The contract awarded to the SES
is highly expensive than the competitive products available in the
By SYED M. ASLAM
April 15 - 21, 2002
The financially troubled Pakistan National Shipping
Corporation has awarded a whopping Rs 50 million IT contract to a
foreign company for a job that could have been done right here in the
country at a less than one-fifth of the price.
Informed sources told PAGE that the contract
for a fully integrated Global Positioning System (GPS) to be installed
on eight of total 14 PNSC vessels including the software, hardware,
equipments and accessories is given to a Greek company named SES. The
vessel management software will enable PNSC and its agents to keep in
touch with its vessels worldwide for speedy response and tracking.
The sources said the contract awarded to the SES is
not only costly compared to similar locally developed package but is
also doubled the competitive products available in the international
market. Sources alleged that the Corporation floated an international
tender but frivolously selected the SES despite participation by many
local companies who quoted much lower prices.
"The awarding of this huge contract to a foreign
company at such an unbelievable price not only deprived the local IT
companies of a sizeable job but has also sent ripples of discontent
among the software industry which yet remains devoid of a local base. It
is sending all kinds of wrong signals to local software industry despite
government assurance that it will be given the first priority.
"Not only the contract is expensive it will also
cost heavily to PNSC in maintenance costs — $ 3000 per month per
vessel compared to as low as $ 400 per month per vessel if done locally.
This translates into operating expenses of $ 24,000 per month or $
288,000 per year which at current exchange rate means an additional
expense of Rs 17.28 million for the fledging Corporation."
Sources said that the job will be implemented in
three different phases. In phase one the Ship Management Department will
be computerized while in the second the specialized and integrated
software package will be developed. In the last and the final phase the
system will be installed on the vessels. "The PNSC has divided the
payment in these various phases to disburse the maximum funds without
Sources said that the GPS system basically supports
two-way communications between the offshore offices and ships to better
vessel management system. "Many local companies only find out that
the PNSC has decided to award the contract to a foreign company and that
too at such a high price and some of them have also approached the
relevant authorities to express their concerns."
Awarding the expensive contract — in term of both
the initial investment and huge maintenance costs as discussed above —
to a foreign company for a job that could have been done at a much lower
price within the country as well as outside makes little sense for PNSC
whose accumulated losses almost equalled its paid-up capital on December
31, 2001 — Rs 1.126 billion or a negligible Rs 16 million more its
paid-up capital of Rs 1.143 billion.
Without questioning the importance of the
ship-management system and its relevance to merchant marine navigation,
awarding the contract to a foreign company at much above the going
prices hardly makes any sense for PNSC which managed to revert back into
black on December 31, 2001. According to the un-audited accounts for the
half year PNSC earned an operating profit of Rs 226 million compared to
a loss of Rs 38 million during the comparative period in the previous
year. Similarly it managed to earn a pre-tax profit of Rs 289 million
compared to a pre-tax loss of Rs 357 million in the comparative period
in the previous year. The PNSC also managed to earn a post-tax profit of
Rs 257 million compared to a post-tax loss of Rs 357 million during the
comparative period the previous year.
During the half-year ended December 31, 2001 PNSC
lifted 3.409 million tons of cargo (including 2.463 million tons of
crude oil) compared to 4.118 million tons of cargo (including 3.292
million tons of crude oil) in the corresponding period the previous
year. It also earned a slightly less revenue of Rs 2.498 billion
compared to Rs 2.513 billion.
The PNSC blamed the reduction in volume of cargo and
value of revenue on the shrinking of world trade saying that ‘Currently,
over 300 container vessels of all sizes are idling worldwide with no
gainful employment. Recovery is not foreseen until well into the year
With such predictions of prolonged hard times, PNSC
whose 14-vessel-fleet comprise ships which have long passed their
economic life costing it heavily in repairs and maintenance the
expensive contract for the installation of GPS ship-management system
hardly makes any sense. More so, as a number of vessels are up for