DRAFT Karachi Fish Harbour: Roadmap for Restructuring Harbour Management and Operations

Karachi Fish Harbour showing the overcrowding among the fishing boats

Competitiveness Support Fund Karachi Fish Harbour - Roadmap for Restructuring Harbour Management and Operations

Abbreviations Beopari BOT CSF EOI EU FCS GoS Ha KFH KFHA Mole Mole holder PR STOFA TORs A moneylender and middleman Build, Operate, Transfer Competitiveness Support Fund Expression of Interest European Union Fishermen’s Cooperative Society Government of Sindh Hectare Karachi Fisheries Harbour Karachi Fisheries Harbour Authority Same as Mole holder, though perhaps not officially sanctioned A seafood commission agent. Sometimes a boat owner and exporter, and a moneylender. “Official” moles are sanctioned at the KFH Pakistani Rupee Sindh Trawler Owners & Fishermen Association Terms of Reference

Currency On 26th May 2008 US$1.00 bought PR 69.36 (State Bank of Pakistan)

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Competitiveness Support Fund Karachi Fish Harbour - Roadmap for Restructuring Harbour Management and Operations

Contents Executive Summary..............................................................................................................iii 1. Introduction........................................................................................................................1 2. Objective.............................................................................................................................4 3. Rationale.............................................................................................................................5 4. The process of privatization of the management of KFHA............................................8 5. Timeframe.........................................................................................................................11 6. Getting consensus...........................................................................................................13 7. Nature of the management agreement for KFH.............................................................15 8. Contractual and legal matters.........................................................................................17 9. Tendering and award of contract....................................................................................21

Executive Summary
1.

This Roadmap report is part of a continuing process undertaken by the

Government of Sindh in cooperation with the Competitiveness Support

iii

Competitiveness Support Fund Karachi Fish Harbour . infrastructure and quality control issues.. The purpose of the Roadmap is to provide the stakeholders with the steps that they have to take in order to bring the Harbour up to a standard that complies with international requirements. 2 iv . and through this improvement in management2 also address income. sewage The work commenced in early 2007 with CSF’s initial report on the KFH and resulting Action Plan. Aim 4. CSF can facilitate the process of change and indeed provide guidelines (such as this Roadmap). It is important to emphasize that the work has to be undertaken by the stakeholders. The key finding of all the work undertaken by CSF related to the Karachi Fish Harbour is that the problems there are not purely physical or technical. Findings 5. In January 2008 a Prime Ministerial Committee confirmed CSF’s approach. Other related work has been undertaken by UNIDO in conjunction with the Federal Marine Fisheries Department of MinFAL 1 The ADB (2007) Port Reform Toolkit (363 pp) has been used as the main guide to practical issues. condition of the auction halls. 3. the technical issues (e. including the Federal and Sindh government to take the necessary steps suggested here.g. The aim of the process of change and restructuring agreed with the Government of Sindh is to move forward the privatization of the KFH in respect of an international management company to be brought in to take over and manage the operations and assets in the Harbour. This should improve the quality of the fish passing through Karachi Fish Harbour by improving the management of the Karachi Fish Harbour. however CSF will work with the stakeholders. Purpose 2.Roadmap for Restructuring Harbour Management and Operations Fund (CSF) and Federal Government to upgrade Karachi Fish Harbour and restructure the management of the Harbour1.

) have tackled countless times without lasting success. Karachi dated 24th January 2008) v . Once an implementing agency and its primary staff are chosen.do not recognize financial value in upgrading the Harbour.EC(Fish)(L&F)/15(15)2007. Notification of a reconstituted Board of KFHA as per previous agreements (See Government of Sindh No.1.Competitiveness Support Fund Karachi Fish Harbour . A number of specific steps have been agreed. then certain key things will need to be done by the agency on the GoS side before CSF can continue its work on the project. 6.2008. Next steps 7. It is important to be frank about this matter. If KFH is to be upgraded and exports to international markets (specifically the European Union) restored. These are: a. the technical or physical aspect of the KFH can be upgraded time and again.Roadmap for Restructuring Harbour Management and Operations systems. provision of ice etc. then it is principally up to the Government of Sindh (as owner of the Harbour) to convince the stakeholders of the value of the changes proposed by CSF. This agency needs to be empowered to take all the necessary actions which can only be taken by the GoS. The agency could be the Sindh Secretariat. condition of boats. Sindh on 22. 8. Livestock and Fisheries Department or the Karachi Fish Harbour Authority itself. Minutes of the meeting regarding Competitiveness Support Fund – Action Plan for Karachi Fisheries Harbour Authority held under the Chairmanship of the Chief Secretary. The Government of Sindh must take ownership of the programme by designating an implementing agency. But there will be no lasting impact if the stakeholders themselves (in particular the so-called “moles” – the holders of auction licenses . The fundamental issue is one of management of the facility and the desire and capacity of owners and managers to actually undertake their work in compliance with well-known and accepted international standards. So far they have not done so.

seeking possible management partners and developing a PC-1 for federal funding if required.Roadmap for Restructuring Harbour Management and Operations b.Competitiveness Support Fund Karachi Fish Harbour . such as preparing a lease agreement.Once these steps have been taken. 9. Consultations including a series of Stakeholder Workshops and Formal Consultative Meetings will build a consensus about the way forward – we believe that it would be futile to pursue this project unless a full consensus of all the stakeholders is reached. CSF can move forward with the next activities on the Roadmap for restructuring the KFH. Competitiveness Support Fund Islamabad June 2008 vi . The stakeholders have to be consulted in order to build consensus. c. A meeting of the newly reformed Board to pass a resolution to offer a contract to a private management company in line with your decision to privatize the KFH.

