I, recall 1972, visiting beautiful valley of Swat along with my wife, which takes me to nostalgia, recalling all mountains with forest and green pasture with Swat river. I, feel sorry with present state of affairs of the valley and it gives me immense shock to see the mountains denuded, thus raising the temperatures in Mingora.
I recall that Swat had excellent motels with British managers, serving 4/5 course meals. Pakistan has been left with 3 percent forest areas, raising temperatures and causing melting of glaciers. The old axiom one man one tree is not implemented, thus entire Pakistan even Karachi is engulfed with heat waves and high temperatures. Karachiites wonder where the sea breeze has gone.
It is very recently that human being have learnt that the planet that sustains us and give us life is a fragile entity and our actions of deforestation, emissions etc have massive repercussions on the well being of mother nature. We cannot freely squander the earth and its resources, without considering the impact on future generations. Climate change, ozone layer depletion, green house gas emissions are the terms unheard of a generation ago, but now are the key words as world is awakening.
More than a decade ago, many countries agreed, through the United Nations frame work convention on climate change (UNFCC), to consider ways and means to reduce global warming and how to cope with inevitable rise in temperatures and prior to that Montreal Protocol on substances that deplete the ozone layer came in 1989, and I recall that amendments were made to SOLAS Convention forbidding use of Halons and perfluoro carbons as fire extinguishing media. It is interesting that Kyoto Protocol was signed in 1997 to ensure legal binding measures to protect the environment in addition to UNFCC, but unfortunately the biggest emitter USA, Singapore, Australia and partially China did not sign, thus no serious efforts were made to preserve the environment.
On the other hand, authoritative organisations such as world metrological organisation and the US national and atmospheric administration are warning that the level of gases in the atmosphere associated with climate change are reaching record high. I am sure millions must have seen the BBC documentary "Global Dimming" which reveals that we may have grossly under-estimated the speed at which our climate is changing. I would also recommend that BBC's documentary "INVADERS OF THE SEA" very vividly explains the problem in graphic details. For the glare of international publicity, fuelled by today's global communication infrastructure, ensures that environmental issues are played on world wide stage. The broader concerns of society mean that pressure to be "GREEN AND CLEAN" is mounting.
In the world of global business today, it is not unusual to find major commercial concerns freely embracing the notion that good environmental and social stewardship actually makes good business sense, thus Corporate Social Responsibility (CSR) is the new concept. Companies are learning the value of their own environmental considerations as their markets and their customers become increasingly sensitised to environmental issues, however there is an inherent quandary in the fact that, on one hand everybody, it seems wants more for less - while on the other society's concerns about safety and the protection of environment grow. Of course all industries and commercial concerns needs to do whatever it can to solve this apparent conundrum, but in the long-term, society will need to address its own priorities and understand that nothing comes for nothing.
A, first comprehensive study reveals the human impact of global warming, climate change is causing 300,000 deaths per year and affecting 300 million people. The study predicts that by 2030 about 500,000 people may die due to severe heat waves, floods, storms and forest fires. The U N Secretary General think tank estimates economic losses more than 125 Billion USD/.year and by 2030 it may cost 600 billion USD/year. The worst to be affected are developing countries and there is serious risk to sub Saharan Africa, Middle East and South Asia. U N Secretary General has launched the report on 29th May at London and said that world is at cross roads, he squarely blamed the weak politicians world wide for impasse in negotiations. He said that now we cannot ignore the human affect of climate change. He called upon negotiators to come to some agreement to avoid mass starvation and migration on mass scale.
Whilst 1997 Kyoto protocol on climate change could not bring any relief due to tough attitude and refusal of USA, Australia and some other countries, but the protocol also failed to address the huge amount of green house gas emissions due to destruction of world rain forest. Deforestation as per study amounts for one fifth of the worlds green house gases. It is estimated that 30 million acres of rain forest disappear every year, destroying biodiversity and pouring billions of tons of carbon dioxide in the air.
As per media report the global warming bill in USA seeks to change the destructive dynamics in two ways. It will, set up a carbon trading system and may raise 60 billion USD / year through sale of pollution allow-ness. It is interesting to note from the world bank report that one acre of rain forest stores 200 tons of carbon.
A big effort is required to resist the loggers, miners, ranchers and politicians who helped in cutting the rain forest in Amazon, NWFP Pakistan (Swat, Kaghan etc). We in Pakistan are already feeling the heat, thus we must put an immediate halt on logging to save ourselves and posterity both. The UN must enforce a legislation on all its members to save the rain forests and control loggers. The fall meeting in Copenhagen must address this serious issue by signing a treaty with no waivers and ensure that BRIC countries must be netted being big polluters.
The Shipping industry was also blamed as polluter, however on examination of its credentials it has been observed that shipping is the least environmentally damaging type of transport, when benched marked to land industry and transport, it is a minor contributor, overall, to marine pollution from human activities. According to GESAMP (UN agency) and UNEP's study reveals that land based discharges, such as sewage and in case of Karachi 400 million gallons of untreated sewage is pumped into Karachi Harbour alongwith industrial effluent from Korangi industrial area to Gizri creek. The land based pollutants along with emissions account for 77 percent of marine pollution generated by human activity.
The maritime transport in contrast is responsible for 12 percent of the total, which has now been reduced to only 10 percent, by stringent measure taken by IMO ie convention Marpol 73/78 and Annex VI for emissions. The world seaborne trade rose from around 15000 billion ton miles to 27000 billion tone mile upto 2004 from 1988. The carriage of oil and petroleum product rose to 70 percent in the above period.
The average number of oil spills have shrunk from 25 in 1970's to 3.5 in 2000, thanks to Marpol convention. It is also interesting to note that maritime industry is small contributor to atmospheric pollution and Pakistan with only 9 ships has virtually no place in the records, neither accounted in studies. The marine engine efficiency and quality of fuel used, improved hull design and large vessels has caused reduction in emission.
I quote a United Kingdom transport study that shows that energy consumption by road transport by truck lies in the range 0.7 to 1.2 mega Joules/tons/km, whereas a 3000 DWT ship at 14 knots is about 0.3 MJ/Tones/km and a container ship is 0.12 MJ/tones/km . The green peace has forced IMO to adopt ship recycling convention, thus taking care of pollution during demolition of ships.
This does not mean that maritime industry be relaxed, but it calls for curtailing their share of pollution and emission both to save this beautiful planet which has been neglected for long and it is our undeniable responsibility to protect the posterity. Shipping has to ensure that its activities are sustainable and we must understand that caring for our environment be our top priority even though it may carry an economic price tag with it.
