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Until 2002, an obsolete Merchant Shipping Act of 1923 governed and regulated shipping in Pakistan due to which merchant marine could not flourish. We have drawn the attention of several Governments of Pakistan in this regard but due to the appointment of pseudo-professionals at the helm of the organisations of merchant marine nothing appreciable could be framed.
Several governments attempted to frame Merchant Shipping Bill to replace the obsolete Act of 1923 but failed bitterly. However, in 2002 a Shipping Policy and Merchant Shipping Ordinance was made but so far has not produced any positive results.
A BRIEF MENTION OF THE LACUNAS PRESENT IN THE PRESENT SHIPPING POLICY AND MERCHANT SHIPPING ORDINANCE ARE BRIEFLY MENTIONED AS UNDER:
a) Failure of framing of the instruments and details of the existing Ordinance.
b) Failure to frame rules and regulations of the training, certification, appointment of officers in various positions and avoidance/violations of the existing rules as notified in the Gazette of Pakistan.
c) The award of "First Right of Refusal" to Pakistan National Shipping Corporation instead of providing such option to "Pakistani Flag" especially for the secured cargoes of the country like crude oil, ores, wheat and rice.
On April 21, 2001 a meeting of the Cabinet Committee on Ports and Shipping was held which was chaired by General Parvez Musharaf. A summary was presented by PNSC on the basis of a report by consultants that PNSC was in a very bad state and the only way to salvage PNSC was to award the exclusive right of affreightment of crude and all other cargoes to PNSC.
PNSC went into profit by charging high freight rates for transportation of crude to the refineries which resulted in price rise of petrol, diesel and kerosene oil. This was brought to the attention of the then Secretary (Communications). The President of Pakistan took notice of this and limited PNSC to charge (AFRA+ 34 WS). This heavy cost of transportation of crude to refinery is being shared by all the end users.
d) Under the present Ordinance and Shipping Policy nobody considers investment in shipping.
We strongly recommend awarding the "First Right of Refusal" to Pakistani Flagships instead of PNSC alone. The decision was made under the chairmanship of General Pervez Musharaf as such the stewards of the Government find it difficult to gather enough courage to draw the attention of the President in sequence with this great hurdle in way of investment by private entrepreneurs in the shipping sector.
There is an urgent need of framing the instruments, details, rules and regulation for the implementation of the newly promulgated Merchant Marine Ordinance and the Shipping Policy. There is a great shortage of competent professionals of merchant marine in the shipping organisations and in the Government due to which we find non-existence of machinery in Pakistani Administration to incorporate the various innovations, changes and developments as are being made in maritime legislation worldwide and update Pakistan in this vital sector of national economy.
The Administration of the United States of America after years of excellent work has framed a Bill captioned "Oceans 21" which is a recommendation of the US Commission on Ocean Policy. We need to update our system in the light of the above mentioned bill.
UN Convention on the Law of Sea (UNCLOS). Consequent upon United Nations Conference on the Law of Sea held at Geneva in 1958 and 1960 the need for a new and generally acceptable Convention on the law of sea was accentuated.
The desirability of establishing through this Convention, with due regard for the sovereignty of all states, a legal order for the seas and oceans which will facilitate international communication, and will promote the peaceful uses of the sea and oceans, the equitable and efficient utilisation of their resources, the conservation of their living resources and the study, protections and preservation of marine environment was recognised.
The Convention was made and is signed by the Government of Pakistan. Consequently, in accordance with Article 57 of UNCLOS, Pakistan has an Exclusive Economic Zone of 200 miles stretching into the sea along with its coastline.
The stewards to the Government of Pakistan being unaware of the UNCLOS were ignorant of Article 76 of UNCLOS that permits member states to have an EEZ beyond 200 nautical miles. Years have passed and the Government has not initiated any steps to take advantage under Article 76 of UNCLOS.
Should the pseudo-professionals at the helm of affairs are not capable then the Government of Pakistan should seek the assistance of the "UN Commission on the Limits of Continental Shelf" in this regard. Pakistan must procure a modern "Survey Ship" to obtain the benefits from its EEZ.