11. A failure to maximise the value of the catch due to quality control problems. Serious issues related to the development of the fishery in Baluchistan including development of Pasni and Gwadar ports Competitiveness Support Fund (2007) Action Plan for Fish Quality and Value Adding at Karachi Fisheries Harbour 3 1 . particularly at Karachi Fish Harbour. designed to address the Pakistan fishing industries’ main and most pressing problems identified two areas of great concern. A study3 in 2007. due to the open entry nature of Pakistan’s oceanic and coastal fisheries. The Competitiveness Support Fund (CSF) is an independent body established in 2006 to reposition the Pakistan economy on a more competitive global footing. These were:• • • Overfishing. Ministry of Finance and the United States Agency for International Development (USAID). Introduction 10.Roadmap for Restructuring Harbour Management and Operations 1.Competitiveness Support Fund Karachi Fish Harbour . It is a joint initiative of the Government of Pakistan.

40% of the catch of Pakistan passes through the Karachi Fisheries Harbour and at least another 20% through the city. the situation at Karachi Fish Harbour was identified as critical. and which has three auction halls. The 34. Karachi is the major port of the country. air and rail links to the rest of the country. fish processing establishments. and which is also the centre of manufacturing and finance in Pakistan. and the Indus delta. road. 13. 14.Competitiveness Support Fund Karachi Fish Harbour . Furthermore regarding the failure to maximise the value of the catch. It is the hub for all fisheries exports and local fish marketing. does not pass through the landing and auction facilities and goes straight to the processors. Export fish generally passes through the Karachi Fisheries harbour.Roadmap for Restructuring Harbour Management and Operations 12. around which the 32 major fish processing companies are concentrated. Some export fish and shrimp. though much of this is fish for fishmeal.4 hectares comprising Karachi Fish Harbour is situated on a prime area of industrial land in West Karachi. a busy international airport. in that the infrastructure and management of the harbour was inadequate for the needs of the fishing industry and required strengthening before significant progress towards alleviating quality control problems could be achieved. 2 . the city with the largest population (20 million estimated) the Competent Authority. and possibly Ibrahim Hyderi on Korangi Creek in Karachi. Some fish is exported directly to Iran and the Middle East from the Western ports of Baluchistan. coming from Baluchistan.

KFHA receives money from Government of Sindh (GoS) budgets and additional income from the hire of space on the harbours already crowded site. boatbuilding activities and administration. The Karachi Fish Harbour Authority (KFHA) is the agency of the Sindh Provincial Government that is responsible for managing the harbour. managing the flows of money involved between the agents providing and using these resources. the loading and unloading of fishing boats to the various auction halls. for boatbuilding and for processing. thousands of people also rely on the KFH for their livelihoods. Berths. KFH needs to deal with a number of disparate activities: the movement of large numbers of fishing boats (large and small).Roadmap for Restructuring Harbour Management and Operations 15. 3 . and providing management information to users and administrators. The efficient management of KFHA involves managing these activities and resources.Competitiveness Support Fund Karachi Fish Harbour . and from the use of the slipway. In principle (or on paper) the Sindh Provincial Government owns the KFA. vessel repair facilities. warehouse Many and other storage spaces have to be allocated and released. management of the auction houses. 16. though this is rarely used for fishing boats. allocation of space to fish processors.

and through this improvement in management 4 also address income. 20. This much has been agreed already by the Government of Sindh (GoS).1. Minutes of the meeting regarding Competitiveness Support Fund – Action Plan for Karachi Fisheries Harbour Authority held under the Chairmanship of the Chief Secretary. infrastructure and quality control issues. No. The situation of the various stakeholders. Karachi dated 24th January 2008. 3 4 5 4 The ADB (2007) Port Reform Toolkit (363 pp) has been used as the main guide to practical issues. 2. EC(Fish)(L&F)/15(15)2007. The management company will Comment This is fundamental to the privatisation process as it defines the type of management agreement that can be entered into. Gov Sindh. which is not too complicated. Regarding management it has also been agreed that5. The intention is therefore to modify the management regime by contracting out the port management function to an expert port operator. 18. The KFHA will outsource the management of the entire facility to an international/reputed company by open competition The KFHA will prepare the TORs and recruit a management company to manage the KFH with the assistance of CSF. This system has not worked in reality and the facilities at the harbour are deteriorating (though there has been some investment to improve auction facilities). The current agreement with the FCS to manage the auction will also have to be rescinded This is extremely complex and technical and will also require a change in the legislation. This requires a “Notification” to the issued and the new members co-opted This will require a change to the legislation. Many of the businesses operating out of the harbour are not contributing adequately to the upkeep of the area and there are serious shortcomings in the collection of dues. Sindh on 22. The main objective of the process is to improve the quality of the fish passing through Karachi Fish Harbour by improving the management of the Karachi Fish Harbour.Competitiveness Support Fund Karachi Fish Harbour . 5 4 . This has contributed to a reduction in the quality of the fish landed and its value. and memoranda have been issued to this effect.Roadmap for Restructuring Harbour Management and Operations 17. Objective 19. inter alia :Minuted agreement 1 2 The ownership of the harbour will remain with the Government of Sindh and the Karachi Fish Harbour Authority (KFHA) will continue to exist The Board of the KFHA shall be reconstituted. assisted by the Competitiveness Support Fund (CSF).2008.

