China on Monday took control of Pakistan’s Gwadar Port located at the mouth of the Persian Gulf just outside the strategically important Strait of Hormuz. The official transfer of Concession Agreement from the Port of Singapore Authority (PSA) to the China Overseas Port Holding Company was carried out in the presence of President Asif Ali Zardari.

Mr. Zardari described the development as another manifestation of growing Pakistan-China relations. About the project’s strategic importance, the President said nearly 60 per cent of China’s crude oil was imported from the Gulf countries. The proximity of the Gulf countries to Gwadar would facilitate the oil flow to it, he pointed out.

Last month, the federal Cabinet had approved the transfer of Gwadar Deep Sea Port to the Chinese. Billed as Pakistan’s biggest infrastructure project, the port has failed as a business venture till date because the security situation in Balochistan discouraged PSA from investing in the development of the port and off-shore infrastructure. Add to this the government’s failure to transfer 584 acres under Navy’s possession to the port.

Though China — which had invested in the construction of the port — had been a contender for running the port, PSA bagged the contract for 40 years during the Musharraf era. While PSA won the bid, the widely held perception is that former President Pervez Musharraf awarded the contract to the Singapore entity to keep the U.S. happy as Chinese control over the port on a major shipping route not only facilitates access to oil producing countries but also provides a major gateway for Chinese goods.

In August last year, the federal government announced that PSA had been allowed to quit the 40-year management, operation, maintenance and development contract in view of the failure to transfer the 584 acres. This issue remains unresolved despite the federal and provincial governments offering land elsewhere in lieu to the Navy.