PORT QASIM IN NEED OF INVESTMENTS

SHAMSUL GHANI
(feedback@pgeconomist.com)
Mar 7 - 13, 20
11

God has blessed Pakistan with the most bountiful gifts of nature - a sea and a network of rivers. While our river-management has left much to be desired, our harnessing of sea power to full economic advantage has also been very inefficient. We have failed to exploit the food potential of sea on one hand and neglected to develop marine environment and engineering on the other. In this discouraging scenario, the development of Port Qasim and the growth of its operational activities remind us of the promise this land and its inhabitants hold. With the multi billion dollar Gwadar project far from being fully operational due partly to our own incompetence and partly to the conflicting interests of major global players, the functioning of Port Qasim is a boon for our economy, particularly the economy of seaborne trade and industrialization.

The port, being the economic hub of country, acts as a powerful channel for transmitting the country's diversified economic activities to meaningful end products. An efficient vehicle of seaborne trade, Port Qasim is the first industrial and commercial port of Pakistan.

Operational since early seventies, the Port is managed by Port Qasim Authority (PQA). It is built on the coastline of Arabian Sea and is located approximately 50 km away from Karachi city and around 15 km from National Highway. The project is spread over 12,000 acres of land out of which 1,000 acres are used for port activities while 11,000 acres are occupied by an industrial zone that carries in its fold a number of industrial projects of great economic importance. The port is connected to the railways through a 14 km long railway link comprising six tracks laid down in the close proximity of the berths. The functioning of the Port includes handling of seaborne trade, warehousing, provisioning of land and infrastructure facilities for setting up industrial projects and units.

The port today handles approximately 40 per cent of country's seaborne trade. The port comprises various single-purpose terminals in addition to a multi-purpose terminal (MPT). Other terminals include FOTCO for the import (and export) of petroleum products: Engro terminal for the import of chemicals, I.O.C.B for the import of raw material for Pakistan Steel, Progas terminal for LPG imports and Liquid Cargo terminal for edible oil imports.

CARGO HANDLED BY MPT AT PORT QASIM (2004-10) IN 000 TONS

TERMINAL 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Multi-purpose terminal (MPT) 2270 2623 1435 2657 2104 621
Liquid imports 1479 1635 1559 1714 1349 99
Liquid exports 25 - - - - -
Dry exports 144 474 880 738 1569 1864
Total dry cargo at MPT (1+4) 2414 3097 2315 3395 3673 2485
Total liquid cargo at MPT (2+3) 1504 1635 1559 1714 1349 99
Total MPT cargo (5+6) 3918 4732 3874 5109 5022 2584
No of ships handled 245 254 254 288 322 174

CARGO HANDLED AT PORT QASIM (2004-10) IN 000 TONS

PARTICULARS 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Total (Imp+Exp) cargo 19437 21573 24350 26424 25023 25606
No of ships handled 806 974 1051 1155 1238 1187

The comparative shrinkage in the total volume of cargo handling business during 2008-09 may divert one's mind to the economic slump that hit the world during the preceding years. Nevertheless, the developing economies are expected to swiftly shrug off the effects of unforeseen downtrends. The divergent trends in the global external markets and the totally overhauled world economic situation demands a rational and futuristic approach towards the management and functioning of projects like PQA. In the aftermath of global financial meltdown, the sea tariff structure put a big question mark on the viability of projects like Port Qasim.

The wave of inflation that has hit our economy during the last three years has immensely raised the cost of doing business cargo-handling being no exception. Moreover, the dwindling global demand has resulted in the shrinkage of seaborne trade. The gravity model warrants destination-oriented external trade policies. This means that economies in close proximity to one another should act as external trade partners thereby minimizing on freight cost and shipment time. This gives rise to tariff-based competition. To survive in this situation, PQA will have to go for capacity building and improved infrastructure with a view to increasing the volume of business handled. Besides a competitive tariff structure, a safe and sound maritime environment will have to be developed. This will require investment on an ongoing basis for which private sector will have to play an important role.

A number of industrial, commercial and infrastructure projects are in progress at PQA. There timely completion will enhance handling capacity of the port from 40 million tons to 83 million tons. The PQA chairman has rightly laid down the following strategic goals and objectives:

* Increased operational capability of PQA
* Acquisition of powerful tugs and pilot boats
* Capacity building
* Deepening of navigational channel
* Upgrading port facilities
* Provision of infrastructure facilities in all industrial zones
* Increased port efficiency to reduce cost of doing business

To attain these goals and objective, PQA will need a sustained inflow of investment funds both from domestic and international channels. The flow of foreign investment has remained seriously hampered during the last three years or so. To restore the flow, foreign investors will have to be offered a wide range of incentives. Port Qasim could well be the focus of government economic policies showcasing such incentives.