reforming labour practices. monitor and evaluate the functioning of the harbour particularly the mole holders will have to be carefully worked out. Karachi Fisheries Harbour is obviously not run efficiently. Some of the reasons for the lack of efficiency. affecting fishermen (incomes). 34 Ha of land in West Karachi should be an asset Currently the Sindh producing dividends for the Sindh Government. Dependant on success of the above. in that the administration by the various bodies charged with management of the various functions is lax. Reform would overcome many of these shortcomings and also remove the long term financial burden for infrastructure investment. traders (export earnings) and the consumer. orientated towards financial probity and commercial results will give a focus on the market and its changing needs. does not cover its running costs and provides a very poor service to its users. The whole country pays for these inefficiencies in that the price of fish is not maximized due to poor quality. The opportunity cost to the Sindh Government of having these 34 Ha of valuable land as an inefficiently run fish harbour is enormous. and enshrined in new legislation. with the proceeds being split between the Fishermen’s’ Cooperative Society and the Management Company/KFHA. making the harbour a commercial entity etc 6 5 . Through attracting foreign investment. overweight and reported to be corrupt. 22. and its costs lie with poor management. The harbour. 6 3.Roadmap for Restructuring Harbour Management and Operations privatise the auction of fish. A private company.Competitiveness Support Fund Karachi Fish Harbour . maintenance and some recurrent costs presently lying with the GoS6. The CSF will continue to assist the KFA and also through their place on the board. The elimination or reduction of political interference and misuse of funds is a very real reason for action. Government subsidises the harbour. and is obvious to even the casual observer. otherwise the privatisation will face legal challenges and serious lack of cooperation. This is accepted by all stakeholders. 24. 23. Rationale 21.

(there are probably several others) include: • • rents for plots on the Harbour Lands are much lower than commercial rents elsewhere in West Karachi no dues are collected by KFHA from boats entering or leaving the harbour. controlled by the Moles and the FCS) and a lack of will to change from above. It was constituted to receive a grant from the EU but has not been disbanded since. KFH has not in the past maximised its incomes. Under its management the harbour has not been well maintained over the last few years. or unloading.Roadmap for Restructuring Harbour Management and Operations 25.Competitiveness Support Fund Karachi Fish Harbour . Recently GoS has made available more than Pak Rupees 200 million in development funds. The Karachi Fish Harbour Authority has been in existence since the early 1980’s. or just tied up in the harbour 7 Some examples With the FCS came the moles. 29. The ownership of the KFH assets passed to the Sindh Government when the responsibility for fisheries passed to the Provinces after 1973. the main revenue stream. Facilities are run down and there has been a serious lack of investment in plant and equipment. 28. 27. and the improvement of vessels fishing to the harbor. mostly for maintenance and equipment. The auction of fish at the Karachi Fish Harbour site began in 1959 when the fish market moved from Karachi town to the harbour. 6 . did not have the capability to run it. Responsibility for the auction was given to the FCS7 as the MFD. as it was then. Although the Sindh Government and various donors have made piecemeal investments to improve the facilities for handling and auctioning fish (such as K1 Auction Hall and refurbishing K2 Auction Hall) there remain many infrastructure problems. 26. Staff strive to manage but their actions are constrained by the structure of the KFH management (with the auction. FCS claimed that an earlier understanding that they had with the Federal Fisheries gave them ownership of the KFH but this claim was thrown out after a court case.

and specifically increase the returns from fishing. most notably the moles. through the de-listing of Pakistan processing units.Roadmap for Restructuring Harbour Management and Operations • the FCS owes more than Pak Rupees 30 million for rent of the auction halls which remains uncollected.Competitiveness Support Fund Karachi Fish Harbour . 32. The task therefore is to design a Management System that will allow the assets of the KFH to remain with Sindh whilst transferring the day to day management of the whole harbour activities to the private sector. They are however. and raising its own revenues. made it impossible to export directly to the European Union. 36. Various vested interests. and The fishing is having some success. industry has not been as profitable of late as in recent past years. 7 . problems since many of those owing money claim they have no money to pay. 34. have sound economic reasons not to support change. 35. but at the same time brought the failings of the KFH to public attention and to the attention of the Federal and Sindh Government. It is only relatively recently that there has been the political will in the GoS to tackle the problem apparent at KFH. which will support the fisherfolk of Sindh and Baluchistan. The Competitiveness Support Fund has been instrumental in maintaining the high profile of the need for Ultimately the Government of Sindh Province (GoS) is attempting to improve the management of the KFH to assist the general development of both the Province and people of Pakistan. These are admirable aims. At the level of the harbour the GoS seeks to ease the financial burden on its budget by transferring part of harbour investments and operating costs to the private sector. The EU has. change. KFHA is striving to collect outstanding rents and other receivables. 30. rectify the shortcomings in management of the harbour and lack of investment in facilities. 33. 31.

infrastructure is leased to private operating companies. There is already a widespread recognition in the higher echelons of decision making at Provincial and Central Government level that the present situation cannot continue. development funds do not reach the intended destinations. The first stage is the acceptance of all parties that change is to happen. infrastructure and revenue have to be decided. the harbour is a drain on the public funds. They also purchase and install their own equipment on the port grounds as required by their business. 8 . including Pakistan. Preparing for privatization has to be done properly.Roadmap for Restructuring Harbour Management and Operations 4. auction halls. For KFH the concept of a “landlord” port9 has generally been accepted as the best model to follow.Competitiveness Support Fund Karachi Fish Harbour . In the landlord port model. 38. World Bank Transport Division. Privatizing the management of the KFHA will not be a simple nor quick process8. Port and harbour privatization has occurred in many parts of the world. Depending on the lease conditions the private port operators may provide and maintain their own superstructure including buildings (offices. The management structure of KFH has not changed significantly since 1984 when it was formed. in the light of the possible difficulties of getting consensus on introducing private management to the KFH would prefer another arrangement. vested interests hinder change and the financial losses to the fishing industry through continued failures in the cool chain from capture to consumer are catastrophic. sheds. (2007). factories etc). 24 years ago. or there might be nobody prepared to take on the job of management. 50 years ago when the harbour opened. the structure of the auction has not changed since 1958. this could be re-considered. 39. and any badly prepared privatization will put back the process of reform for many years. KFHA is financially compromised. and a body of experience has been built up which shows that the process is both more involved and more drawn out than at first appears. The lease to be paid to the port authority is usually a fixed sum per square meter per year. though the alternatives do not offer the same advantages. and this was merely a 8 9 See: Port Reform Toolkit. The process of privatization of the management of KFHA 37. 40. If GoS. In an established harbour such as KFH arrangements for the labour.