We need a broad based effort in which every one has a responsibility and every one has a role to play, which is a maxim "THINK GLOBALLY" act locally. We all must educate people, increase awareness about the true state, and detoriating state of planet and be responsible citizens to protect and preserve the environment, but we may promote and promulgate its virtues and beautiful impact on all forms of life.
Now that there is a wide spread recognition that green house effects represent a real, present, clear and serious threat to environment and our planet earth, thus only action can save mother nature. The ball is in court of politicians of developed and under developed countries to respond soonest as I quote Sir Nicholos Stern former world bank economist who said, "economic cost of action against global warming is far lower than the cost of inaction". The world masses have great hope on the fall summit as it is already too late.
Whilst in Karachi's perspective our city father, be commended for plantation and President's effort to develop Boat Basin Park and Malir River park and plantation of trees is equally commendable, but Karachiites would like to see implementation of these environment friendly efforts.
The other aspect which is equally important to ensure maintaining the trees by watering them with sewage treated water, as its pains to see that Cano-corpus planted in open space near old Casino Clifton are dying down due to no maintenance. The City Nazim and Cantonment Board must salvage the remaining trees.
As, a humble maritime person , I can safely say that shipping has a green record, however it pains to see in Pakistan, that having ratified many conventions on oil response etc, our ports are not adequately equipped to address OPRCI requirement, nor they have trained staff. Pakistanis have enormous indivual potential but collectively, we have failed to project our motherland.
One has to hang his head in shame, when Pakistanis nominated for ILO, IMO, etc are simply tourist section officers, personal Secretaries who are obliged as member of Pak delegation, even the head of delegation could not comprehend the International documentation of UN bodies.
What a pity and misuse of tax payers money. I, remember that a Pak delegation member was said to be asked to leave the ILO meeting due to misbehaviour and not being sober. On the contrary Iran, India, even Saudi Arabia delegation comprises of Public/Private Sector, Experts who are known internationally and can contribute as they are not layman like our delegation to marine environment, UNEP etc.
We look forward for a change in Governance environment of Pakistan by inducing professionals in all faculties, so that our country's contribution be taken seriously by International forums and we could protect our interest world wide. We have to ensure recognition of our credentials by world's agency. The cost of action on correcting our governance is nominal than the cost of action which is effecting our PSDP and all environmental/social welfare projects suffer due to slashing of PSDP.
Saturday, June 13, 2009
Tuesday, June 2, 2009
Malicious political campaign
The western media have launched a tirade of media blitz against development of port by Sri Lanka in collaboration with Chinese. It is nothing new, as I personally faced very intriguing questions by western media on Gwadar Port where I happened to be Chairman in 2006/07. I strongly dispelled the rumours that Gwadar is developed by Chinese as a naval base.
On the contrary, Chinese never showed any interest, neither participated in the open tender. All western media reports were malicious as the port was awarded to Singapore. "I recall Hambantota in 60s a small fishing village, as navigator we had to be careful to avoid small fishing boats, when rounding southern end of Sri Lanka.
The port lies on the main East and West route and is being developed with Chinese assistance of 1 billion USD and will be completed in 15 years in four phases. The first phase will cost 450 million USD. The work on the bunkering terminal started in 2007 and likely to be completed in 39 months. The terminal may handle upto 500,000 M/tons of oil / products per annum. It is also planned to develop oil refinery, container terminal and power plant.
The fear expressed by belligerent western and Indian media is that China being dependent on import of oil from Middle Eastern countries, thus wants to control the sea route. Sri Lanka is situated in the Indian Ocean close to Mallaca Strait and has a strategic location for the protection of oil route. The fears may be misconceived as was the case with Gwadar, but one wonders if China may use the port for bunkering facility of its naval fleet.
What is so big fuss about it, as Trincomalee was the base used by Britain, so is nearby Diego Garcia. France has a base now in Abu Dhabi and Bahrain offers state-of-the-art support to US naval fleet. I simply fail to understand the double standards, when I read Sunday Times, Indian Express or see BBC T.V. where Indian experts are criticising the building of port.
The Indian media is urging the newly elected Prime Minister to address the Chinese chequers, the influence of Chinese stretching from Pakistan to Myanmar, Bangladesh and now a fuelling station on main East-West route, the media wants a concrete strategy to arrest the influence of Chinese in Indian Ocean, even Air Marshall Major Chief of Indian Air Force feels China as a major threat than Pakistan.
Indians never objected on their own or western build up, but are seriously reacting to the development of Hambantota Port, duly supported by West. What a paradox?
While Sri Lankan leadership is indomitable, sovereign, firm and not lackeys as had been the case, dealing firmly with LTTE, they are going ahead with the project and sixty five percent of the work on two break water alms and (East and West) is completed and excavation and dredging by Sino Hydro, a Chinese firm, is in progress for the channel across the KARGAMLEWAYA.
The port is likely to be completed by 2011, and initially will cater to industrial and service sector and later for container traffic. At present more than 100 vessels bypass Sri Lanka South west coast daily with no value addition to the economy of the country. The port may be operative by January 2011, as Sri Lankan Government is proceeding ahead firmly by awarding a Chinese contractor to build the bunkering facility and tank farm for oil storage.
Indian media is worried that on completion of Hambantota Port, it may trigger international competition to control energy supply routes in the Indian Ocean as China's 80 percent and India's 65 percent oil supplies pass through sea lanes of Indian ocean.
It is also interesting to note that US Joint forces command confirms that commercial shipping/container port at Hambantota being built by Chinese is part of China's "strings of pearl" strategy to gain political influence and project power in Indian Ocean whilst Chinese vehemently deny accusations and have clarified that its investment in the port is for commercial purposes only.
Chinese are also willing to enhance Sri Lanka's ship building capacity by building a dockyard at Hambantota. I may not comment on Indian or western media concerns on this port, but with my personal experience of Gwadar it appears to be a malicious political campaign to blackmail Sri Lanka and Chinese.
The Sri Lanka President Mahinda Rajapaksa is firm and remains dedicated and has not taken any dictations, but it is feared that West may try to malign him with war crimes on Tamils. It is intriguing that the same western media wants Pakistan to do more and does not project co-lateral damage to civilians and armed forces both, while fighting war on terrorism.
