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)


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

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

Government of Sindh in cooperation with the Competitiveness Support


the technical issues (e. This should improve the quality of the fish passing through Karachi Fish Harbour by improving the management of the Karachi Fish Harbour.Roadmap for Restructuring Harbour Management and Operations Fund (CSF) and Federal Government to upgrade Karachi Fish Harbour and restructure the management of the Harbour1. condition of the auction halls. however CSF will work with the stakeholders. It is important to emphasize that the work has to be undertaken by the stakeholders. and through this improvement in management2 also address income. 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. 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. 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. 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..Competitiveness Support Fund Karachi Fish Harbour . Purpose 2. including the Federal and Sindh government to take the necessary steps suggested here. infrastructure and quality control issues. 3. Aim 4.g. CSF can facilitate the process of change and indeed provide guidelines (such as this Roadmap). 2 iv . sewage The work commenced in early 2007 with CSF’s initial report on the KFH and resulting Action Plan. Findings 5. In January 2008 a Prime Ministerial Committee confirmed CSF’s approach.

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. 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. Minutes of the meeting regarding Competitiveness Support Fund – Action Plan for Karachi Fisheries Harbour Authority held under the Chairmanship of the Chief Secretary.2008.EC(Fish)(L&F)/15(15)2007. 8. 6. provision of ice etc. So far they have not done so. Notification of a reconstituted Board of KFHA as per previous agreements (See Government of Sindh No.Competitiveness Support Fund Karachi Fish Harbour . Karachi dated 24th January 2008) v .) have tackled countless times without lasting success.1. Livestock and Fisheries Department or the Karachi Fish Harbour Authority itself. the technical or physical aspect of the KFH can be upgraded time and again. These are: a. It is important to be frank about this matter. A number of specific steps have been agreed.do not recognize financial value in upgrading the Harbour. The Government of Sindh must take ownership of the programme by designating an implementing agency. condition of boats. Next steps 7. 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. If KFH is to be upgraded and exports to international markets (specifically the European Union) restored. Sindh on 22. 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.Roadmap for Restructuring Harbour Management and Operations systems. Once an implementing agency and its primary staff are chosen. But there will be no lasting impact if the stakeholders themselves (in particular the so-called “moles” – the holders of auction licenses .

seeking possible management partners and developing a PC-1 for federal funding if required.Once these steps have been taken. The stakeholders have to be consulted in order to build consensus.Roadmap for Restructuring Harbour Management and Operations b. c. CSF can move forward with the next activities on the Roadmap for restructuring the KFH. Competitiveness Support Fund Islamabad June 2008 vi .Competitiveness Support Fund Karachi Fish Harbour . such as preparing a lease agreement. 9. 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. 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.

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

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

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

The intention is therefore to modify the management regime by contracting out the port management function to an expert port operator. 18. 2. 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. EC(Fish)(L&F)/15(15)2007. The situation of the various stakeholders. 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. Objective 19.1. Minutes of the meeting regarding Competitiveness Support Fund – Action Plan for Karachi Fisheries Harbour Authority held under the Chairmanship of the Chief Secretary. This has contributed to a reduction in the quality of the fish landed and its value. 20. 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. infrastructure and quality control issues. This requires a “Notification” to the issued and the new members co-opted This will require a change to the legislation. and through this improvement in management 4 also address income.Competitiveness Support Fund Karachi Fish Harbour . Gov Sindh.Roadmap for Restructuring Harbour Management and Operations 17. which is not too complicated. Sindh on 22. Karachi dated 24th January 2008. 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. 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. 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). No. Regarding management it has also been agreed that5.2008. assisted by the Competitiveness Support Fund (CSF). 3 4 5 4 The ADB (2007) Port Reform Toolkit (363 pp) has been used as the main guide to practical issues. and memoranda have been issued to this effect. 5 4 . This much has been agreed already by the Government of Sindh (GoS).

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

as it was then. and the improvement of vessels fishing to the harbor. or unloading. 27. 26. 29.Competitiveness Support Fund Karachi Fish Harbour . 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. Recently GoS has made available more than Pak Rupees 200 million in development funds. 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. The Karachi Fish Harbour Authority has been in existence since the early 1980’s. 6 . Responsibility for the auction was given to the FCS7 as the MFD. Facilities are run down and there has been a serious lack of investment in plant 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. did not have the capability to run it. It was constituted to receive a grant from the EU but has not been disbanded since. Under its management the harbour has not been well maintained over the last few years. mostly for maintenance and equipment. the main revenue stream. (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. The ownership of the KFH assets passed to the Sindh Government when the responsibility for fisheries passed to the Provinces after 1973.Roadmap for Restructuring Harbour Management and Operations 25. KFH has not in the past maximised its incomes. controlled by the Moles and the FCS) and a lack of will to change from above. or just tied up in the harbour 7 Some examples With the FCS came the moles. 28.