The various powers of the parties.Roadmap for Restructuring Harbour Management and Operations continuation of previous practices at the town market. particularly since the management company or institution will require that its investment is protected by law. procedures for solving disputes. the current legislation related to changing the composition of the board of directors of the KFHA and introducing more stakeholder participation. 46. nor even the labour force of KFHA and FCS or other stakeholders are fully convinced of the benefits of privatization. The size of the task must not be underestimated. Finally this all has to have a solid legal basis. rules. The GoS. Consensus must be obtained through negotiation and compromise because a confrontational approach is unlikely to be successful. but also defined so as to allow the new management to manage in an efficient and effective way. Very importantly. from the colonial era. at little cost. 9 . 43. 42. Similarly the change of the ordinances and regulations relating to the change of management of the KFHA can probably be addressed via these channels. through the KFHA has access to legal advice and services which will allow it to alter. as will the GoS who will retain ownership of the assets. the contractual and management arrangements for the private sector entity that will takeover the management of the harbour must be scoped out and agreed upon before the privatization process can go ahead. 44.Competitiveness Support Fund Karachi Fish Harbour . 45. Where the GoS and KFHA will probably require bringing in outside legal advice or assistance is in the drafting and preparation of the TORs and contract to engage the Management Company to manage the KFH. Currently (May 2008) many people claim never to have heard that there was a proposal that the management of the harbour might be privatized. Unfortunately it is still not certain that some of the powerful vested interests. 41. rents and labour issues must be consistent with the public interest.

10 . for instance. must be mollified by whatever arrangements are made. because the arrangements for dealing with the existing and ingrained vested interests in the KFH remain to be sorted out. though in the case of the KFH some of the common difficult problems are to be avoided. partly by its relatively small size but also by deciding on a concession or lease with the GoS retaining the assets and land.Roadmap for Restructuring Harbour Management and Operations This is not uncommon in harbour or port privatizations. the concession/lease arrangement will not be simple. However. The Mole holders and Beoparis.Competitiveness Support Fund Karachi Fish Harbour . far from it.

CSF provides funding for the engagement of a suitable legal drafting company to prepare the TORs and contract agreement CSF assists by arranging media publicity in regional and “Port” publications Government of Sindh procedures Assists KFHA where appropriate CSF consultant assists as required 11 . Timeframe 47. before they are passed Will not intervene at this stage as these actions are well within the capabilities of the GoS. Getting consensus and the role of the vested interests are most important. Preparation of TORs for contract Request for EOI Shortlist Assists KFHA with information and administrative back up in the preparation of the TORs. For the KFH the following timetable may be appropriate:Activity To be complete by Responsibilities KFHA Continues with investigating aspects of the privatisation process particularly the preparation of TORs of the future management company. Following this the objections and opinions of the various interests in the harbour will be obtained and can be discussed in various forums.Roadmap for Restructuring Harbour Management and Operations 5. FUNDING REQUIRED Government of Sindh Ideally the GoS would publicise the intention to privatise the management of the KFH. through either a notification or through the media. This gives targets and helps the planning process. It is advisable if a timeframe is placed on the various actions that have to be completed. Prepares.Competitiveness Support Fund Karachi Fish Harbour. its various Departments and the KFHA. with Fisheries Department. VERY LIMITED FUNDING REQUIRED from Sindh Government or KFHA resources KFHA engages a suitable legal drafting company to prepare the TORs and contract agreement. modifications & amendments to the existing ordinances so that the law allows the privatisation to go ahead. leading to consensus. CSF Preparation Ends August 2008 Continues to provide assistance in the form of a consultant to aid progress Basic Legal aspects Starts Sept 2008 End October 2008 Starts end Sept 2008 Ends Feb 2009 Jan 2009 Depends Legal Department will check the proposed modifications and ensure that they are consistent with current legislation.

Roadmap for Restructuring Harbour Management and Operations Tender Provisional award Negotiations Final Award of tender to winning company Handover Dispute with the moles! Forever! On Progress With TORs Must be fully transparent The CSF envisages continuing assistance to the GoS to help progress towards the ultimate goal of privatisation of the KFH. 12 .Competitiveness Support Fund Karachi Fish Harbour.

