THE SHIPPING SCENARIO

 

Shipping plays an insignificant role sector in the national economy and the dependence on foreign shipping lines have only increased


By Syed M. Aslam
Nov 17 - 23, 2003

At any given time some 45,000 merchant ships are moving around the world's sea lanes across hundreds of thousands of coastal jurisdictions through the international waters. According to the International Shipping Federation (ISF) around 5,000 million tons of cargo was shipped over a distance of about 4.6 million miles in 2000.

Pakistan is gifted with 560-mile-long coastline and yet it has failed to reap the benefits that it should have derived from being a maritime nation. The proximity to the sea and enormous benefits that it offers to the economy, however, has never been exploited to its fullest as shipping has never seen fit by the policy makers to accord the priority that it deserved. Shipping plays an insignificant role sector in the national economy and the dependence on foreign shipping lines have only increased over the years costing the exchequers money second only to defence. The dependence has also provided foreign shipping lines to increase the freight charges at will at one pretext or the other, particularly in the post 9/11 world.

Today the fleet of state-owned Pakistan National Shipping Corporation, the only national flag carrier, comprises just 14 vessels: 9 combi, feeder containers (of the 3 acquired in 1996 one has also been sold) and 3 crude oil tankers: all of whom are old and long past their economic and commercial lives.

The used tankers were inducted into the PNSC fleet only two months ago and at a time when the future of single-hull tankers remains highly uncertain. Single-hull tankers may be banned by global shipping watchdog International Maritime Organisation (IMO) at its meeting scheduled in the third week of next month in Britain. The country was totally dependent on chartered vessels for its crude oil shipments for a full 9 months until September because PNSC had no vessel: the only tanker owned by PNSC, m.t. Jauhar, was sold for scrap at Guanzhou port in China on June 12 this year after undergoing expensive, and extensive, repairs and dry-docking since early December last year. A PNSC subsidiary Shalamar Shipping (Private) Limited announced the induction of the 22-year-old Aframa type tanker in September only after Tasman Spirit, a veseel chartered by the then tankerless Corporation, ran aground to cause the worst environment catastrophe off the coast of Karachi.

According to informed sources in the shipping circle, the IMO is expected to come up with stringent laws to ensure safer merchant marine operations and may ban single-hull tankers way ahead of the 2007 deadline due to increased oil spills across the globe including the recent one off the Karachi coast.

However, the sources told PAGE that the ban doesn't necessary mean that the single-hull containers acquired by the PNSC would be affected by any such ban even if the IMO decides to go ahead with it next month. "First of all, the developing and the poor members of the IMO, which has 146 members (all members of the United Nations are also the members of IMO), are expected to strongly resist any such ban because they just could not afford to replace their fleet. Secondly, even if the IMO chooses to go ahead with the ban it would give its member nations certain time to implement the decision which can be as long as one year. Thirdly, even if the ban will be enforced it would most probably mean that the single-hull tankers would not be allowed to enter the ports of the developed countries.

"It would be like saying that while we could not force you to stop sitting naked in your home we would not allow you to come to our home without clothes. The fact that Pakistan's crude oil run is restricted to the Middle East would make it possible for the operator, which in this case is the PNSC, to keep plying the trade without any repercussions from the IMO."

The PNSC enjoy a 10-year exclusive contract for the import of crude oil for the 3 national refineries. This is how the corporation, which had only one depleted tanker then, was gradually awarded the exclusive contract. In April 2001, the Cabinet Committee on Ports and Shipping Wing awarded the First Right of Refusal to the PNSC in April 2001. On October 7, 2002 a case was presented to the Economic Coordination Committee for the awarding of a 10-year crude oil shipment contract to the PNSC. Sixteen days later on October 23; Pakistan Refinery Limited, National Refinery Limited and PARCO were directed by the Ministry of Petroleum and Natural Resources to sign a 10-year contract with the PNSC. The PNSC was awarded the contract at rates way above the market rates.

Observers say that the PNSC is being kept afloat by allowed to charge excessive rates the ultimate price of which is paid by the people through high petroleum, diesel and kerosene prices.

According to the unaudited financial report of the PNSC for the first quarter ended September 30, the operating profit increased by Rs 263 million to Rs 454 million over the comparatively period last year. The pre-tax profit also depicted a healthy increase of Rs 94 million to Rs 324 million. While its heartening to see PNSC better its performance the fact remains that it was made possible by indirectly subsidising the Corporation at the cost of burdening the people with high prices of petroleum and products.

Can Tasman Spirit happen again? Yes it would unless the related maritime departments closely inspect and monitor the vessels calling at the national ports because over 70 per cent of the ships calling at the ports of Karachi are flying Flag of Convenience, which allows easy registration with least concerns for laws making it easy to avoid accountability in case of a mishap.