May be at the end they may perhaps malign our forces for war crimes as the case is in Sri Lanka of LTTE and Tamils. Bringing economic development to the neglected southern corner of the Island was cornerstone of Mahenda's election manifesto. The region was starved of investment and infrastructure will be transformed into economic and industrial heart of the country.
Modern infrastructure is essential for a country's long term economic development, but after 60 years of independence Sri Lanka has only one major Port and airport, inadequate power generation, in fact the nation is still without a single multilane highway. Sri Lanka is building southern expressway to support logistics and hinterland connectivity to the port.
It appears that Lankans have learned from our mistake of building Gwadar Port, without hinterland connectivity, thus the port remained idle, except handling logistically subsidised captive public sector cargo. The cost of subsidy per ton is 2200/Rs and total amount is said to be 10 billion rupees plus, as per the media reports.
Shipping analysts believe that Hambantota port is financially a viable project when bench marked to Gwadar, as the port is ideally located on main East-West route and advantageous to ship owners to use for bunkering facilities comparing to Colombo/Indian ports, as there will be no deviation from the main route.
The Hambantota port project, power project and Southern expressway is the largest development project since the Mahawelli project which was supervised by a Pakistani Shoaib Sultan, believed to be now with AKRSP project. I congratulate people and Government of Sri Lanka being our long-tested friends as Chinese, for expeditious completion of the project. Stay firm, shun all propaganda by west and Indian media by staying on the course and let a new day dawn for the poor of south Island as the fishermen's have faced abject poverty.
I am happy to learn that 40,000 people will get employment. Sri Lankans have expertise as Colombo is handling 70% of transshipment cargo, whilst only 30% captive cargo is handled. Hambantota may chip a slice out of volume from Singapore, which is the main transshipment hub, nearby in Malaka Strait. The Indian dream of converting their port to a regional hub on East Coast may be lost, with the development of the new port on the main route. The development is pinching India economically.
On the contrary, Chinese never showed any interest, neither participated in the open tender. All western media reports were malicious as the port was awarded to Singapore. "I recall Hambantota in 60s a small fishing village, as navigator we had to be careful to avoid small fishing boats, when rounding southern end of Sri Lanka.
The port lies on the main East and West route and is being developed with Chinese assistance of 1 billion USD and will be completed in 15 years in four phases. The first phase will cost 450 million USD. The work on the bunkering terminal started in 2007 and likely to be completed in 39 months. The terminal may handle upto 500,000 M/tons of oil / products per annum. It is also planned to develop oil refinery, container terminal and power plant.
The fear expressed by belligerent western and Indian media is that China being dependent on import of oil from Middle Eastern countries, thus wants to control the sea route. Sri Lanka is situated in the Indian Ocean close to Mallaca Strait and has a strategic location for the protection of oil route. The fears may be misconceived as was the case with Gwadar, but one wonders if China may use the port for bunkering facility of its naval fleet.
What is so big fuss about it, as Trincomalee was the base used by Britain, so is nearby Diego Garcia. France has a base now in Abu Dhabi and Bahrain offers state-of-the-art support to US naval fleet. I simply fail to understand the double standards, when I read Sunday Times, Indian Express or see BBC T.V. where Indian experts are criticising the building of port.
The Indian media is urging the newly elected Prime Minister to address the Chinese chequers, the influence of Chinese stretching from Pakistan to Myanmar, Bangladesh and now a fuelling station on main East-West route, the media wants a concrete strategy to arrest the influence of Chinese in Indian Ocean, even Air Marshall Major Chief of Indian Air Force feels China as a major threat than Pakistan.
Indians never objected on their own or western build up, but are seriously reacting to the development of Hambantota Port, duly supported by West. What a paradox?
While Sri Lankan leadership is indomitable, sovereign, firm and not lackeys as had been the case, dealing firmly with LTTE, they are going ahead with the project and sixty five percent of the work on two break water alms and (East and West) is completed and excavation and dredging by Sino Hydro, a Chinese firm, is in progress for the channel across the KARGAMLEWAYA.
The port is likely to be completed by 2011, and initially will cater to industrial and service sector and later for container traffic. At present more than 100 vessels bypass Sri Lanka South west coast daily with no value addition to the economy of the country. The port may be operative by January 2011, as Sri Lankan Government is proceeding ahead firmly by awarding a Chinese contractor to build the bunkering facility and tank farm for oil storage.
Indian media is worried that on completion of Hambantota Port, it may trigger international competition to control energy supply routes in the Indian Ocean as China's 80 percent and India's 65 percent oil supplies pass through sea lanes of Indian ocean.
It is also interesting to note that US Joint forces command confirms that commercial shipping/container port at Hambantota being built by Chinese is part of China's "strings of pearl" strategy to gain political influence and project power in Indian Ocean whilst Chinese vehemently deny accusations and have clarified that its investment in the port is for commercial purposes only.
Chinese are also willing to enhance Sri Lanka's ship building capacity by building a dockyard at Hambantota. I may not comment on Indian or western media concerns on this port, but with my personal experience of Gwadar it appears to be a malicious political campaign to blackmail Sri Lanka and Chinese.
The Sri Lanka President Mahinda Rajapaksa is firm and remains dedicated and has not taken any dictations, but it is feared that West may try to malign him with war crimes on Tamils. It is intriguing that the same western media wants Pakistan to do more and does not project co-lateral damage to civilians and armed forces both, while fighting war on terrorism.
May be at the end they may perhaps malign our forces for war crimes as the case is in Sri Lanka of LTTE and Tamils. Bringing economic development to the neglected southern corner of the Island was cornerstone of Mahenda's election manifesto. The region was starved of investment and infrastructure will be transformed into economic and industrial heart of the country.
Modern infrastructure is essential for a country's long term economic development, but after 60 years of independence Sri Lanka has only one major Port and airport, inadequate power generation, in fact the nation is still without a single multilane highway. Sri Lanka is building southern expressway to support logistics and hinterland connectivity to the port.
It appears that Lankans have learned from our mistake of building Gwadar Port, without hinterland connectivity, thus the port remained idle, except handling logistically subsidised captive public sector cargo. The cost of subsidy per ton is 2200/Rs and total amount is said to be 10 billion rupees plus, as per the media reports.
Shipping analysts believe that Hambantota port is financially a viable project when bench marked to Gwadar, as the port is ideally located on main East-West route and advantageous to ship owners to use for bunkering facilities comparing to Colombo/Indian ports, as there will be no deviation from the main route.