The issue of "Sir Creek" which is about sixty kilometers in length, situated some eighty miles South East of Karachi has not so far been resolved in spite of several meetings between India and Pakistan. The Government of Pakistan must stress on the historical position of "Sir Creek" which is situated along with the coastline of Pakistan.
In 1947 when the sub-continent was divided the province of Sindh became the province of Pakistan that included Kutch. In 1950, Pakistan Rangers had set up posts to guard the frontiers of Pakistan. Later, in sixties, India took control of these posts.
In 1963, after a few hours the Pakistan Army captured all posts. This is known as the "First battle of Run Kutch". This issue was taken at the International Court of Justice that awarded its judgement in favour of Pakistan.
The Government of India has then taken the plea in accordance with Article 59 of UNCLOS and is continually trying to trap Pakistan under this clause. Both the countries have agreed to conduct surveys in the area.
It is not out of place to mention that long time ago a tributary of river (during floods) known as "Sir/Sur" used to flow through Gujrat and flow into the sea at a place which today is known as "Sir Creek". The Government of India has planned to take advantage of Article 59 of UNCLOS to procure the area on "equity basis".
MARPOL ANNEX VI: The issue of "global warming" has drawn the attention of the environmentalists and they have managed to convince the International Maritime Organisation to adopt "Marpol Annex VI" in 1997 that came into force in May 2005.
WHAT IT MEANS: BRIEFLY THE SALIENT FEATURES ARE GIVEN AS UNDER:
a) The annex sets limit on emission of sulphur oxides and nitrogen oxides from ships exhaust and prohibits deliberate emission s of ozone-depleting substances. The regulations were added to Marpol in 1997.
b) The annex includes a global cap of 4.5% by mass (%m/m) on the sulphur content of fuel and calls on IMO to monitor the worldwide average sulphur content of fuel once the protocol comes into force.
c) It allows for special Sox Emission Control Areas (Seca) to be established with major stringent controls. In these areas, the sulphur content of fuel oil on ships must not exceed 1.5%m/m.
Alternatively, specially designed system to be used while emission of exhaust from ships. It is imperative for the stewards to the Government of Pakistan to take serious note of this Convention to keep our fleet operational in the future.
Last but not least, ports form an integral part of shipping and without saying anything about ports; I feel that my submission would remain incomplete.
Years back I had submitted a complaint to the Prime Minister's Inspection Committee about PQA. A number of deficiencies and corruption cases were brought to the attention of the Competent Authority.
Billions of rupees were squandered and paid to a Dutch firm M/s Brook Haven for dredging the PQA channel at exorbitant rates with many other benefits. After thorough scrutiny of our submission, the Government of Pakistan took corrective steps resulting in savings of billions of rupees. Why the PQA stewardship itself took no corrective steps? Probably, either due to ignorance and incompetence or corruption.
We have also submitted a report to the President of Pakistan elaborating the facts regarding grounding of m.t.Tasman Spirit on 22nd July,2003. The stewards to the Government of Pakistan presented a false picture through the media claiming that they shall receive billions of rupees on account of grounding of the tanker and oil spill but so far nothing has been received; on the contrary the actual fact is published in a UK magazine "Fairplay" dated 10th February, 2005 on page 4 and 5.
The report says "With US $8.7 billion worth of claims at stake, Karachi Port Trust attempted to conceal potentially damaging information about the state of its channels before the grounding of Tasman Spirit, the trust was frustrated by some ingenious sleuthing, which not only led directly to a UK High Court for access to the information." The Prime Minister of Pakistan has appointed a committee to negotiate the settlement.
The Government of Pakistan is of the considered opinion that the pseudo-professional stewardship in the ports organisations is not capable to set the course right, therefore, have decided to award container terminals of the ports to the private entrepreneurs, that too, to foreigners.
SECOND CONTAINER TERMINAL AT PQA AWARDED TO DP WORLD OR OWNERS OF QICT: As per the terms of the concession agreement, PQA was to negotiate with QICT to develop the second container terminal. If negotiations failed (90 days limit set), then PQA was to tender for the project.
After over a year of negotiations and failure of negotiations to conclude any agreement, PQA publicly advertised for tendering for the project and invited Expressions of Interest (EOI). DP World gave their willingness in writing to PQA to participate in the tender.
