China Overseas Port Holding Company (COPHC) has signed a 40-year concession agreement to develop and run the expanded second phase of the Gwadar deep sea port, as well as the Gwadar Free Zone.

Gwadar is in the midst of a major expansion, and COPHC has already been running the existing port operations since 2013. It will now lead the construction of what is viewed as one of the key elements of the China Pakistan Economic Corridor (CPEC). The Pakistan government announced the latest concession deal on April 20.

Gwadar is located close to Pakistan’s border with Iran, and so is strategically positioned as a waystation on China’s sea routes to the Persian Gulf, or across to the Gulf of Aden and up on towards the Suez Canal. In addition, a network of roads and railways heading north from Gwadar will connect landlocked Xinjiang Province.

Thus, Gwadar is viewed as a vital connection to the maritime part of the Belt and Road project, and the land-based New Silk Road connecting Asia and Europe.

President Xi Jinping visited Pakistan in April 2015. Projects in and around Gwadar were high on the agenda.

Already in November last year, the first large scale convoy carrying Chinese made goods crossed the border in northern Pakistan and drove down to the Gwadar port. The long-term plan for Gwadar envisages that it will be able to handle 400 million tonnes of cargo a year.

A Chinese construction company is building the East Bay Expressway from Gwadar, with financing provided by China. The expressway is expected to be completed in late 2018.

Photo courtesy of China Overseas Port Holding Company.