The Hambantota port project, power project and Southern expressway is the largest development project since the Mahawelli project which was supervised by a Pakistani Shoaib Sultan, believed to be now with AKRSP project. I congratulate people and Government of Sri Lanka being our long-tested friends as Chinese, for expeditious completion of the project. Stay firm, shun all propaganda by west and Indian media by staying on the course and let a new day dawn for the poor of south Island as the fishermen's have faced abject poverty.
I am happy to learn that 40,000 people will get employment. Sri Lankans have expertise as Colombo is handling 70% of transshipment cargo, whilst only 30% captive cargo is handled. Hambantota may chip a slice out of volume from Singapore, which is the main transshipment hub, nearby in Malaka Strait. The Indian dream of converting their port to a regional hub on East Coast may be lost, with the development of the new port on the main route. The development is pinching India economically.
Monday, May 25, 2009
Maritime industry - futuristic vision
I have been associated with shipping for a long time. We experienced a downturn in 1980. However due to global economic meltdown, shipping has been hit severely in the last quarter of 2008, causing bankruptcy to ship owners, slowing down of new port projects and low load factor and losses to all major lines.
This recession in maritime is worst than ever encountered. Some generalists during the boom claimed to have made a turn around in 2000 of sick companies. However, when shipping was at its peak, no commercial expertise was required and some companies and banks got the vessel free within five years and ships were operated by management companies without any chief executive.
Now it is the testing time of shipping skill to keep the head out of the water, as recession may cause more casualties in 2009/10, but it opens the doors of opportunities and one can translate the opportunity by taking over business from competitors. Diversified business conglomerates have history of stemming such economic downturn cycles, as it is part of business.
The latest research by prominent maritime analysts forecast a nominal growth of 1.2% in container trade, while expecting demand to grow in 2011. The excess supply is likely to stay until 2011, coupled with low load factors, vessels lay off, demolition and major lines are trying hard to break even, whilst major ports of the world and terminal operators are assisting by reducing tariff to keep the bleeding ship-owners in business. Four hundred and twenty fine container vessels had been laid up and now ship-owners are short of space to lay up in ports, thus requesting Sri Lanka to allow lay up in Trincomalee Bay which may accommodate 50 vessels. The ship breaking industry at Gadani, has got new lease of life due to old tonnage being demolished.
At present, only Gadani has 80 vessels, four contributed by PNSC and one tanker sold to Bangladesh demolishers by PNSC. Current gearing is low for operators but prolonged losses may erode equity and test debt servicing capability of major players. The investment researchers are painting a bleak picture of South Korean Lines due to depreciation of wong and Taiwanese due to high gearing, but Maersk line and Japanese may overcome the losses due to diversified business, mix.
Forwarders will be equally affected due to price conscious exporters and importers, but large forwarders are equipped to overcome the storm due to diversified networks and wide range of services.
While reading drewry and UBS report, economists expect a more prolonged global recession and container shipping has deteriorated worst in 2008, than expected. The operators will continue to suffer deeper losses till 2010. Forwarding in basically 1-2% margin business if regulated and ethics are not compromised, as in Pakistan, Karachi Chamber is crying for long to regulate the forwarders, but to no avail.
The government officials are blank on the subject and all recommendations of Karachi Chamber of Commerce remains frozen in files due to lack of competence of regulators and unawareness, causing misery to poor exporters and importers. Ethically premium margins are achieved by forwarders, who have strong global network and value added services.
The declining volumes on Asia-Europe and transpacific trades may last till 2011, as US trade has faded and west coast ports are facing 37% cut in volumes as dry bulk freight rates have plummeted and US dollar has strengthened. It is believed that ship-owners are operating at or below cash break even levels and laying up vessels to preserve cash and margins. Due to excessive supply growth, zero margins will be seen till 2010 and these trade accounts for 60-80% of revenue of most Asian container, shipping operators.
The expected trading losses may be 5% to 50% up to 2010. If this condition persists for the next 2/3 years, major operators will face serious funding problems.
The analysts have forecast that charter rates and vessel prices will continue to decline. The analysts have revised global container shipping model and have lowered demand forecasts to reflect a protracted global recession. The analysts have collected world-wide data on new deliveries and cancellations and concluded that supply/demand balance may be achieved by 2011.
According to Lloyds list, there is no possibility of direct link between China and Taiwan and about 742,000 TEU is transshipped through Hong Kong. It is interesting to note from the data that 60% to 80% revenue is generated by most listed operators by large vessels and only 7 large container vessels have been laid up when compared to 425 medium sized container ships. A modest impact may be seen in large container ships as most of them are up to 5 years of age.
The decline in freight rates in 2008 has surpassed industry expectations. The magnitude in 09 and speed of decline has led to a situation, where operators are unable to cover cash costs. Service rationalisation and cancellations, vessels lay ups and off hiring of chartered vessels is common in the industry.
We, in Pakistan, are 100% dependent on foreign lines for our containerised export and import cargo of 1.7 mill TEUS. If major players continue to be in distress, many more lines will stop calling our ports thus our ports may consider assisting lines to operate by cutting down their tariffs thus giving comfort to the lines. Similarly, the terminal operators must be regulated on the pattern of TAMP in neighbouring countries and the ministry may constitute a "tariff authority of port and terminals" to regulate tariff.
The body should be duly represented by Karachi Chamber of Commerce and Industry. Neither ports nor terminals may levy un-announced tariffs. It is also imperative to regulate our freight forwarders, as demanded by Karachi Chamber of Commerce and code of business ethics be introduced by regulators.
The concept of free market economy has failed and markets in greed do not correct themselves thus the need of regulator is established world-wide and we cannot be an exception. The lobbies in Pakistan are quite strong, but should be resisted to boost our exports. Unless we regulate, it is free for all and the trade continues to suffer. It is now high time to implement the assurances for relief to trade to overcome the trade deficit with growth of exports. The ministry may also assist the shipping industry, by offering ship-owners to lay up ships at Gwadar protected bay, as total 1000 ships are laid up and others are in the line. Philippines has translated crisis into opportunity by allowing ship-owners to lay up ships in Subic Bay and Davo protected anchorage and charging only 91/USD per day from owners. Why can't we do the same to generate revenue by translating the crisis into opportunity.
This recession in maritime is worst than ever encountered. Some generalists during the boom claimed to have made a turn around in 2000 of sick companies. However, when shipping was at its peak, no commercial expertise was required and some companies and banks got the vessel free within five years and ships were operated by management companies without any chief executive.