PQA invited Expression of Interest (EOI) and three firms submitted their EOI's. PQA extended the date of submission of EOI twice. Before the expiry of the date of EOI, PQA awarded the project to DP World by passing all rules and regulations. The award of the project lacks transparency and merit as before the expiry of the submission of EOI Bid date, the project has been awarded to one party.
Why were all the bids not received and the best offer evaluated? How can the term of royalty payment be less than what PICT is paying as per their agreement with KPT signed 4 years ago? It seems that Government again has given priority to foreign parties at preferential terms, bypassing merit and transparency and putting the existing terminal at a disadvantage.
There are other integral parts of shipping; a few notable being Training, Certification schemes in Pakistan, Classification Societies, Marine Insurance, Banking, Logistics, IMPV Act, integrated system of roads, rail, air and sea transportation which shall be discussed at some other venue.
"Force is Power and when Forces are all together they become absolute power but one must not neglect professionalism and human link which together cause absolute prosperity and is the real power"
-- Given below is a comparison of Pakistan's Container Terminals which speaks volumes of discrepancies. Had the ports stewardship itself managed the container terminals, Pakistan would have earned billions of rupees.



==========================================================================================================================================
Comparison of Pakistan's Container Terminals:
Qasim International Karachi International Pakistan International
Container Terminal Container Terminal Container Terminal
(QICT) (KICT) (PICT)
==========================================================================================================================================
Year of Concession 1995 1996 2002
==========================================================================================================================================
Terms of Concession Build, Own, and Operate Build, Own and Transfer Build, Own and Transfer
(BOO) (BOT) (BOT)
Ownership Majority foreign owned 100% foreign owned by 100% owned and
ie by DP World-previously Hutchison International operated by Pakistanis.
P&O Ports Terminals. APL, ICTSI
Lease Period 30 years 21 years 21 years
Quay Wall Length 600 meters 600 meters 600 meters
Area given by the Port 250,000 Sq. Meters 140,000 Sq. Meters 180,000 Sq. Meters
Royalty to the Port No royalty payments to $6 per container from $12.54 per container move
PQA for 5 years (as volumes the date of commercial six weeks after signing
were less than 150,000 operations ie 22 months of the concession agreement
containers per year). after award of concession. with 5% escalation
Royalty payment after after every 3 years.
Only terminal to com
mence commercial
operations six weeks after
signing of concession and
started paying royalty and
generating income for KPT
Lease Rental to the Port Rs 200/- per Sq Meter About Rs 300/- per Sq Rs 411/- per Sq
( at the time of award per annum. Meter per annum. Meter per annum.
of concession)
Escalation of 15% every Escalation of 15% every
3 years. 3 years.
Wharfage charges on the Charges Rs 1000- Transfer all Wharfage Transfer all Wharfage
Cargo & every container. 1800/- per container collection to KPT. collection to KPT.
and only pass onto
PQA Rs 400/- per container.
QICT earnsRs 600-1400/- per container.
Equipment as per contract Old machinery allowed All equipment was to All equipment to be
to be imported and installed. be brand new. brand new.
Custom duty Exempted As per Tariff As per Tariff
Dock Labour Board No DLB, therefore no DLB applicable which DLB applicable which
(DLB) DLB excessive wages makes the labour cost makes the labour cost
cost & 25% cheaper in 25 % expensive. 25 % expensive
labour terms.
New concessions offered 2nd Container Terminal Entire West Wharf None
by Port Authority. awarded to QICT practically given to
owners-DP World. KICT
Additional area of 250,000 Additional area of
Sq Meters. 120,000 Sq Meters
Additional Quay Wall of Additional Quay Wall
750 Meters. of 362 Meters
Royalty agreed as $9.2 per
container which is still cheaper
than what PICT is paying to KPT.
Area given free of cost for 5
years whereas other terminals paid
lease charges from day one of
possession of area
==========================================================================================================================================

(Concluded)
(The writer is General Secretary, Pakistan Merchant Navy Officers' Association.)

Copyright Business Recorder, 2007

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