Pakistan mulls privatizing $2.5bn freight industry

Aasim A Siddiqui, chairman of All Pakistan Shipping Association, says measures to reduce freight bill may yield desired results with the participation of local investors. (AN photo)

• Move to reduce dependence on foreign shipping lines for transportation of 85% cargo
• Investors say will wait for development of Gwadar port before signing on dotted line

KARACHI: Pakistan is contemplating measures to reduce its dependence on foreign shipping companies for ferrying its import and export goods, billed to the amount of $2.5 billion annually, Aasim A Siddiqui, Chairman of All Pakistan Shipping Association, told Arab News on Sunday.
“Pakistan is currently paying this amount to foreign shipping companies for transportation of around 85 percent of inbound and outbound cargo from the country’s harbors,” Siddiqui, who also provides policy inputs to the country’s Ministry of Maritimes Affairs, said.
Pakistan’s state-owned Pakistan National Shipping Corporation (PNSC) transports around 15 percent of the total cargo handling comprising mainly oil shipments.
PNSC’s current fleet includes four oil tankers and five bulk cargo carriers with the corporation planning to add three modern double hull oil tankers to cater to the demand of Motor Gasoline transportation.
The PNSC pocketed Rs872 million during the nine months of the fiscal year ending on March 31, against Rs1,381 million earned during the same period in 2016.
It reflects a decrease of 37 percent due to the government’s decision to restrict the import of fuel oil after the country switched to LNG consumption, which adversely affected PNSC’s business.
“The government is considering different approaches to reduce the freight bill including allowing private sectors to charter vessels with local crew. At present, the foreign vessels are chartered with foreign crew and they are paid [their wages] in dollars which adds additional pressure on the already depleting foreign exchange reserves,” Siddiqui said.
Pakistan is currently facing a historic deficit which increased by $18 billion by the end of the fiscal year 2017. Finance minister, Asad Umar, estimates that the country is in urgent need of $9 billion to run the economy.
“The reviewed policy draft of the maritimes policy of 2002 will be ready within the next three months. It should set the direction for the shipping industry in the future. The draft is being prepared with the help of all stakeholders,” Siddiqui said.
The average cost of cargo vessels falls between $10 million and $15 million, while the daily expenses of chartered vessels are between $30,000 and $50,000, according to official stats.
Localization of the industry would not only reduce the current bill but would also help in providing employment opportunities in the country. “We have experienced manpower that could replace the foreign crew… We would have to pay them only for the chartered vessel unlike paying up to 30 to 40 foreign crew members,” he added. 
As the Gwadar port project — part of the China Pakistan Economic Corridor (CPEC) – nears completion, Pakistan expects huge shipping activities. CPEC is aimed at building a trade and infrastructure network connecting Asia with Europe and Africa along the ancient Silk Road trade routes. 
However, Pakistan’s investors said they remain unaware of the plans. “We are still waiting for the master plan of Gwadar’s development which has not been shared even after five years of the progress,” Siddiqui said, adding that “once we have the master plan, the local investor will decide for investing in Pakistan”.
“If Pakistanis can invest in other countries, including the UAE, there is no question why they would not invest in their own country. It is only a matter of consistent government policies.”
Pakistan’s shipping sector was vibrant and growing until the nationalization of shipping companies in January 1974. Before the change, the national fleet comprised 53 vessels, owned by 10 private companies. The fleet increased to 71 vessels before the separation of East Pakistan into Bangladesh in 1971.
The total fleet strength of PNSC increased to 60 ships with the induction of 14 vessels in the late 1970s and early 1980s and enjoyed a complete monopoly till the early 1990s when the shipping sector was deregulated. At present, the fleet has reduced to only 9 active vessels.
Prime Minister Imran Khan, in his inaugural address, had encouraged Pakistanis to invest in their own country.