which is susceptible to political interference and backtracking on earlier decisions. leading to reduction of incomes. 6. They will not allow changes that affect their businesses. Mollifying these individuals is a necessity. Concerns Currently 2000 boat owners land to Karachi Fish Harbour. who are also financiers to the industry. Also their crews. 2. but it must be considerable). which is heir livelihood. The Members of the Sindh Trawler Owners & Fishermen Association (STOFA). These individuals are concerned about the continuation of the status quo. They are concerned about their jobs. all members of the Fishermen’s Cooperative Society (FCS) who fish to the harbour. 49. Thus consensus is a necessity. 13 .Competitiveness Support Fund Karachi Fish Harbour . Getting consensus 48. If possible they would like to see price rises for landings coming from any privatisation. It is futile to attempt to privatize KFH if it is not agreed to by the stakeholders that this is an appropriate way forward. There will always be dissenters. (Pakistan Seafood Industries Association) their administrative staff and employees (no reliable figure for employment in these industries is available. The KFHA staff and its numerous employees (~200) 5. A brief list of the main stakeholders and their main concerns in the KFH includes:Stakeholder 1. but a general consensus can usually be achieved. which represents the interests of the larger domestic boat owners. probably another 70. auctioneers and though loans get sole access to some fish landed at the harbour. This does not appear to be the case in KFH. The fish processors are concerned about profits. The Official Moleholders. 2000+ fishing boat owners. KFHA staff is concerned about their jobs and long term future. so wish to see more and better fish landed. The STOFA needs a landing place for their vessels. owners of boats.000. particularly with a fluid political landscape. Politically & financially these are very powerful people. The administration and numerous junior employees of the FCS (380) 4. The crews are worried about their jobs. They wish to continue to do so and also to be guaranteed a reasonable price for their labours.Roadmap for Restructuring Harbour Management and Operations 6. Many are tied to the moles but the market/harbour must continue to serve them. whilst the staff is concerned about their jobs and long term future. 3. A top down approach can only be followed if the power to make and adhere to decisions is available and will be enforced. The various fish processors.

5. there may be such grassroots revolt that it cannot be carried through. The Government of Sindh.Roadmap for Restructuring Harbour Management and Operations They may also be boat owners 7. and other similar businesses 11.Competitiveness Support Fund Karachi Fish Harbour .08 that nobody had spoken to the Moleholders about privatising the auction. 14. money lenders who finance the fishermen. there may be vested interests10 of such political and economic power that they can stop the process. The Beoparis. Ship repair and building businesses who hire land from the KFHA for their businesses. Nothing to be done is allowed to “rock the boat” politically. Retailers in markets and shops 12. There may be pressing reasons. spares. engines. Would like a return from the 34 Ha of land. but will nevertheless oppose strongly any changes that reduce their access to the harbour or dealings with fishermen. bunker. It is thus incumbent on the GoS. between it leaving the harbour and being retailed in the various markets in Karachi and the other major cities in Pakistan. through the KFHA to ensure that change is on the agenda at all levels. with private management of Government owned assets) is inappropriate. usually through loans to the vessel owners 8. but will nevertheless oppose strongly any changes that reduce their access to or dealings with fishermen. Wish for a continued supply of good quality fish and shellfish to supply to their customers Want a supply of good quality healthy food Wishes to protect its assets whilst reducing the KFH reliance on recurrent and development funding. Suppliers to the fishing industry (nets. None of this will be revealed until a full stakeholder consultation is undertaken. why the form of change planned (a landlord port. These industries are concerned abut the general health of the fishery. 9. in that servicing and supplying this segment is the basis of many of their livelihoods They will wish to be reassured that they can carry on their businesses on the KFHA land. Not as powerful as the Moles. which owns the KFH assets Not as powerful as the Moles. The large number of other middlemen and traders who deal in the fish. The GoS must appoint a person or It was obvious on 22. Consumers of marine fish from the KFH 13. 51. The politicians do not wish for a large disaffected group to be created in West Karachi. 10 14 . un-envisaged by the planning process so far. ice etc) 10. Local Politicians 50.

GoS must. who are already fearful that changes may impact adversely on their livelihoods. the nature of the arrangements they wish to make to privatize the operations of the harbour. decision makers at the GoS. It will avoid problems. if any. d. It will flush out the dissenters. through a very public consultative process. and any stakeholders). GoS and CSF have proposed that the KFH will be managed and the day to day operations of the harbour controlled by a private company under a lease. Currently. particularly with the diverse labour groups employed at the harbour. 7. Nature of the management agreement for KFH 53. right from the start. c. This will have several affects:a. but guided by the board of the KFHA (who would presumably control Government Development Funds expenditure. This will lead to conformity of decision making in investment and development options. b. what parts can be privatised and what.Competitiveness Support Fund Karachi Fish Harbour . the management company. who will be encouraged to put forward their objections early on in the process. advise all the stakeholders of their plans and make the whole process transparent. The consultation process will also crystallize in the minds of the 52. though it is not yet formally approved by all stakeholders. The KFHA as the arm of the GoS This is a would not be involved in the day to day running of the KFH. the stakeholders themselves and Aid Donors that change is on the way and the problems of KFH are to be addressed. It will convince potential bidders for the management contract that the GoS has approached the privatization process in an open and transparent way. It will convince the public.Roadmap for Restructuring Harbour Management and Operations group of people to address the issue of getting consensus. cannot. because they will receive reassurances. and act as a moderating agency in any disputes between the GoS. The GoS would grant a “concession” to the management company. enabling the GoS/KFHA to incorporate changes to the privatization process to satisfy their worries. 15 .

