Karachi - International Container Terminal

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ICTSI and American President Lines, operating jointly as Karachi International Container Terminal (KICT) Ltd. signed the implementation agreement with the Karachi Port Trust (KPT) for a 20-year concession to develop, manage, operate and maintain a three-berth common user container terminal in June of 1996. American President Lines and ICTSI were equal partners in the joint venture. The agreement called for a 20-year operating lease as part of Pakistan's $160 million, five-year port privatization program under the oversight of the Karachi Port Trust. In 2002, Hutchison Port Holdings (HPH)- a joint venture of Hutchison Whampoa Ltd (HWL) (80%) and PSA Corp. (20%) since 2006 - acquired a 100% equity share in KICT, and became the terminal operator. The terminal was to be equipped with four Panamax gantry cranes capable of handling 45 moves per hour and was expected to handle up to 300,000 containers a year after completion of the first phase of the project. Cargo handling capacity was expected to increase by about 50 percent to roughly 450,000 boxes annually by the time the expansion was completed. The first phase of the two-stage project began within six months of the agreement and became operational about 18 months from the time the joint financing was fully in place. The terminal was to have berthing space of about 900 feet and three berths. Karachi currently handles about 80 percent of Pakistan's box volumes and Pakistan's container traffic has been growing at the rate of 12 percent a year. KICT had completed the initial drawdown of funds to finance its expansion program for Berths 22-24A in the port in August of 1997. A syndicated loan of US$45 million was provided by ANZ Gridlays, Ltd., Bank of America and local banks Mashreq Bank psc, Soneri Bank and Al Faysal Investment Bank, Ltd. Another DM 15 million (US$8.7m) facility has been provided by DEG mbH, while US$6.6 million in suppliers credit was provided by Nissho Iwai Corp. Total project cost has been placed at US$69 million. KICT had aimed to commence commercial operation of Karachi's first state-of-the-art container terminal in late 1998. APL was to pay roughly Rs 274 million (US$6.7 million) per annum to the Karachi Port Trust (KPT), the manager and trustee of the Port of Karachi, US$4 million in berth lease, Rs 34 million (US$830.000) per annum land rental and Rs 60 million (US$1.5 million) per annum as percentage of container business (calculated US$5.36 per TEU for 250,000 containers in the initial phase). Note that in order to calculate the real value of the concession fee, a discount rate of 12.1% aa was used; this rate is the money market rate of the year of financial closure provided by the International Financial Statistics. APL was expected to pay more to the KPT in the following year as the container handling capacity at KICT was expected to increase up to 400,000 TEUs in the second phase. In January 2005, KICT and Karachi Port Trust agreed a US$ 55m third phase of development, which comprised a US$15 million cash subsidy commitment from Karachi Port Trust and a US$40m investment by KICT. Phase three involved KICT’s expansion from berths 28-30 to berths 26 and 27 and an extension of KICT’s concession to 2027. Following the completion of the third phase of KICT in May 2008, KICT had a total area of 26.03 hectares, a quay length of 973 meters and was equipped to handle 700,000 TEUs annually.