PAKISTAN: Karachi terminal negotiates contracts

20 December 1996

Two major contract awards for work on the new container terminal being built at Karachi are at the final stages of negotiations, project sources say. The terminal is being built by Karachi International Container Terminal, a joint venture between International Container Services of the Philippines and American President Lines. It will be implemented on a build-operate- transfer (BOT) basis and will have a capacity of 450,000 20-foot equivalent units (TEUs).

Germany's Noell Preussag is expected to be awarded the contract to provide nine gantry cranes and other equipment. The award for the civil works is expected to go to the Athens-based Joannou & Paraskevaides (Overseas). The civil works contract will include the construction of terminal facilities and the strengthening of the berth.

Bank of America has confirmed details of the financing package for the terminal. The project has received all the necessary financial commitments and most of the documentation has been signed. Bank of America says that the project will be the first in Pakistan to be funded using limited recourse finance without government guarantees.

The elements of the package which have now been signed are a $6.6 million commitment from Japan's Nissho Iwai Corporation, backed by a letter of credit from the local Faysal Bank, and a local syndicated murabaha financing facility, led by ANZ Grindlays Pakistan, worth

Rs 550 million ($13.7 million). Other aspects of the package are expected to be finalised by mid-January. They are: a commitment from the German government's private investment arm DEG of DM 15 million ($9.7 million); and foreign currency financing worth $6 million from the local Crescent Investment Bank. Crescent will guarantee the amount and is expected to raise the money using credit facilities from multilateral agencies such as the World Bank and the International Finance Corporation. The two sponsors are both providing $25 million in equity.

The implementation agreement for the project was signed with the government of former premier Benazir Bhutto. Whilst details of the project are now nearing finalisation, it is not yet clear whether the dismissal of Bhutto will affect the scheme.

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