STRATEGIC PROJECTS IN SHIP BUILDING, DEEP-SEA CONTAINER HANDLING

SYED FAZL-E-HAIDER
Apr 28 - May 11, 2008

Pakistan is poised to take advantage of the strategic location of its new port at Gwadar (which has become operational) and fast pace of growth of maritime activity in the region by having a giant shipyard at Gwadar, which is located close to the Strait of Hormuz linking the Persian Gulf and the Gulf of Oman. By executing the strategic projects like national trade corridor (NTC), giant shipyards at Gwadar and Bin Qasim ports and deep-sea container terminal at Karachi port, Pakistan broadly plans to appear on the world map of ship building, repair and deep sea container handling in three to four years time.

Pakistan Planning Commission has already estimated an annual income of US$60 billion from transit trade after completion of the NTC project, a couple of shipyards and improvement of the North-South road network. Islamabad has also sought advisory services from internationally qualified firms led by a reputable international financial institution for the development of giant shipyards. The development of shipbuilding and marine industries can make the country a leading shipbuilding player in the region.

The country is all set to take advantage of the emerging opportunities in shipbuilding, including engine and equipment manufacturing. According to an estimate, internationally the demand for new ships will increase from around 30 million DWT a year at present to around 90 million DWT a year in 2055. The establishment of two new shipyards with bigger docks would ensure accommodation of giant vessels and the development of shipbuilding industry in the south Asian country.

At present, Karachi Shipyard and Engineering Works (KSEW) is the country's only yard, which is fulfilling the needs of local shipping industry through repairs. The docking facilities of KSEW have not been enhanced since 1970. It has the limitation of depth of water in the present channel. Karachi Port Trust (KPT) is currently working on a deep draught container terminal project for which KSEW needs space to undertake bigger ships for repair and maintenance. Pakistan National Shipping Corporation (PNSC) has only a fleet of only 14 ships and presently Pakistan depends on foreign ships for 80 per cent of its trade.

GIANT SHIPYARDS

Islamabad plans to set up two giant shipyards with a capacity of 600,000 DWT at its ports of Gwadar and Bin Qasim at an estimated cost of $500 million. It has already sought Chinese help and advisory services from international firms for the purpose. In view of the growing demand for new ships around the world, the strategically located Pakistan is a take-off point for such projects. Gwadar can turn into an ideal place for a facility for repair and maintenance of bigger local and foreign ships and vessels.

The proposed Gwadar shipyard is planned to be set up at Gwadar East Bay. It will spread over 500 acres of land. It will have at least two dry docks of approximately 600,000 DWT. The shipyard will not only provide the facility of ship repairing but it can then be further upgraded to undertake state-of-the-art shipbuilding of bigger size and high-tech ships like Very Large Crude Carriers (VLCCs) and Ultra large Crude Carriers (ULCCs).

The capacity in the Gulf for such repair of vessels is limited and such a facility at Gwadar will be one of the trigger industries for bringing up Gwadar port and development of the region.

Islamabad wants to build the proposed shipyards in cooperation between Pakistani private sector and Chinese Corporate sector while government would also incorporate its participation. Last September, the adviser to former Prime Minister Shaukat Aziz on Finance Dr Salman Shah held important meetings with key Chinese bankers, financial institution and shipbuilding companies for cooperation in setting up two giant shipyards in Pakistan during his visit to China. He met with presidents of EXIM Bank and ICBC, Chairman of China Banking Regulatory Commission, Chairman of China International Capital Corporation, China Development Bank, the MMC - a reputed financial institution and prominent entrepreneurs dealing with ship-building - with basic purpose of cooperation in ship-building project.

DEEP-SEA CONTAINER TERMINAL PROJECT

Last November, the Hong Kong-based Hutchison Port Holdings Limited (HPH) entered into an agreement with the Karachi Port Trust (KPT) to invest over $1 billion in the Pakistan Deep Water Container Port Project (PDWCP). The project will have 10 draft berths at 18-metre depth, of which four will be completed in the first phase by 2010 and will have a terminal capacity of 3.1 m TEUs. The concession has been awarded on build-operate and transfer (BOT) basis for an initial lease of 25 years and could be extended for another 25 years on mutually agreed terms and conditions. Total expected income stands at over $3.5 billion over the 25 year concession period. Under the deal, 10 berths will be spread over an area of 5km and the first vessel is expected to sail into the new terminal by 2010.

Construction of $1 billion deep-sea container terminal at Karachi is expected to turn the country into a major transshipment hub for the regional countries, further bolstering Pakistan's trade and commerce. After completion of the project, Pakistan would be one of the few countries of the region that would not only provide ship-building, but also repair facilities and deep-sea container terminal that can accommodate some of the largest ships.

NTC PROJECT

Islamabad has already chalked out an ambitious Rs 520 billion plan to develop National Trade Corridor (NTC) that will link upper parts of the country in the North with ports in the South to reduce travel time and fuel cost by improving existing road network and introducing new highways and motorways by 2012. The project is expected to reduce cargo travel time from Karachi to Peshawar from 72 hours to 36 hours and road losses to the tune of over $1 billion per annum which will reduce annual transportation cost by 10 percent.

$5.36 billion NTC project is mainly aimed at decreasing the cost of doing business through improved trade logistics and connectivity. The project would establish a major communication link for Central Asian states, China and the Gulf as 60 per cent trade of oil and gas is carried out through this route. It will reduce the transport time from and to China, the Middle East, Central Asian states, Europe and Africa. The National Trade Corridor highway investment plan is a core component of NTC project. The plan covers the corridor's backbone from Peshawar to Karachi and the outlying links that will connect Pakistan to China via Gwadar port in Balochistan.