it may be leased to the Management Company for a period not yet determined. legally binding. the 34 Ha of land of the harbour under the terms of this contract. land. but major investment in infrastructure must. These include the return on investment that can be expected. since no responsible private company will be attracted to sign up to a contract that does not make clear its responsibilities. though depending on the decision of the GoS. The assets. in the short term at least. and lease out the infrastructure. If these criteria are not met then none but charlatans and “get-rich-quick” merchants will reply to the Expression of Interest (EOI) that will be issued.Competitiveness Support Fund Karachi Fish Harbour . though 20 years would seem appropriate. The lease contract could 11 This latter most unlikely to be granted! 16 . The obligations and rights of each party to the contract must be explicit. or Federal) so as to allow the harbour to be privatized. and if not watertight and clearly defining the rights and responsibilities of both sides. a watertight contract and legal and transparent support from the public sector. 56. The Company will also expect to receive equitable treatment in the bidding process and will have had to be allowed to make its own feasibility analysis based on an examination of the past and current records of the KFHA and other operators whose responsibilities it is going to take over (FCS and the Moleholders11 for instance). A private Company will evaluate its involvement in KFH on several criteria. It may be possible to privatize the actual operations of the KFH. they are practically worthless.Roadmap for Restructuring Harbour Management and Operations contract (or lease). proper financing for infrastructure and investment. come from the Government (of Sindh. whereby the GoS will transfer operating rights to the Management Company for the KFH. 54. 57. The main point about any contracts that the GoS enters into regarding management of KFH is that all are legal documents. 55. buildings and other infrastructure currently owned The Management Company will then manage the harbour and the assets in by the GoS will remain the property of the GoS.

Apparently (Junaid Farooki. The lease agreement between the FCS and the GoS pursuant to Agriculture. Work on the contents of the future lease agreement with the private company could go ahead in anticipation of the passing of these various amendments. (1984) and the Karachi Fisheries Harbour (Control and Management) Regulations (1991). 61. Pers comm). Sindh on 22. Notification No. Contractual and legal matters 58. will have to be cancelled. The current legislation is inadequate to allow for a concession or lease Legislation allowing this arrangement must be enacted. or in the case of a breach of the lease clauses straight away without compensation.Competitiveness Support Fund Karachi Fish Harbour . KFHA Advocate. 12 17 . Karachi dated 24 th January 2008. Pers comm) this does not constitute much of a problem and does not require a change of legislation. 8. 60. amendments to the existing legislation. to change the Karachi Fisheries Harbour Authority Ordinance. GoS.2008. Livestock and Fisheries Department. The FCS currently owe Pak Rupees 30 million in unpaid rent. Minutes of the meeting regarding Competitiveness Support Fund – Action Plan for Karachi Fisheries Harbour Authority held under the Chairmanship of the Chief Secretary. The first matter to be addressed is whether the legal structure currently existing in Sindh allows for the reconstitution of the KFHA board as agreed and minuted12 in the agreement between GoS and CSF in January 2008. Gov Sindh. KFHA Advocate. merely a “notification” which is easily arranged. No EC(Fish)(L&F)/15(15)2007.Roadmap for Restructuring Harbour Management and Operations perhaps allow for capital investment from income when harbour income reaches a pre-determined level. (Junaid Farooki.1. 59. through on the KFH assets and land. FCS are in breach of a large number of the clauses in this lease agreement and the lease agreement in any case has clauses allowing GoS to take back the assets after giving adequate advance notice.2(5) SO (FISH)/1996AL&F/2002 dated 13th February 2002.

responsibilities and representation at all management levels of the Management Company with FCS.Competitiveness Support Fund Karachi Fish Harbour .Roadmap for Restructuring Harbour Management and Operations 62. 63. The exact relationship. This share may be on a sliding scale. vii. Some financing may come from income. and any other rentals to the KFHA. GoS may require expert assistance in preparing these documents. v. vi. in which case this must be defined in the contract. Payment of any other fees. A definition of all technical and legal terms in the contract. The length of the concession/lease on the harbour The arrangement of the lease. a concession agreement for a harbour such as KFH may consist of a single contract or a combination of legally binding contracts covering:i. One of the valued features of a landlord port agreement is the possibility of a clear division of responsibilities between the authority (KFHA) and the Management Company. Depending on the specific situation. and some of this may come from Government development funds provided by either Federal or 18 . Arrangements for financing infrastructure in the harbour must be clear. Once the management contract is granted how much can the GoS through the KFHA board interfere in management of the harbour? The relationship between the GoS. the KFHA board and the Management Company has to be clear at the outset. ii. viii. iii. Activities permitted to be carried out in the KFH. and the importance of getting this right when the lease is prepared cannot be over-emphasised. where either a rental ($/sq yd) is paid by the Management Company for the concession to run the KFH. and rises later as cash flow improves. Moles. where the first few years allow the Management Company to make more money whilst it gets the harbour under control. ix. The meaning of terms. royalties and revenues. Sindh Trawler Owners Association and other stakeholders. The kind of lease (a landlord concession is envisaged) iv. or the KFHA shares the profits from operating the harbour.

The Managing Company is going to be responsible for day to day operations of the Karachi Fish Harbour. The relationship between the various premises and service companies on the 34 Ha of KFH land in West Karachi and the Management Company must be crystallized. and the KFHA. These day to day operations will require definition. Ultimately the Government’s investment in KFH land is going to have to realize commercial returns.Roadmap for Restructuring Harbour Management and Operations Provincial Government. and reassessed in commercial terms. in 19 . Maintenance xi. x. since the new Management Company will be expected to take them over.Competitiveness Support Fund Karachi Fish Harbour . power. fishermen and the employment of former KFHA and CSF employees and staff. requirements for infrastructure and equipment currently owned by KFHA. and the responsibilities of the Management Company. The present arrangements should be compared with an ideal situation. xii. The possibilities and methods of increasing rents to commercial levels (far above current levels) have to be detailed and their feasibility included. if applicable. and who has the say on how the money is spent (including awards to sub contractors etc) must be defined in great detail. Human resources development and training for workers at the port. special conditions. Details (rent. The exact nature of the arrangements for disbursing development funds. or lease arrangement of each of the operators paying rent to the KFHA have to collated. duration of lease. xiv. maintenance clauses etc) of every sub-lease. GoS cannot continue subsidizing the large number of premises presently enjoying low rents and as landlord the Managing Company will have to address this problem very soon after establishment. water and sewage. The KFHA must therefore prepare an audit of its day to day management activities and relate them to what is written in the Karachi Harbour Authority Ordinance (1984) xiii. Provision of utilities. processing plants. presented in detail. (This includes boat building plots. Yet more may come from the management company depending on the agreement entered into. offices and workshops etc). ice making premises.