Now it is the testing time of shipping skill to keep the head out of the water, as recession may cause more casualties in 2009/10, but it opens the doors of opportunities and one can translate the opportunity by taking over business from competitors. Diversified business conglomerates have history of stemming such economic downturn cycles, as it is part of business.
The latest research by prominent maritime analysts forecast a nominal growth of 1.2% in container trade, while expecting demand to grow in 2011. The excess supply is likely to stay until 2011, coupled with low load factors, vessels lay off, demolition and major lines are trying hard to break even, whilst major ports of the world and terminal operators are assisting by reducing tariff to keep the bleeding ship-owners in business. Four hundred and twenty fine container vessels had been laid up and now ship-owners are short of space to lay up in ports, thus requesting Sri Lanka to allow lay up in Trincomalee Bay which may accommodate 50 vessels. The ship breaking industry at Gadani, has got new lease of life due to old tonnage being demolished.
At present, only Gadani has 80 vessels, four contributed by PNSC and one tanker sold to Bangladesh demolishers by PNSC. Current gearing is low for operators but prolonged losses may erode equity and test debt servicing capability of major players. The investment researchers are painting a bleak picture of South Korean Lines due to depreciation of wong and Taiwanese due to high gearing, but Maersk line and Japanese may overcome the losses due to diversified business, mix.
Forwarders will be equally affected due to price conscious exporters and importers, but large forwarders are equipped to overcome the storm due to diversified networks and wide range of services.
While reading drewry and UBS report, economists expect a more prolonged global recession and container shipping has deteriorated worst in 2008, than expected. The operators will continue to suffer deeper losses till 2010. Forwarding in basically 1-2% margin business if regulated and ethics are not compromised, as in Pakistan, Karachi Chamber is crying for long to regulate the forwarders, but to no avail.
The government officials are blank on the subject and all recommendations of Karachi Chamber of Commerce remains frozen in files due to lack of competence of regulators and unawareness, causing misery to poor exporters and importers. Ethically premium margins are achieved by forwarders, who have strong global network and value added services.
The declining volumes on Asia-Europe and transpacific trades may last till 2011, as US trade has faded and west coast ports are facing 37% cut in volumes as dry bulk freight rates have plummeted and US dollar has strengthened. It is believed that ship-owners are operating at or below cash break even levels and laying up vessels to preserve cash and margins. Due to excessive supply growth, zero margins will be seen till 2010 and these trade accounts for 60-80% of revenue of most Asian container, shipping operators.
The expected trading losses may be 5% to 50% up to 2010. If this condition persists for the next 2/3 years, major operators will face serious funding problems.
The analysts have forecast that charter rates and vessel prices will continue to decline. The analysts have revised global container shipping model and have lowered demand forecasts to reflect a protracted global recession. The analysts have collected world-wide data on new deliveries and cancellations and concluded that supply/demand balance may be achieved by 2011.
According to Lloyds list, there is no possibility of direct link between China and Taiwan and about 742,000 TEU is transshipped through Hong Kong. It is interesting to note from the data that 60% to 80% revenue is generated by most listed operators by large vessels and only 7 large container vessels have been laid up when compared to 425 medium sized container ships. A modest impact may be seen in large container ships as most of them are up to 5 years of age.
The decline in freight rates in 2008 has surpassed industry expectations. The magnitude in 09 and speed of decline has led to a situation, where operators are unable to cover cash costs. Service rationalisation and cancellations, vessels lay ups and off hiring of chartered vessels is common in the industry.
We, in Pakistan, are 100% dependent on foreign lines for our containerised export and import cargo of 1.7 mill TEUS. If major players continue to be in distress, many more lines will stop calling our ports thus our ports may consider assisting lines to operate by cutting down their tariffs thus giving comfort to the lines. Similarly, the terminal operators must be regulated on the pattern of TAMP in neighbouring countries and the ministry may constitute a "tariff authority of port and terminals" to regulate tariff.
The body should be duly represented by Karachi Chamber of Commerce and Industry. Neither ports nor terminals may levy un-announced tariffs. It is also imperative to regulate our freight forwarders, as demanded by Karachi Chamber of Commerce and code of business ethics be introduced by regulators.
The concept of free market economy has failed and markets in greed do not correct themselves thus the need of regulator is established world-wide and we cannot be an exception. The lobbies in Pakistan are quite strong, but should be resisted to boost our exports. Unless we regulate, it is free for all and the trade continues to suffer. It is now high time to implement the assurances for relief to trade to overcome the trade deficit with growth of exports. The ministry may also assist the shipping industry, by offering ship-owners to lay up ships at Gwadar protected bay, as total 1000 ships are laid up and others are in the line. Philippines has translated crisis into opportunity by allowing ship-owners to lay up ships in Subic Bay and Davo protected anchorage and charging only 91/USD per day from owners. Why can't we do the same to generate revenue by translating the crisis into opportunity.
Sunday, May 17, 2009
The entrepreneur should not panic
Business was at its peak for the last one decade. However an economic downturn is unpredictable, but a reality which is part of the business cycle where the economy is in decline. This phase is said to mark the end of a period of growth in the business cycle.
Economic downturns are usually classified by decreased levels of consumer purchases (in particular of durable goods) and, secondly, reduced levels of production by industry and business. Our crisis is attributed more to instability rather than the impact of a global meltdown. Our GDP growth is expected to be 2.5, as PSDP has been slashed to half, whilst India and the Bangladesh economy is expected to grow at GDP of 6/7.
The economic downturn effects small entrepreneurs and their businesses who struggle to survive and keep on growing. However an economic downturn opens opportunities as well. A well-organised company can translate the opportunity by taking away business from the competitors. Resourceful business house may capture the opportunities, from an economic downturn, by innovative methods of doing business, which were never practiced during a period of growth.
The worst sufferers are cash strapped SMES. One must take the challenge of navigating his business through a financial meltdown by realigning his business with the current economic realities in Pakistan/globally.
The need is to refocus on your core clients/customers, reduce your static operative expenses, conserving cash, and manage more proactively, rather than reactively. I quote George Soros here "Stay away when the greed is on and be greedy when the fear is on."
TARGETS AND GOALS The immediate goal is how to survive the current economic impasse, turning to a more efficient and cost-effective performance. The second target is to expand the business during a financial meltdown. You should grow the customer base, improve efficiency, reduce costs, protect assets and lastly conserve cash. The entrepreneur should not panic as historically recessions do not last forever and focus on what one can control, disregarding media rhetoric.
