, expected to be implemented over 3-5 years, though progress remains pending. The delay may stem from unclear project financing and model approaches. However, the Gwadar initiative should create a state-of-the-art facility capable of repairing and building ships up to 600,000 DWT, meeting regional and global demands.

While concerns about market demand and facility size exist, the Federal Government's forward-thinking vision, executed through a phased, market-driven approach, could lead to success. The initial phase might focus on Suezmax size ships (between 120,000 to 200,000 DWT), with later phases accommodating larger vessels (up to 500,000 to 600,000 DWT) based on market demand.

Market analysis indicates promising prospects for Gwadar, paving the way for a thriving maritime city supported by allied/ancillary industrial activities. Gwadar's ongoing projects, such as the New Gwadar International Airport and proximity to global shipping lines, make it an ideal location for ship repair and maintenance.

The establishment of this facility would require a capital investment of approximately $0.6 to $1 billion for shipbuilding and $0.5 to $0.75 billion for ship repair and maintenance. Despite its capital intensity and potential for long-term national security and technological/industrial advancement, the active involvement of the Federal Government remains crucial for this significant venture.

Reports suggest that setting up the facility as a joint venture (JV) with foreign investors, supported by the Pakistan Navy, is under consideration. However, the government's roadmap is not yet clear. Alternatively, exploring a Public-Private Partnership (PPP) BOT model could enhance competitiveness and innovation under the CPEC framework. Prioritizing and initiating the project within the CPEC framework would provide a fast-track solution to address these challenges.