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1- TREATMENT OF TOXIC INDUSTRIAL EFFLUENTS
2-
PAKISTAN INTERNATIONAL CONTAINER TERMINAL
3-
APTMA: THE IN-HOUSE PROBLEMS
4-
CEMENT INDUSTRY

 

PAKISTAN INTERNATIONAL CONTAINER TERMINAL

 

Adds to the improvement of Karachi Port

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By SHABBIR H. KAZMI
Nov 24 - Dec 07, 2003
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Shipping and transport provide impetus to the growth of Pakistan's economy. In boosting foreign trade, a competitive shipping and transportation sector plays a vital role. The backbone of shipping is country's ports and their reliability to facilitate ships and cargo handling. Establishment of Pakistan Internal Container Terminal (PICT) by the private sector opens a new chapter in improving the quality of services being offered at Karachi Port.

The PICT has been incorporated in June 2002 solely as a terminal operating company. Premier Mercantile Services (PMS) was awarded a 21-year Concession to build and operate a dedicated container terminal at Berths 6-9 at Karachi Port on BOT basis in April 2002. Following extensive negotiations, an Implementation Agreement was entered into with the trustees of the Karachi Port Trust (KPT), which inter alia detailed the commercial, financial and technical terms of the Concession. This agreement also provides for the terms on which PICT will be required to implement additional phases of the project.

The important relevant provisions required: 1) the setting-up by PMS a Terminal Operating Company to design, finance, construct and operate a dedicated container terminal with a capacity of handling up to 450,000 twenty foot equivalent container units (TEUs) per annum on berths 6-9 East Wharf for a period of 21 years in phases linked to traffic growth on BOT basis, 2) a commitment to meet expanding needs for the future container traffic growth; and 3) to complete the physical implementation of Phase-I by April 2004.

The PMS has been operating on Berths 2-5 at East Wharf, Karachi Port carrying out the container handling and stevedoring operations since 1964. The equipment that was used for container handling has been transferred to PICT at the new berths under the requirement of the IA with the KPT. The ship-to-shore mobile harbor cranes acquired from PMS are currently being used by the PICT to handle containers to and from the vessels. These mobile cranes have a low operating cost but their efficiency and reach is low. Therefore, new rail-mounted ship-to-shore gantry cranes will be installed by March 2004. Once new cranes are in operation, the company will be able to enhance its tariffs, volumes and service capability, all of which will contribute towards higher revenue.

Notably, one key advantage that has accrued to PICT was the immediate start of operations on October 15, 2002 through the acquisition of handling equipment from PMS and the transfer of PMS customers to the new terminal. As a result of Phase-I completion, PICT's handling capacity will increase from present 80,000 containers to 150,000 containers per annum. The annual container handling capacity could be further enhanced to 300,000 and 450,000 by the end of Phase-II and Phase-II, respectively, if warranted by the volumes.

The PICT is currently implementing Phase-I for which equity has been raised through private placement and public offering and the debt has been arranged from the International Finance Corporation (IFC) and OPEC Fund. It is envisaged that PICT would be able to undertake subsequent second and third phases (as and when required) almost entirely through internal cash generation.

 

 

Cost and Funding Sources Phase-I
                                                                           (Rs in millions)

Costs

Container handling equipment

1,311.3

Civil works

172.3

Pre-operating expenses

156.6

Vehicles

8.6

Other expenses

10.0

Working Capital

34.8

Total

1,693.6

Funding Debt

IFC Loan

536.5

OPEC Fund

449.5

Equity Sponsors

371.2

Pre-IPO

106.8

Public Offer

160.0

Cash generation from project

69.6

Total

1,693.6

Source: PICT Prospectus

 

According to the stipulation of the IA, the company shall be paying royalty to the KPT at a rate of US$ 12.54 per container handled with an indexation of 5% after every three years. First indexation shall start after five years from completion of Phase-I. The royalty will be payable on a monthly basis within ten days of the end of each month and shall be subject to annual adjustments, if any, on the basis of audited records of the containers handled. The royalty payment shall not be subordinated to the payments of principal, interest, or any other charges/debt due by the company to the lenders or and third party.

Karachi Port, accounting for the 80% of the traffic handling, plays the dominant role due to its infrastructure facilities, proximity to the city and deeper berths. It handles nearly 63% of the country's total throughput. The port can handle up to 75,000 dwt tankers, modern container vessels, bulk carriers and general cargo ships. The containerized traffic in Pakistan is currently handled by PICT, Karachi International Container Terminal (KICT), Qasim International Container Terminal (QICT) and Self-Geared vessels.

 

 

Containerized traffic in Pakistan far exceeds the locally available ship-shore capacity. The gap is filled by vessels that carry their own cranes (gear) along with containers. This reduces available space on the ship. Therefore, once PICT becomes fully operational, the number of geared vessels visiting Pakistan will be reduced and hence results in an effective increase in the traffic available to port operators in Karachi.