The effective way is to communicate with all. The foremost is to renegotiate with all and develop a win-win approach in negotiations with all vendors, ensuring a favourable bottom line. The fact remains that during a melt down, one has to diligently monitor the cash flows. The idea is to know how to monitor, protect, control, and use the cash to make it work. Cash flow forecast be made monthly to ensure expenses do not exceed receivables.
A good entrepreneur must convert excess obsolete inventories into cash. The core issue is to reduce the amount of your inventory without loosing sales. One cannot discount ensuring timely collection of accounts receivables. The key to success is an efficient collection system that generates timely payments.
It is imperative to renegotiate with suppliers, lenders and landlords and to re-evaluate staffing requirements, shopping for better insurance rates, but don't cut your advertising cost to increase brand awareness and generating additional demand of products and services.
Business houses are well-advised to consult advisors who give professional advise on all faculties of business. No one can dispute that a good entrepreneur will slash across the board expenses by 10-15%. The most difficult challenge is to convince your banks to stay on your right side, as banks become tough and are out for recoveries. You must convince the banks to re-negotiate as it is in mutual interest.
Most of the entrepreneurs are confronted with high rates of interest; benchmarked to the world, creating a financial and liquidity crunch. As utilities have gone sky high, the labour, due to inflationary trends, demands a high salary, thus a businessman is caught between the devil and the deep sea. A businessman, also a human being, comprehends that redundancy will cause hardship to employees and will create social problems, thus the business house averts retrenching labour, groomed and skilled at the cost of the entrepreneurs.
The global melt down has not effected us much due to a strong prudential and regulatory regime. Banks can be convinced by presenting business and action plans. The key is to ensure that your lender will work with you, but frequent communication is critical to keep the banks soft on you and of course, paying on re-negotiated schedules. Moreover the Pakistan business community is more prone to cash than credit cards.
We are now pinning hopes on the current G-20 summit to enforce a stringent regulatory regime to curb financial adventures by callow bankers and discipline the financial system globally. The economic glut since the last quarter of 2008, has caused closures of small businesses and created unemployment. However signs of some recovery, by 2010, are in sight.
Let us keep our fingers crossed. The maritime sector suffered the worst impact causing bankruptcy to ship-owners and allied business. Now that excess tonnage is being scrapped, there appears to be some relief by 2010/2011. Most of the maritime port projects are either slowed down or deferred. I am sharing my experience of the last 12 months, my clairvoyance spotting economic trends.
Economic downturns are usually classified by decreased levels of consumer purchases (in particular of durable goods) and, secondly, reduced levels of production by industry and business. Our crisis is attributed more to instability rather than the impact of a global meltdown. Our GDP growth is expected to be 2.5, as PSDP has been slashed to half, whilst India and the Bangladesh economy is expected to grow at GDP of 6/7.
The economic downturn effects small entrepreneurs and their businesses who struggle to survive and keep on growing. However an economic downturn opens opportunities as well. A well-organised company can translate the opportunity by taking away business from the competitors. Resourceful business house may capture the opportunities, from an economic downturn, by innovative methods of doing business, which were never practiced during a period of growth.
The worst sufferers are cash strapped SMES. One must take the challenge of navigating his business through a financial meltdown by realigning his business with the current economic realities in Pakistan/globally.
The need is to refocus on your core clients/customers, reduce your static operative expenses, conserving cash, and manage more proactively, rather than reactively. I quote George Soros here "Stay away when the greed is on and be greedy when the fear is on."
TARGETS AND GOALS The immediate goal is how to survive the current economic impasse, turning to a more efficient and cost-effective performance. The second target is to expand the business during a financial meltdown. You should grow the customer base, improve efficiency, reduce costs, protect assets and lastly conserve cash. The entrepreneur should not panic as historically recessions do not last forever and focus on what one can control, disregarding media rhetoric.
The effective way is to communicate with all. The foremost is to renegotiate with all and develop a win-win approach in negotiations with all vendors, ensuring a favourable bottom line. The fact remains that during a melt down, one has to diligently monitor the cash flows. The idea is to know how to monitor, protect, control, and use the cash to make it work. Cash flow forecast be made monthly to ensure expenses do not exceed receivables.
A good entrepreneur must convert excess obsolete inventories into cash. The core issue is to reduce the amount of your inventory without loosing sales. One cannot discount ensuring timely collection of accounts receivables. The key to success is an efficient collection system that generates timely payments.
It is imperative to renegotiate with suppliers, lenders and landlords and to re-evaluate staffing requirements, shopping for better insurance rates, but don't cut your advertising cost to increase brand awareness and generating additional demand of products and services.
Business houses are well-advised to consult advisors who give professional advise on all faculties of business. No one can dispute that a good entrepreneur will slash across the board expenses by 10-15%. The most difficult challenge is to convince your banks to stay on your right side, as banks become tough and are out for recoveries. You must convince the banks to re-negotiate as it is in mutual interest.
Most of the entrepreneurs are confronted with high rates of interest; benchmarked to the world, creating a financial and liquidity crunch. As utilities have gone sky high, the labour, due to inflationary trends, demands a high salary, thus a businessman is caught between the devil and the deep sea. A businessman, also a human being, comprehends that redundancy will cause hardship to employees and will create social problems, thus the business house averts retrenching labour, groomed and skilled at the cost of the entrepreneurs.
The global melt down has not effected us much due to a strong prudential and regulatory regime. Banks can be convinced by presenting business and action plans. The key is to ensure that your lender will work with you, but frequent communication is critical to keep the banks soft on you and of course, paying on re-negotiated schedules. Moreover the Pakistan business community is more prone to cash than credit cards.
We are now pinning hopes on the current G-20 summit to enforce a stringent regulatory regime to curb financial adventures by callow bankers and discipline the financial system globally. The economic glut since the last quarter of 2008, has caused closures of small businesses and created unemployment. However signs of some recovery, by 2010, are in sight.
Let us keep our fingers crossed. The maritime sector suffered the worst impact causing bankruptcy to ship-owners and allied business. Now that excess tonnage is being scrapped, there appears to be some relief by 2010/2011. Most of the maritime port projects are either slowed down or deferred. I am sharing my experience of the last 12 months, my clairvoyance spotting economic trends.
Tuesday, April 28, 2009
Need for deep water port act
It was Saturday, the 18th of April, when the Prime Minister inaugurated the dredging and reclamation works. The evening was sultry and humidity was high, but it was well organised spectacular and elaborate show followed by fire work. One can rightly say it was extravaganza. While all went well, but rubrics by an insolent compere offended the community of journalists.
