The financing deal of $135 million between Pakistan National Shipping Corporation (PNSC) and ABN-Amro Bank for acquisition of two oil tankers and one bulk carrier is likely to be finalised in a month or two.
Sources told Business Recorder that the Ministry of Ports and Shipping has given November 16, this year, to the national flag carrier for the purchase of all three vessels. In this regard, a technical team of PNSC has inspected some suitable vessels for purchasing, but they were waiting for finalising the financing deal of $135 million with ABM-Amro Bank.
Interestingly, the corporation did not seek any government guarantee for financial deal with the bank. The new vessels include two double-hull oil tankers of 'Aframax class' and one bulk carrier of 'Panamax class'.
The vessel acquisition plan would cost an amount of $150 million, of which $135 million has been arranged through financing from bank (ABN-Amro Bank), while remaining amount of $15 million would be provided by the corporation from its own financial resources.
Earlier, the Prime Minister Shaukat Aziz has given approval for the purchase of three vessels. The corporation fleet renewal and expansion plans are continuing with its efforts to add more tonnage to its fleet. The corporation obtained necessary approvals from the federal government that also appreciated the plan and it is expected that these vessels would be inducted in fleet in this financial year, 2006-07.
The national flag carrier have to replace its ageing oil tankers as one of its oil tankers would be out of business under restrictions of Condition Assessment Scheme (CAS) of International Maritime Organisation (IMO) in 2007, while another three tankers would fall under the same in 2010.
Lack of adequate fresh tonnage (new ships), due to past financial constraints has resulted in gradual deterioration of the PNSC fleet in terms of age profile and unless the trend was reversed, foreign vessels would grab a bigger chunk of the country's sea borne trade, the sources said.
The age profile of the fleet, however, is gradually deteriorating, as, in terms of dead-weight tonnage (DWT), over 62 percent of the fleet of 15 ships with about 636,182 DWT is over 26 years old, while remaining 38 percent is 23 to 18 years old.
With this age profile it has been estimated that over 60 percent of the fleet needed to be replaced within next four to six years. During the past three years, the corporation paid $21.9 million for the purchase of three oil tankers-MT Shalamar, MT Swat and MT Johar-while MT Lalazar was purchased for $13.5 million and a bulk carrier MV Kaghan for $15 million.
With the help of these two oil tankers the country's liquid cargo import, especially crude oil handling, would be enhanced. Now, the corporation manages a fleet of 10 multipurpose cargo ships, four Aframax tankers and one bulk carrier under its flag.
These tankers are over 20 years old, as new tankers are very costly and financial constraints have forced the corporation to opt for second-hand vessels in the past. The requirement of double-hull tanker, against single hull, came into force in 1998, and those countries operating old oil carriers have to replace them with the new version of tankers-double-hull.
A new tanker of double hull of 'Aframax' class costs around $40 million to $60 million, but PNSC had purchased four single-hull oil tankers at a cost of about $35.4 million. However, sources said that better maintained tankers have a longer life. "The purchase of all four tankers was arranged from our own financial resources, without borrowing a single penny from any financial institution," the source added.
At present, the corporation is lifting only 20 percent of the country's total national carriage that stands at 55 million tonnes, due to high growth activity in national economy.
The national flag carrier has already secured a 10-year "Contract of Affreightment" from January 20, 2003, for crude oil transportation with Pakistan Refinery Limited, National Refinery Limited and Pak-Arab Refining Company.
The corporation also transported 90,900 tons crude oil from the Gulf to Colombo for Sri Lanka-based Ceylon Petroleum Corporation and also got itself registered with the company.
In mid-1990, the Corporation had availed a loan option of $50 million from National Bank of Pakistan (Bahrain) for the purchase of three small size gearless container vessels. These three vessels were used for feeder services and have a carrying capacity of about 1100 'twenty equivalent units' (TEUs).
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