Corporation no more has a single crude oil tanker

June 30 - July 06, 2003



The state-owned Pakistan National Shipping Corporation (PNSC) has lost its only crude oil tanker, M.T. Jauhar, early this month. The auctioning of Jauhar for scrap at a Chinese port earlier this month has left the country entirely dependent on foreign shipping companies for such sensitive import as crude oil, not to mention the cost of crude imports that such dependency may pose.

Though Jauhar only helped supplement the crude oil imports and the PNSC all along used foreign vessels on charter hires, the loss of the only crude oil tanker would result in absolute dependency. The situation is even more frightening as landed price of imported crude oil, including the shipment charges, has a direct bearing on the retail prices of petrol and petroleum products.

M.T. Jauhar, an over 25 year-old Afrax type tanker of 70,000 DWD (Dead Weight Tonnage) bought second-hand by the PNSC, was seen fit to undergo massive repairs and dry-docking costing PNSC millions of dollars months before it was auctioned for scrap at the Chinese port of Guangzhou on the 12th of this month.

Tracing back the details of Jauhar's last months, the General Secretary of Pakistan Merchant Navy Officers' Association Shaikh Muhammad Iqbal said that the vessel's last commercial voyage took place six months ago in December 2002. It was loaded in Ras Tanura, Saudi Arabia and arrived in Karachi on December 7, 2002 and was discharged completely two days later. The vessel remained moored for another 12 days after the discharging and then shifted to anchorage. On December 29, Jauhar sailed Karachi anchorage in blast (empty, without cargo) for Fujairah, UAE and arrived there on January 1, 2002 and stayed there till March 4, he said.

During its two months stay in Fujairah, Jauhar underwent a series of repairs and was also dry-docked. Ultrasonic thickness measurements were also conducted by Bureau Veritas, an agency approved by the Classical Society, and the vessel was finally declared unfit due to very poor condition of its hull. However, special permission was obtained from Bureau Veritas to allow the vessel to sail to Karachi for further repairs and immediate dry-docking because of the bad hull condition.

The vessel sailed Fujairah on special permission and reached Karachi on March 9 and PNSC workshop was engaged for repairs and fabrication of steel structure locally to 'reduce costs'.

Iqbal claimed that extensive repairs were carried out at the PNSC workshop till March 31 and the vessel sailed once again on April 1 for repairs and dry-docking at Ghangzhou, China. It arrived Ghangzhou 23 days later, almost double the average time for a non-stop journey by other vessels between Karachi and the Chinese port, due primarily to the depleted condition of the vessel. Repairs and dry-docking were carried on-and-off and the vessel stayed at Ghangzhou wharfage until the 12th of this month, when it was auctioned for scarp at $ 208 per matric ton for its LTD (Light Tonnage Displacement), the weight of steel, of little over 17,200 tonnes, or about $ 3.6 million, Iqbal said.



Since its last commercial voyage in early December last year, the vessel underwent repair and dry-docking works at different ports Fujairah, Karachi, Guangzhou which costs PNSC over $ 1.1 million according to Iqbal. It also remained idle for about 184 days from December till its ultimate scrap at Guangzhou on the 12th of this month which cost the PNSC a fixed operating expense of around $ 6,000 a day. The totals costs of repairs, dry-docking and 184 idle days thus cost PNSC over $ 2.3 million which was sold for scarp for $ 3.6 million.

"If the dilapidated vessel had to be scraped within months, as has been the case, what's the wisdom of spending over two million dollars on it. However, it is not the first time that PNSC has chosen to spend massive sums on money on a scrap-bound vessel. For instance, M.V. Hinglaj was repaired/dry-docked and had its steel structure removed to be later sent to Gadani for scrap."

So PNSC, the sole national flag carrier shipping line of the country, no more has a single crude oil tanker and yet it enjoys a 10-year exclusive contract with the Ministry of Petroleum to ship all crude oil imports into the country. It would also help increase the dependence on foreign shipping lines entirely through which PNSC charter hires. Pakistan imports between 5.5-6 million tones of crude a year for its three refineries. The increased dependence is seen by Iqbal to allow PNSC to charge adhoc shipment tariffs which are already on the high side.

For instance, quoting average comparative Aframax spot rates calculated on WS (World Scale) Rate compiled by international tankers association, Iqbal said that the PNSC, which enjoys the Right of First Refusal and thus accorded the exclusive rights on crude imports, is already charging over three-times tariff for shipment of crude from Ras Tanura to Karachi. "If calculated on the basis of WS Rate the PNSC should be charging only around $ 2 per ton for the transport of the crude but it is charging over $ 7 a ton for the shipment of crude from Saudi Arabia the ultimate cost of which is borne by the consumers."