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. The EU has. rectify the shortcomings in management of the harbour and lack of investment in facilities. Various vested interests. 35. KFHA is striving to collect outstanding rents and other receivables. but at the same time brought the failings of the KFH to public attention and to the attention of the Federal and Sindh Government. 33. have sound economic reasons not to support change. most notably the moles. and The fishing is having some success. 7 . 31. and raising its own revenues. through the de-listing of Pakistan processing units. These are admirable aims.Competitiveness Support Fund Karachi Fish Harbour . 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. change. problems since many of those owing money claim they have no money to pay. 36. 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. industry has not been as profitable of late as in recent past years. 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. 30. 32. and specifically increase the returns from fishing. which will support the fisherfolk of Sindh and Baluchistan. 34. made it impossible to export directly to the European Union. They are however. It is only relatively recently that there has been the political will in the GoS to tackle the problem apparent at KFH.

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

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

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

through either a notification or through the media. Following this the objections and opinions of the various interests in the harbour will be obtained and can be discussed in various forums. its various Departments and the KFHA. before they are passed Will not intervene at this stage as these actions are well within the capabilities of the GoS. 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. It is advisable if a timeframe is placed on the various actions that have to be completed.Competitiveness Support Fund Karachi Fish Harbour. Preparation of TORs for contract Request for EOI Shortlist Assists KFHA with information and administrative back up in the preparation of the TORs. Getting consensus and the role of the vested interests are most important.Roadmap for Restructuring Harbour Management and Operations 5. with Fisheries Department. modifications & amendments to the existing ordinances so that the law allows the privatisation to go ahead. Prepares. FUNDING REQUIRED Government of Sindh Ideally the GoS would publicise the intention to privatise the management of the KFH. This gives targets and helps the planning process. 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. VERY LIMITED FUNDING REQUIRED from Sindh Government or KFHA resources KFHA engages a suitable legal drafting company to prepare the TORs and contract agreement. 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. leading to consensus.

Competitiveness Support Fund Karachi Fish Harbour.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 .

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

The Beoparis. between it leaving the harbour and being retailed in the various markets in Karachi and the other major cities in Pakistan.08 that nobody had spoken to the Moleholders about privatising the auction. Nothing to be done is allowed to “rock the boat” politically. None of this will be revealed until a full stakeholder consultation is undertaken. 10 14 . and other similar businesses 11. Suppliers to the fishing industry (nets. why the form of change planned (a landlord port. The GoS must appoint a person or It was obvious on 22. Consumers of marine fish from the KFH 13. money lenders who finance the fishermen. there may be vested interests10 of such political and economic power that they can stop the process. Would like a return from the 34 Ha of land. but will nevertheless oppose strongly any changes that reduce their access to or dealings with fishermen. ice etc) 10. It is thus incumbent on the GoS. but will nevertheless oppose strongly any changes that reduce their access to the harbour or dealings with fishermen. spares. 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. 14. The Government of Sindh. there may be such grassroots revolt that it cannot be carried through. engines. with private management of Government owned assets) is inappropriate. The politicians do not wish for a large disaffected group to be created in West Karachi. 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. bunker. which owns the KFH assets Not as powerful as the Moles.Roadmap for Restructuring Harbour Management and Operations They may also be boat owners 7. Retailers in markets and shops 12. Local Politicians 50.5. The large number of other middlemen and traders who deal in the fish. un-envisaged by the planning process so far. through the KFHA to ensure that change is on the agenda at all levels. There may be pressing reasons.Competitiveness Support Fund Karachi Fish Harbour . Ship repair and building businesses who hire land from the KFHA for their businesses. usually through loans to the vessel owners 8. 51. These industries are concerned abut the general health of the fishery.

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

land. since no responsible private company will be attracted to sign up to a contract that does not make clear its responsibilities. proper financing for infrastructure and investment. legally binding. come from the Government (of Sindh. The obligations and rights of each party to the contract must be explicit. The lease contract could 11 This latter most unlikely to be granted! 16 . 54. whereby the GoS will transfer operating rights to the Management Company for the KFH. though depending on the decision of the GoS. These include the return on investment that can be expected. The assets. 55. in the short term at least. the 34 Ha of land of the harbour under the terms of this contract.Competitiveness Support Fund Karachi Fish Harbour . they are practically worthless. The main point about any contracts that the GoS enters into regarding management of KFH is that all are legal documents. though 20 years would seem appropriate. a watertight contract and legal and transparent support from the public sector. It may be possible to privatize the actual operations of the KFH. and if not watertight and clearly defining the rights and responsibilities of both sides. it may be leased to the Management Company for a period not yet determined. 56. 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. 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. or Federal) so as to allow the harbour to be privatized. and lease out the infrastructure. A private Company will evaluate its involvement in KFH on several criteria. but major investment in infrastructure must. 57. 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).Roadmap for Restructuring Harbour Management and Operations contract (or lease).

