Majyd Aziz
Pakistan is fortunate to have three major Ports, namely,
Karachi, Port Qasim and Gwadar, while a fourth Port at Keti Bandar is also
envisaged. Karachi Port provides
round-the-clock easy and safe navigation to tankers, modern container vessels,
bulk carriers and general cargo ships up to 75,000 DWT. Karachi Port has 30 dry
cargo berths (13 on West Wharves, 17 on East
Wharves)
and 3 liquid cargo handling berths (POL and Non-POL) and the Karachi
International Container Terminal (KICT) that is privately owned and operated with
fully equipped modern technologies. Over 1700 vessels call at the Karachi
Port annually while operational capacity is about 3500 ships. The
following is the performance at Karachi Port:
There is ample scope of enhancing the operational activities
of the Karachi Port and it is incumbent upon the Port authorities, the Port
operators, and the Port users to ensure that this major Port of Pakistan is
operating at its optimum.
Pakistan’s imports and exports have increased
substantially in the past some years. This has led to a dynamic enhancement in
activities at both the Karachi Port as well as Port Qasim. The country’s third
Port at Gwadar is there to complement the existing Ports. However, the foreign
operators responsible for marketing and running Gwadar Port have been unable to
attract business. Although there has been significant introduction of
sophisticated and high tech machinery and equipment at the Ports, there is
still lot to be done. There is an imperative need to attract more investment as
well as inducing the cargo handlers to bring in more sophisticated technology.
Nowadays, due to abnormally high volume of commodities such as wheat and other
foodstuffs as well as coal, sugar, chrome ore, clinker and cement, the
efficiency and infrastructure of the Ports are under tremendous pressure.
At
present, most of the port-specific equipment and machinery attract duties and
sales tax. In these days, with the Rupee value falling down, the prices of
these equipments have become atrociously high. However, notwithstanding the
fact that cost is increasing, the government levies duty at today’s prices.
This has impacted on the feasibilities of the various projects resulting in
abandonment of facilities as well as portraying the country’s image as a low
profit center or as an insensitive decision making environment.
The
objective of the government is to offer appropriate facilities, with minimum
hassle, and at comparable prices. The emphasis should be on providing excellent
service at better prices. Therefore, it is submitted that a paradigm shift is
essential and that the cost of handling and other charges at the ports be made
pragmatic keeping in view the difficulties faced by Port users.
It is,
therefore, suggested that in order to boost port traffic, in order to maximize
the potential of these Ports, and in order to attract substantial foreign
investment and acceptance of the port as an important destination, it is
proposed that the import duties and other levies on port and shipping equipment
be zero-rated and that there should be no frontloading in any manner whatsoever.
This measure would provide a tremendous boost to the shipping industry and that
it would ensure remarkable investment in this sector.
Another example of unnecessary charges is the
“light dues” which are based on net registered tonnage of
the vessels as
per Section 10 of Lighthouse Act 1927 on ships calling at Pakistani Ports. The rates were Rs 0.50 per NRT but some five
years ago; these were raised to Rs 3.00 per NRT and recently further raised to
Rs 7.00 per NRT. The “light dues” are imposed without any improvement, replacement,
or modernization of the Lighthouse. The dues are collected by Customs on behalf
of the Mercantile Marine Department. As an example, a ship with a load of
27,000 NRT has to pay approximately US$ 2000 which adds to more than Rs
5.00 per tonne of cargo. These “light dues” unnecessarily increase the cost of
the commodity by US$ 1.00-1.50 per metric tonne. It is estimated that the
annual “light dues” are between Rs 900 to Rs 1000 million.
The Lighthouse at Manora Island near Karachi Port is the tallest lighthouse in Pakistan at 28 m (91 feet). In 1889, the British
built it to assist trade vessels approaching Karachi Harbor. The light of this Lighthouse is prominent from up to
20 nautical miles away on a clear night. Its focal plane is 148 feet high.
Unfortunately, the Lighthouse has neither been modernized, repaired or even
well-maintained inspite of the huge collection of dues.
Furthermore, all these high
Port tariffs and exorbitant dues result in heavy monetary surpluses for the
Ports. This encourages the government, the Port authorities, and the concerned
Ministry to generously utilize these funds to build flyovers, underpasses,
water fountains, and other non-Port related edifices and also donate huge
amounts for various causes to obscure organizations. In actuality, it is
trade and industry, as well as the consumers, who are paying for this entire
extravaganza without realizing the added cost in freight due to these dues,
tariffs, and levies. There is no private sector monitoring and even the Ports
Trustees are not concerned with this front-loading which is costing billions
for trade and industry. There is a Lighthouse Advisory Committee but it rarely
meets.
It is also pertinent to note
that the Port dues are dollar-based and so with the depreciation of the Rupee,
the Ports make windfall profits with the result that this bonanza is
diverted to non-Port activities. The Trustees as well as representatives of trade
and industry, especially, FPCCI, KCCI, OICCI, KCA, etc should insist that the
financial surpluses are not used for donations, giveaways, and building
non-Port structures. It is proposed that Port charges should be bifurcated into
local and foreign allocations. Local charges should take into account the
salaries, overheads, maintenance and repairs, and other auxiliary expenditures.
The foreign component should be based on the foreign exchange involved. This
should help save billions for trade and industry.
It is ironic that while
funds were being diverted to non-Port activities, the Berths at KPT were in
shambles and inoperative. Even today, Berths 3, 14, 15 and 16 are under
repairs and still not operational. Moreover, whenever foreign goodwill ships
come into the Port, the security concerns and other exigencies hamper the
workings of the Ports and Pakistan’s foreign trade is disturbed. There is also
the imperative need to check and monitor the efficiency and productivity of the
various Port equipment such as tug boats, pilot boats, dredgers, etc. Large
amount is wasted in maintaining and operating these equipment.
The culture
of strikes and closures are affecting movement of cargo from the Ports. The
12-day strike in December 2012 by the transporters and truck owners should be
an eye opener for the government as well as trade and industry. This resulted
in huge demurrage charges, loss of export orders, markets running out of
imported goods, and negative image around the world. The government did not
react to the strikes and it was after nearly two weeks that the government took
cognizance of the strike and negotiated the end of the strike. It is proposed
that political parties and religious organizations should allow Ports to
perform so that the country does not come to a halt. Pakistan is probably the
only country where business related cargo, especially export cargo, is not
allowed free movement during strikes and protests.
There is always this hope that the Ports
of Pakistan would become the focal centers of trade through the global seas.
The private sector should be fully involved with policymaking and decision
making stages so that the Ports of Pakistan become attractive for world
shipping lines.
