PORTS & SHIPPING
FACING IMMENSE FINANCIAL CHALLENGE
An interview with Arshad Munir Ahmad, MD, KSEW
By Syed M. Aslam
May 08 - 21, 2000
Pakistan's ports and shipping infrastructure primarily comprise two seaports, a single shipping company, the state-owned Pakistan National Shipping Corporation (PNSC) having a fleet of 15 vessels long past their economic lives, and a work-starved shipyard which in its better days have built over 440 vessels including ships and an array of port utility vessels including tugs, barges, port survey vessels and also fishing vessels. It has not only built ocean-going ships for PNSC but also utility vessels for Karachi Port Trust, Maritime Surveillance Agency, Pakistan Navy. Cargo vessels for Iran, Saudi Arabia, China, UAE, etc. , were also built.
The lack of work at the KSEW today is really an extension of an overall deterioration in the ports and shipping sector. Of the two operational ports, Port Qasim still primarily remains a day-time port after almost two decades of operation. The average age of twelve break-bulk carriers and the three used container vessels acquired by the PNSC is 18 years and 13 years respectively. The aged fleet poses an immense financial challenge for the PNSC which is once again heading in red for the year ended June 30 this year as it requires frequent repair, maintenance and dry-docking works but also makes it inescapable for it to replace the fleet in the near future. This has become all the more important as the much stricter security code by the International Maritime Organisation which was extended for the relief of many developing countries like Pakistan will be effectively enforced in the near future.
PAGE talked to the Managing Director of the KSEW, Arshad Munir Ahmad, a serving Rear Admiral of the Pakistan Navy, to highlight the problems of the KSEW, which in turn highlight the overall stagnation of the ports and shipping infrastructure. He also suggested measures for the revamping of the sector, particularly the PNSC, which today lifts just a fraction of the national cargoes and whose failure to replace its outdated fleet could mean the end of shipping in Pakistan.
As mentioned earlier, the lack of work has turned KSEW which used to be the hub of ship-building activities in the region in the late 50s and early 80s into a work-starved organisation. Today, it is unable to pay the salaries to its workers and staff for the last two months. There is just enough work for the KPT today, not only in its core activity, the ship building, but also ship repairing. The years of neglect and the lack of local support have taken a heavy toll on the KSEW.
At present, KSEW has a limited number of small ship-building and maintenance works. The ship-building works in process include 3 tugs and two pusher tugs from the Pakistan Navy, the body work on the Agosta B submarine for the Pakistan Navy in collaboration with the Naval Dockyard. The maintenance works include maintenance and repair work of PNSC vessel Islamabad, KPT tugs and vessels of Maritime Surveillance Agency (MSA). KSEW is still awaiting the release of Rs 20 million from the PNSC for the repair works on m.v Sarghoda recently.
Rear Admiral Arshad Munir Ahmad told PAGE that KSEW needs Rs 700 million annually just to breakeven but is falling short of 25 per cent of this bare minimum revenue just to keep afloat. The absence of any ship-building orders over the years and the lack of support by the PNSC which did not provide a single ship repair and maintenance work during the last decade has taken a heavy toll on the KSEW.
The KSEW Managing Director stressed the need for the restoration of 30 per cent subsidy which was withdrawn by the government of the local ship-building orders some two years ago. He informed PAGE that it is traditional for the governments around the world to subsidise the ship-building orders by as much as 50 per cent to protect the interests of their shipyards in this era of cut-throat competition. Citing the example of the EU he said that the European Union has plans to approach the WTO against Korea which offers 40 per cent subsidy on ship-building orders.
He said that KSEW has tried to win the ship dry-docking, maintenance and repair orders from the PNSC which preferred to have its vessels service outside the country due to longer times taken by the KSEW. The ship repair work from PNSC has also started coming to the KSEW as we have assured it our commitment for on-time finishing of a work. We have already convinced the PNSC with the timely repair of m.v. Sarghoda recently and same will be the case with m.v. Islamabad the ongoing works on which will be completed at least 3-4 days early. We have got the firm commitment from the PNSC to send its ships for repairs to the KSEW for next six months, he added.
He said that the KSEW has initiated an aggressive marketing strategy, particularly aimed at securing ship-building orders, as it offers the lowest ship-building rates in the region and is fully equipped to build ocean-going vessels upto 26,000 DWT. KSEW has also approached PNSC to submit its plans for next 10 years including the replacement of its existing fleet which is inescapable in next five years. The same is the case with the fleet of Pakistan Navy.
He stressed that the government should allow same protection to the sole national ship-building shipyard, the KSEW which it allows to the local auto industry. If the local auto industry can be given protection against the foreign imports through high discouraging tariff why not the government discourage the import of ships which can be built in the country, he asked.