Truly it was undesirable/uncalled for and comperes may not be permitted to speak extempore. The Minister and the GM P&D of KPT took pains in arranging such a mega event after a long pause, who should be commended, as it was an impressive display in all respect, except the poignant episode, which resulted in no or poor coverage.
It is also true that some critics and interest do not subscribe to such project and I respect their views. However, I being an independent writer would try to deliberate on merits and demerits and the history of deep water ports in the world without prejudice.
A deep water port is any port that may accommodate fully laden post panamax vessels. The concept of deep water port first emerged in 1970 to facilitate Lousiana Offshore oil Port (LOOP) in accordance with Section 863(C) (2) of IRS in USA. Five oil majors clubbed to create deep water port in USA to accommodate super tankers. As a result the deep water port act of 1974, 33 USC-501 et SE2 ( "the Act" ) was enacted by congress in USA, in order to promote efficiency in transportation and protect the environment by establishing procedures for the location, construction and operation of deep water ports off the coast of United States.
A deep water port is defined under 33 US CS. 1502(10) as any man made structures other than vessels and similar appurtenances to the extent they are located seaward of the high water mark. The constitution, laws and treaties of USA shall apply as if such port were an area of exclusive Federal Jurisdiction located within a State. However, interestingly, the ACT 33 US SCS 1518 (d) excludes application of Custom Laws.
Gross income tax exemption is also available to foreign entrepreneurs and only net 4% tax is payable. The Netherlands and many other countries too have separate deep water port acts. However in Pakistan there is no such act, even KPT Act is 1886 (Bombay Act VI of 1886) duly amended from time to time without disturbing the main body of old Act, thus it is imperative that a deep water port act be enacted for smooth operation of the proposed new port.
The growth of container traffic due to unprecedented shipping boom, which lasted about ten years, South East Asia and Gulf region witnessed a growth of 18.4% comparing to 14% in the world. This could be a driving force in conceiving a deep water port. More so, Pakistani ports only handled captive cargo of 1.7 mill TEUS, including 100,000 transit boxes, whilst Colombo, Dubai, Salalah, Singapore, Hong Kong, Rotterdam, Schenzen and even Bander Abbas thrived on transshipment business. Port of Colombo only handles 30% captive cargo whilst 70% cargo is transshipment boxes and port is making good revenue with transshipment business, whilst our 3 terminals thrived on captive cargo and said to be generating excellent IRR of 30% plus on their investment.
When the deep water port was conceived in 2006, shipping was at its peak but plummeted in the end of 2008 laying about 477 container vessels and bankruptcy to many ship-owners, as the shipping bubble burst due to global meltdown. The volumes have been affected world-wide and in India, Singapore, Hong Kong and Schenzon volumes have dropped upto 19%, but port of Singapore is assisting the bleeding shipping lines by lowering its tariff by 35%. The above is true in today's perspective but there will be turnaround in economy world wide by 2014/15.
The strong argument in favour of building deep water port is that, it will not be ready before 2014, thus recession may be over and on completion of phase I of KDWEP it will have 1500m quay length to accommodate 5th and 6th generation container ships of over 350 LOA, 55.0 meter beam. Carrying about 10/1100 TEUS thus giving advantage on economy of scale, lower freight rates and initiating first time transshipment from KDWCP.
But an act is necessary to root out evils of KDLB, trade unions and of course, tariff compatible to transshipment ports. Unfortunately the 3 terminals at both ports are handling feeder vessels due to restrictions of draft, but KDWCP will cater to 16 m draft initially, thus saving our impo/expo double handling cost due to feederings. Trade will get edge on freight rates.
Due to economic glut it is the right time to build the asset as KPT with 40 billion rupees plus in coffers is only saving interest, but by building asset it will have multiplier effect and when recession is over, we will be ready to take the challenge. It is also true that most of the contractors world wide are idling and will be most willing to undertake any job even at break even to avert insolvency due to liquid cash flow crunch and tightening by banks.
I was amazed to learn that CWE has taken capital dredging on less than 8 USD per cu. meter when bench marked to 20 USD per meter in 2007/08. They are said to be dredging 33 million cubic meter at a cost said to be 220 mill USD, a peanut. However, the firm has no expertise in designing of navigable channel and ports, but they may sublet the assignment, due to their limited port skill, as they specialise in Dam / Reservoirs, Hydro power project etc. KPT and its consultants will have to keep an stringent eye on the scope of work awarded and to ensure they effectuate world class standards. The designing of channel, basins etc are highly specialised skill jobs, unlike laying rail tracks or roads with generalist experience.
Once dredging and reclamation is completed by CWE, the marine protection work may commence and project shall include construction of 3 break waters and sand dyke. The marine protection works may comprise three rocks or concrete ( CORE-LOC units, armoured break waters to provide shelter to the basin particularly in SW monsoons from May 15 to September 15th, when sea is extremely rough.
The latest breakwater technology must be used to prevent sedimentation and seepage of sand into basin. Dubai palms break water is a living example. It may cost 0.5 bill USD in today's market. KPT has already awarded two terminals based on landlord concept on BOT basis, which after construction of KDWCP, may cater to small feeder vessels and may give back up support.
After completion of dredging and break water the concessionaire M/s. HPH who are the leading terminal operators of the world will do civil construction of 1500 m quay wall and equip port with state of art gantries, RTGS etc to give fast turnover at KDWCP to calling ships.
It is expected that HPH will invest 457 mill UISD and it is said that they have already paid 50 mill USD to KPT and have shown commitment earlier too by completing KICT extension project at west wharves.
I do not wish to comment on KPT's projections of earning as it is too early to predict, as we have to wait and see the revival of shipping industry and economic glut, which has caused downward spiral, but as an optimist I see that recession will be over by the time KDWCP is ready in 2013/14 to handle ships. It is also true that DP world has backed out from QICT extension at Port Qasim and so from London gateway port, so is PSA from Hazira deep water port in India.
The future of Bombay gateway port is also in doldrums as Dravados the Spanish firm who got concession with Gammon India, has been sold out to China merchants, thus Indian Govt will never give NOC to a Chinese firm, as had been the case in earlier tender, when Turbo Larsen was denied due to Hong Kong connection.