master? Who is to enforce these regulations and what are the penalties? How is enforcement to be funded? Role of harbour The auction has the potential to be one of the prime income generators in the harbour. as well as cost recovery methods. This clearly must change to free up space in the harbour and the Management Company has to be given the mandate to both charge commercial rates and regulate vessel movements. The legal basis for these powers. Ability of the harbour master to issue rules and regulations for the better organisation of the harbour activities. xvii. This means the FCS and Moles must agree to co-operate (probably under some mitigating conditions) prior to any management contract being established. The currently proposed shift in management of the auction halls from the FCS and the mole holders to a private body is critical to the success of the whole privatization process and any shortcomings in this part of the lease will be catastrophic. Harbour use fees.25% of the value of the catch and split this with the FCS. Arrangements for auction of fish13 in the harbor must be confirmed. The regulatory environment and the enforcement of marine safety. xvi.Roadmap for Restructuring Harbour Management and Operations reaching that ideal should be defined. or for tying up there. and then enshrined in the lease agreement. Auctioning is currently undertaken by the moles (less than 30 in number) who raise 6.Competitiveness Support Fund Karachi Fish Harbour . FCS and the moles are yet to formally agree to this. 13 20 . It has been proposed that the auction will be subcontracted by the management company who will collect the 6. The statutory powers and duties of the harbormaster that will be appointed by the Management Company. xix. The balance of the auction fees will pay for the sub-contract and provide income to the management company as revenue to be split up between it and the KFHA as agreed in the contract. xv. environmental regulations. The moles will no longer be responsible for auctioning the fish. Currently nobody pays harbour fees on entering or leaving the harbour. xviii. the FCS using their share to undertake social works with the fishermen members and to pay (or not as the case is) Rp10 million annual rent for the auction halls to KFHA.25%. providing half of this to the FCS who will withdraw completely from the KFH and restrict themselves to their social works with their members. international shipping regulations and the like. billing and payments systems for users. (Related to many other issues below). There may be difficulties in getting their formal agreement and this has already been indicated in very strong terms by the senior mole holder.

Competitiveness Support Fund Karachi Fish Harbour . This would cover the return of assets. negotiations with preferred bidder and award of tender. 9. More esoteric activities such as the promotion of the harbour. either at the end of its term or prior to that. customs and health authorities. assessment of tenders.Roadmap for Restructuring Harbour Management and Operations xx. xxiii. The exact procedure will be in line with GoS standard tendering rules. Award of building contracts between the Management Company and a construction company for construction or development work (with the KFHA exercising some form of quality control?). 65. xxiv. boats and vehicles to the harbour area. Arrangements for the termination of the lease. Dredging of the harbour. Arrangements for violations of the lease agreement by any of the contracting parties and a dispute resolution path. This is a long way ahead in the future. 66. Access for KFHA staff and other statutory bodies to the harbour environs and what they are allowed to do there. It will involve advertised invitation to make Expressions of Interest (EOI). xxi. or potential bidders will be put off. tourism etc xxvi. Tendering and award of contract 64. The GoS will enter into a contract with a Management Company to This process has to be provide the management services required. completely transparent. a shortlist. Any other issues that may become apparent during either the preparation of the draft leases or the contractual negotiations. tender. clearly laid out. The role of the KFHA and the Management Company. in the case of gross violations of its clauses by one of the two contracting parties. Access agreements with the GoS and municipal authorities for people. restaurants. Who decides and how is this to be paid for? xxii. decision on preferred bidder. xxvii. 21 . xxv. Cooperation with policing. among other things xxviii.

Competitiveness Support Fund Karachi Fish Harbour . Expert TA may be required to assist this process.Roadmap for Restructuring Harbour Management and Operations 67. 22 .

Roadmap for Restructuring Harbour Management and Operations Appendix 1 References ADB (2006) Technical Assistance Consultant’s Report. Prepared by ANZDEC Limited Consultants. KFHA (2008) PowerPoint presentation “Briefing to Minister for Fisheries Sindh” 23 . December 2005. (& appendices). Government of Sindh (1991) Karachi Fisheries Harbour (Control and Management) Regulations. 1991. This law provides the legal basis to carry out efficient operation of harbour facilities and for periodic inspection of hygienic conditions of processing plants. Project Number: PAK 37188. Regulations set up under the Karachi Fisheries Harbour Authority Ordinance 1984. Lays down the regulations for the proper management of the Karachi Fisheries Harbour. cold storage and other related activities. ice plants. 1984.Competitiveness Support Fund Karachi Fish Harbour . Came into force 30th Jan 1992.) Fishermen’s Cooperative Society Ltd (1969) Bye-Laws of the Society as Corrected up to 12th June 1969 Government of Sindh (1984) Karachi Fisheries Harbour Authority Ordinance. ADB (2007) Port Reform Toolkit (363 pp) CSF (2007) Action Plan for Fish Quality and Value Adding at Karachi Fisheries Harbour Fishermen’s Cooperative Society Ltd (2005) FCSL (an information sheet on the Fishermen’s Cooperative Society Limited. Pakistan: Sindh Coastal and Inland Community Development Project.

