KARACHI-Gwadar Port has been handed over to a local business group through Novation Agreement signed between Port of Singapore Authority International (PSAI) and Gwadar Port Authority (GPA) on October 26, 2007, The Nation has learnt. The Nation has found through a copy of Novation Agreement available with it that PSAI has assigned its responsibilities/obligations to three port operating companies namely Terminal Operating Company, Maine Services Company, and the Free Zone Company by Novation Agreement soon after Concession Agreement. The main beneficiary of the three above mentioned companies was Free Zone Company that is having 61 per cent shares by Aqeel Kareem Dedhi (AKD) group, as transfer of land to this Free Zone Company will be made soon. While transfer of port assets, facilities, buildings and infrastructures have already been made to the Terminal Operating Company and Marine Service Company. According to the Novation Agreement, PSAI will remain responsible for any acts of omission, commission or default on the part of these Operating Companies except for the Free Zone Company, and for that purpose, it will hold at least 51 per cent shares (it has presently 60 per cent) of the first two companies. The definition of Novation in The Contract Act, 1980, is 'that, there being a contract in existence, some new contract is substituted for it either between the same parties or between different parties, the consideration mutually being the discharge of the old contract. The Terminal and Marine Services Companies will earn revenues through tolls, dues, rates, charges, and tariffs from vessels, while the Free Zone Company will earn income from rentals, sales of real estate; development charges, maintenance charges, utility charges, etc., the documents state. Moreover, the all three operating companies Terminal Operating Company, Marine services Company, Free Zone Company will pay 9 per cent, 9 per cent, and 15 per cent royalty accordingly from their gross revenues. According to the novation to the Concession Agreement the Free Zone measuring 923 hectares shall be acquired by the GPA with a clear title and with full authority to lease the same to the Free Zone Company for establishment of free zone. The Free Zone area will be customs-free and a 20 years tax holiday shall apply to business that may be established in the area, while the Free Zone Company shall be given lease hold rights in respect of the Free Zone area for a term of 40 years. The documents further disclosed that, 'The investors in the Free Zone area shall be given subleases for a period of 99 years from the free zone effective date, and all leases shall be signed by the Free Zone Company, GPA, and the sublease. The land for Free Zone was to be acquired by GPA and handed over to Free Zone Company as the land in the ownership of Pakistan Navy and Coast Guard, which is approximately 261 hectares, to be handed over on the date of commercial operation, while the remaining 662 hectares to be handed over by December 31st of 2007 with a grace period until June 30th, 2008. If GPA fails to acquire sufficient land under the above mentioned conditions, it shall acquire the remaining land within the port area to the reasonable satisfaction of Free Zone Company, it was further added. Moreover, the Free Zone Company shall not be required to pay land lease to GPA but will be allowed to charge sub lease fee from Free Zone users at fair market value, while limited residential development/housing in the Free Zone area will be allowed for use by staff employed in the port/related business. According to the copy of the agreement, the signatories include the then Chairman GPA Rear Admiral Ehsan Saeed, Chairman Gwadar Port Implementation Authority (GPIA) Rear Admiral Syed Afzal Hyder, Chief Executive Officer Free Zone Company Yasin Dhedhi, and witnesses. The marine experts while commenting on the said agreement said that Novation is not consistent with the original debtor remaining liable in any form; it requires as an essential element that the right against the original contractor shall be relinquished, and the liability of the new contracting party accepted in his place. The sources said it is quite interesting that the said three companies are operating the very important port of the country in the name of Port of Singapore Authority PSA which is technically against the national interest. According to the documents the signatories to the Novation Agreement were Admiral Ehsan Saeed, former Chairman GPA.