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

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

The possibilities and methods of increasing rents to commercial levels (far above current levels) have to be detailed and their feasibility included. requirements for infrastructure and equipment currently owned by KFHA. fishermen and the employment of former KFHA and CSF employees and staff. xii.Competitiveness Support Fund Karachi Fish Harbour . if applicable. (This includes boat building plots. Maintenance xi. and who has the say on how the money is spent (including awards to sub contractors etc) must be defined in great detail. water and sewage. presented in detail. maintenance clauses etc) of every sub-lease. 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. The present arrangements should be compared with an ideal situation. and the responsibilities of the Management Company. Provision of utilities. and the KFHA. Details (rent. duration of lease. These day to day operations will require definition. offices and workshops etc). 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 reassessed in commercial terms. power. special conditions. 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. Ultimately the Government’s investment in KFH land is going to have to realize commercial returns. The exact nature of the arrangements for disbursing development funds.Roadmap for Restructuring Harbour Management and Operations Provincial Government. ice making premises. Yet more may come from the management company depending on the agreement entered into. x. Human resources development and training for workers at the port. or lease arrangement of each of the operators paying rent to the KFHA have to collated. in 19 . since the new Management Company will be expected to take them over. xiv. processing plants. The Managing Company is going to be responsible for day to day operations of the Karachi Fish Harbour.

xvi. or for tying up there. Arrangements for auction of fish13 in the harbor must be confirmed. It has been proposed that the auction will be subcontracted by the management company who will collect the 6. Ability of the harbour master to issue rules and regulations for the better organisation of the harbour activities. This means the FCS and Moles must agree to co-operate (probably under some mitigating conditions) prior to any management contract being established.25% of the value of the catch and split this with the FCS. 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. The statutory powers and duties of the harbormaster that will be appointed by the Management Company. xv. Harbour use fees. 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. xvii.Competitiveness Support Fund Karachi Fish Harbour . 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.Roadmap for Restructuring Harbour Management and Operations reaching that ideal should be defined. environmental regulations. Currently nobody pays harbour fees on entering or leaving the harbour.25%. 13 20 . 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. xix. international shipping regulations and the like. billing and payments systems for users. and then enshrined in the lease agreement. (Related to many other issues below). xviii. 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. There may be difficulties in getting their formal agreement and this has already been indicated in very strong terms by the senior mole holder. Auctioning is currently undertaken by the moles (less than 30 in number) who raise 6. as well as cost recovery methods. The regulatory environment and the enforcement of marine safety. The moles will no longer be responsible for auctioning the fish. The legal basis for these powers. FCS and the moles are yet to formally agree to this. providing half of this to the FCS who will withdraw completely from the KFH and restrict themselves to their social works with their members.

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

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

Competitiveness Support Fund Karachi Fish Harbour . KFHA (2008) PowerPoint presentation “Briefing to Minister for Fisheries Sindh” 23 . cold storage and other related activities. Came into force 30th Jan 1992. 1984. 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. December 2005. This law provides the legal basis to carry out efficient operation of harbour facilities and for periodic inspection of hygienic conditions of processing plants. Lays down the regulations for the proper management of the Karachi Fisheries Harbour. Government of Sindh (1991) Karachi Fisheries Harbour (Control and Management) Regulations. ice plants.) 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. Prepared by ANZDEC Limited Consultants. Regulations set up under the Karachi Fisheries Harbour Authority Ordinance 1984. Project Number: PAK 37188. 1991.Roadmap for Restructuring Harbour Management and Operations Appendix 1 References ADB (2006) Technical Assistance Consultant’s Report. (& appendices).

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

Chief Technical Officer TRTA UNIDO Zazi Jan M’d – Dep Sec Livestock & Fisheries Sindh 25 . Sindh SM Tarique – Executive director Korangi Fisheries Harbour Authority. Steffen Kaeser – Industrial Development Officer UNIDO W. Amir – Director Research.Roadmap for Restructuring Harbour Management and Operations Sagheer Ahmed – Public Relations Officer KFHA Sahoor Hussain Abbasi – Dep Dir KFH Samir S. MD KFH – Shoaib Siddiqui – Sec. 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. 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 .M. Livestock & Fisheries.

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

Competitiveness Support Fund Karachi Fish Harbour . 27 .Establishment Further assistance from CSF will then be necessary so that a suitable management structure can be initiated. Advertising for suitable companies (internationally) to be short-listed for management of the KFH 3. 4. open and competitive). a management company recruited and suitable oversight can be arranged. the selection of the successful bidder. Outsourcing to a suitable Pakistan based body the responsibility for the preparation & completion of tender documents for the management of the KFH. Assisting GoS with providing adequate background information to potential bidders and assisting with site visits by potential bidders. ( All to be transparent. and the award of the tender.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. Assisting with negotiations with the various bidders. 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. 2. PHASE 2 . The CSF will support the GoS in:1.

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