Budget 08/09 is an ambitious document in the current chaotic international environment where fuel oil prices may surge to 150 USD and 200 USD by the end of the year. There can't be any dispute on the size and targets of growth, but due to rising commodity prices, freight hikes on import and double digit inflation, there appears a lot to be done in a little time because of international trends.
Finance Minister seems oblivious to the economy's revenue generating ability and additional revenue generation upto 25% in 12 months, which is unprecedented. The chartering rates of vessels due to oil prices, supply and demand are high and 20 foot container costs 800 USD to Dubai comparing 2007 when it was only 300 USD.
The country pays about 2.5 billion USD and now is expected to pay 3.0 billion USD in view of freight hikes, but unfortunately no relief or any provision has been made towards maritime sector, in particular ship owning under Pak flag, which has only 14 old ships and the beneficiaries are foreign flag vessels, dictating our trade and making our export/import expensive and incompetitive due to non-existence of sizeable tonnage under our own flag.
It is not only maritime sector but textile apparel sector, a foreign exchange earner is also ignored. It was intriguing to note that the Finance Minister was made to state that in maritime sector dredger import will be custom free. It is already exempted from custom duty vide S,R.O. 457(1)/2004 dated 12th June, 2004, S.No 95 exempting ships, tugs dredgers etc under Pak flag up to year 2020 at rate of duty 0% advalorem. This appeared to be a gimmickry to say that maritime sector has been focused and addressed in the current budget.
If I presume that SRO of 2004 is now being made part of the finance bill, it is unbelievable that a realisation has dawned after a lapse of 4 years. However a fear does exist that the move may also include foreign dredgers who come on project basis for short duration of 6/12 months and may also be exempted from payment of custom duty.
If the latter is true then we will be killing our nascent dredger industry which has brought investment under Pak flag both in public and private sector and transfer of technology and employment to Pakistanis on dredgers, tugs etc. I sincerely hope that my presumption is not correct, we have to await for details, but we must express our fears and resist any move to kill the new dredging industry under Pak flag.
KPT and Private sector both have invested heavily in this sector. It is said that more than 50 mill USD have been invested and Pakistani human resource have been trained abroad to undertake dredging of harbours etc.
Port Qasim pays to foreign dredging companies for dredging annually 1 billion rupees for a Bill of Quantity of 5 million cu. meter silt removal to maintain 11.0 meter draft. The channel is to be dredged to 14.0 meter as per new agreement with D P World at a cost of 140 million USD and after dredging, 10 million cu. meter silt will have to be removed annually at the cost of Rs 3 billion annually. The present cost of trailer suction dredging is 5 USD per cu. meter and cutter suction dredging is 20 USD per cu. meter.
DPW has been constituted for 140 million USD dredging of Port Qasim by the Ministry. Our nascent dredging industry needs to be protected from foreign giants in this industry.
I would rate this industry growing well under Pak Flag and it is an excellent example of public and private sector competing under the same flag with no preferences . In addition to Port Qasim, Gwadar Port is going for 1 million cu. meter dredging and government will ensure that Pak flag will be given preference as Port Qasim Board unanimously resolved to give preference to Pak flag vide agenda item 34 of 91st board meeting. Preference to national flag is a must.
KPT has been awarded work to dredge Pasni Fish Harbour so the users are not only ports but KESC, Pak Navy, refineries and DHA etc, and a lot of foreign exchange is paid to foreign companies for dredging work. The fleet is building up well and KPT has acquired state of art dredgers so is the private sector.
THE PRESENT STATUS OF DREDGING FLEET UNDER PAK FLAG IS AS UNDER:
KPT - Public Sector:
-- TSD Mahmoodul Hasan 2500 cu. meter.
-- TSHD Abdul 6500 cu. meter
-- CSD Karamat
-- Back Hoe Ali
-- Grab dredger Aminullah working at Pasni
Private Sector:
-- 3 CSD, Raffay, Shayan, Danayal
-- 2 Grab dredgers - GHD Kamran and KT
-- With allied equipment, tugs, barges etc.
The fleet of dredger is growing equally in public and private sector with transfer of technology and training of Pakistani human resource, who are operating them efficiently.
The government must support the nascent dredging industry under Pak flag, be it public or private sector and in all tenders provision be made to pay 15% extra on tender rate to Pak flag as incentive. This incentive is given by many countries to their national flag.
The annual dredging cost may exceed 10 billion rupees when all users, including KPT, which undertakes its own dredging. I also propose similar incentives to tugs flying Pak flag and hiring of tugs of foreign flags be discouraged to build our own fleet of dredgers and tugs under Pak flag to save foreign exchange and generate employment of Pakistanis on their own fleet.
The Finance Minister did mention development of Gwadar port out of logistics allocation of Rs 37 billion, but categorised maintenance and repair of Makran coastal highway which was completed in 2004. There is no indication or allocation for connecting Gwadar to Surab and Rotodero to connect national highway or commonly known as National Trade corridor. There is no allocation for expressway to be built from port to connect coastal highway by passing city settlements or rail road. This validates current statement of Minister of Ports and Shipping that Gwadar Port may be operative by 2011.
These are my humble suggestions and I am confident that the Ministry will give due consideration for growth of Pak fleet. It is time to forget vested interests and national interest be considered foremost. (Nine Tenth of Wisdom consists in being wise in time)