DG Fisheries (MFD) Lt Gen Muhannad Zubair – Executive director IMU M. Abdullah Khoso . Anis Soomro – Dep Dir KFH Anwar-ul-Islam . Executive Engineer. Shuneed. Habib Sangji – Al-Noor Enterprisees. KFHA Muhammad Iqbal Lakho – Staff officer to ACS Muhammad Suleman Niazi – President of the Ice Dealers Association for Fisheries Nazar Hussain Mahar – ACS Planning Sindh Professor Mike Dillon – Consultant for UNIDO/EU Quamruddin Baloch – Freelance Consultant (Fisheries) Diesel/bunker provider. MFD Fazal Sajidi Baloch – President KFHA Employees Union Gulam M’d Mehar . Board of Investment Memon. Lab Accreditation. 24 . UNIDO Dr Ian Goulding – Consultant for UNIDO/EU Dr Khawajh – Administrator for FCS Dr Muhammad Hayat: .Director Fisheries Sindh Arsala Khan Niazi – President STOFA Baboo Ismail – The Senior Moleholder Badar ul Islam . Central & West Asia. TRTA.DG Fisheries Hasim Mahmood Shosa – Chief Secretary.Executive Director.Communication Officer.Roadmap for Restructuring Harbour Management and Operations Appendix 2 Significant People met during assignment.Expert.Junaid Farooqi –KFHA Advocate M’D Ali Shah – Chairman PFF M’d Ghazanfar Ali – FCS Manager Major Iqbal Ehmad: .Fisheries Development Commissioner. Pakistan Fisherfolk Forum Aisha Moriani – Deputy Sec MinFAL Allan Kelly – ADB Principal Rural Development Economist. processor M. Government of Balochistan Hussain Jarwar – Manager Programmes PFF Javed Ishrat .SME Expert. UNIDO Capt Ajamal Khan Ghoury – KFHA Harbourmaster Dr Ali Abbas Qazilbash: .Competitiveness Support Fund Karachi Fish Harbour .

Roadmap for Restructuring Harbour Management and Operations Sagheer Ahmed – Public Relations Officer KFHA Sahoor Hussain Abbasi – Dep Dir KFH Samir S.Chief Technical Officer TRTA UNIDO Zazi Jan M’d – Dep Sec Livestock & Fisheries Sindh 25 . Sindh SM Tarique – Executive director Korangi Fisheries Harbour Authority. Amir – Director Research.M. Malana – Law Dept Sindh Province Yasir Abbas Syed – Al Noor Enterprises Zahid Burghary – Sindh Minister for Fisheries Zawdu Felleke: .Competitiveness Support Fund Karachi Fish Harbour . Livestock & Fisheries. Pakistan Business Council Sarwar Siddiqui – Chair STOFA Sarwar Siddiqui – Chairman STOFA Shahbaz Anwer – MD ABC Gold Ltd and General Secretary of Deep Sea Fishing Trawler Operators Association Shahid Gulzar Shaikh – MD KFHA Shaukaat Hussain Dir F & T MFD. Steffen Kaeser – Industrial Development Officer UNIDO W. MD KFH – Shoaib Siddiqui – Sec.

together with the Auctioneers and Co-operatives) accept the responsibility for port reform at KFH. 6. 5. and thus to be managed through the proposed management company. Identifying the basic public functions and public responsibilities that will remain with the GoS and which will define the role of the KFHA in management of the public assets. Ensuring that the proposal fits in with International law. PHASE 1 . Identifying the functions and responsibilities that will be suitable to be privately managed. It will be necessary for the various parties to be aware of and support the reform process. 4. Addressing labour issues 7. their adequacy. technical and economic regulation of the port management and the port itself. 26 Feedback from these .Groundwork Broadly the CSF will support the Government of Sindh in: 1. environmental legislation and any coastal zone management issues current in Pakistan and the region. Defining the objectives that the GoS wishes to achieve in the KFA 2. involving all the stakeholders at the KFH. meetings will be incorporated into any plans. 9. available funding and improvement schemes. 3. Ensuring that the legislative base for the new management structure is compliant with existing Pakistan and Sindh laws. though a suitable legislative act.Competitiveness Support Fund Karachi Fish Harbour . Karachi Fish Harbour a. the KFHA.Roadmap for Restructuring Harbour Management and Operations Appendix 3 Terms of Reference for the Project 1. either through concessions or under leases. so the CSF will organise a series of meetings to explain the process. 8. Defining the methods of oversight so that the public interest is protected: strategic planning. Identifying the assets needed to support each of the functions. Ensuring that the various actors (notably the GoS and its subsidiary body. decrees and by-laws.

Competitiveness Support Fund Karachi Fish Harbour . the selection of the successful bidder. including within the documents the results of the discussions and consultations of Phase 1 and ensuring that the tender documentation is compliant with Pakistan and Sindh laws and regulations. Advertising for suitable companies (internationally) to be short-listed for management of the KFH 3. ( All to be transparent. and the award of the tender.Establishment Further assistance from CSF will then be necessary so that a suitable management structure can be initiated. The CSF will support the GoS in:1. a management company recruited and suitable oversight can be arranged. PHASE 2 . 2. open and competitive). Assisting GoS with providing adequate background information to potential bidders and assisting with site visits by potential bidders.Roadmap for Restructuring Harbour Management and Operations b. Once the detailed preparation has been done the GoS can proceed to identifying suitable companies as candidates for the management function in the KFH. 4. Outsourcing to a suitable Pakistan based body the responsibility for the preparation & completion of tender documents for the management of the KFH. 27 . Assisting with negotiations with the various bidders.

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