The Colombo South Port is also in doldrums as no terminal operator came forward to bid. If KDWCP is ready prior to Colombo and Bombay, HPH may turn this into regional Hub for transshipment, but will have to compete with Dubai, Salalah, JNPT and Colombo. HPH will be testing its management/marketing and port operator skills to attract lines but KPT has to match its wet dues and avoid undue interference giving a free hand to HPH to market and operate the terminal. However the role of regulator in today's world is imperative. KPT is committed to make connectivity to cargo village and Northern Bye-pass which may cost 56 billion rupees as reported in media, but it will be a lifeline of project, otherwise the project will be hampered by operational delays due to congested connectivity to groyne.
The forecast in 2007 was world container volumes will touch 557 mill TEUS by 2010. Let's keep our fingers crossed and pray for early recovery of world from recession. HPH, being common carrier terminal operator may face tough time with Maersk and NOL, who have strong interest in Salalah and being shipowners as well as dedicated terminal operators may patronise their own terminals of Salalah for transshipment as it is handling 3.4 mill TEU and new concession with NOL: may double the capacity.
In today's world no one can make a firm forecast, but as the saying goes, I quote George Soros " Fear when greed is on and be greedy when fear is on. The 14 m plus deep water ports in the region are Singapore, Sohar, Salalah, Schenzen, Shanghai, Kakinada and Hazira (India) The proposed 16 m plus deep water port in India is Chennai, Vizhingam Kakinada, in Bangladesh is Sonadia near Cox's Bazar and Nobel Laureate Yunus has appealed to government to expedite the project. In Burma is Kyekphyu and Colombo South Port in Sri Lanka, whilst Qatar is going ahead with Khalifa deep water port.
I have penned down merits and demerits but feel apparently that KDWCP may be a success subject to economic revival. It may not hurt existing terminals as the case in Vietnam, Bangkok etc, where after building of deep water ports existing terminals are busy in feeder operation.
Maritime experts may form their own opinion but one thing is clear that port management skill is a faculty and can't be left to callow generalists, with no commercial maritime background. Ships are required to maintain their schedules and terminals have windows for every line, unlike bus or rail road. You may arrive a day later. The fixed operating cost of a container ship per day is 40/50,000 USD. The project has been initiated and now we look forward for the goal to be achieved.
TAIL PIECE: I have collected data of Khalifa Port, Sohar, Chennai etc and will be analysing data, bench marking KDWCP evaluation matrix, dredging, navigation report and simulated conditions in my next detailed write up subsequently. However, I would like to make humble recommendation for consideration of Ministry of Ports and Shipping.
As per World Bank/IMF and financial analysts, presently world economy suffers from toxic assets of 4.1 trillion USD and revival of economy is expected by 2013/14. However nothing is firm, thus we are blessed with sufficient time to look into recommendations. Let this project be considered as stimulus package to our economy.
ENACT A DEEP WATER PORT ACT: Form a cluster group of maritime industry, taking onboard existing terminal operators to address the impediments in the new Act. Spain and other countries do so to get the best inputs. Since shipyards are idling, it is time to negotiate building min two 85 tons Bollard Pull Tugs of Z-propellers because of 360 degrees steer able propellers.
A very intricate calculation is needed to establish the exact Bollard pull required to hold a ship,. Opposing a measured surface to beam wind blowing x meters/second. Acquire two Pilot Boats to face sea conditions upto Beaufort scale 8-9, safe working platform, large GM constructional strength to control collisions. Everyday and of coarse a speed of 20/25 knots.
Renegotiate all contracts as Saudi Arabia and others are doing. Induct 100 young engineers/MBAs strictly on merits to groom them in port development, designing, dredging etc. Make use of indigenous dredgers under Pak flag, be it private or public and avoiding minor jobs to foreigners. Pakistani companies should have priority.
Reclaimed area must be subjected to latest compactness Technology with Canadians and Dutch. Allowing nature to compactness is considered obsolete as was done at Gwadar. Generate maximum, employment of Pakistanis by making mandatory on contractors to impart training to our youth. Debate with critics with logic and technical data and convince.
Truly it was undesirable/uncalled for and comperes may not be permitted to speak extempore. The Minister and the GM P&D of KPT took pains in arranging such a mega event after a long pause, who should be commended, as it was an impressive display in all respect, except the poignant episode, which resulted in no or poor coverage.
It is also true that some critics and interest do not subscribe to such project and I respect their views. However, I being an independent writer would try to deliberate on merits and demerits and the history of deep water ports in the world without prejudice.
A deep water port is any port that may accommodate fully laden post panamax vessels. The concept of deep water port first emerged in 1970 to facilitate Lousiana Offshore oil Port (LOOP) in accordance with Section 863(C) (2) of IRS in USA. Five oil majors clubbed to create deep water port in USA to accommodate super tankers. As a result the deep water port act of 1974, 33 USC-501 et SE2 ( "the Act" ) was enacted by congress in USA, in order to promote efficiency in transportation and protect the environment by establishing procedures for the location, construction and operation of deep water ports off the coast of United States.
A deep water port is defined under 33 US CS. 1502(10) as any man made structures other than vessels and similar appurtenances to the extent they are located seaward of the high water mark. The constitution, laws and treaties of USA shall apply as if such port were an area of exclusive Federal Jurisdiction located within a State. However, interestingly, the ACT 33 US SCS 1518 (d) excludes application of Custom Laws.
Gross income tax exemption is also available to foreign entrepreneurs and only net 4% tax is payable. The Netherlands and many other countries too have separate deep water port acts. However in Pakistan there is no such act, even KPT Act is 1886 (Bombay Act VI of 1886) duly amended from time to time without disturbing the main body of old Act, thus it is imperative that a deep water port act be enacted for smooth operation of the proposed new port.
The growth of container traffic due to unprecedented shipping boom, which lasted about ten years, South East Asia and Gulf region witnessed a growth of 18.4% comparing to 14% in the world. This could be a driving force in conceiving a deep water port. More so, Pakistani ports only handled captive cargo of 1.7 mill TEUS, including 100,000 transit boxes, whilst Colombo, Dubai, Salalah, Singapore, Hong Kong, Rotterdam, Schenzen and even Bander Abbas thrived on transshipment business. Port of Colombo only handles 30% captive cargo whilst 70% cargo is transshipment boxes and port is making good revenue with transshipment business, whilst our 3 terminals thrived on captive cargo and said to be generating excellent IRR of 30% plus on their investment.
When the deep water port was conceived in 2006, shipping was at its peak but plummeted in the end of 2008 laying about 477 container vessels and bankruptcy to many ship-owners, as the shipping bubble burst due to global meltdown. The volumes have been affected world-wide and in India, Singapore, Hong Kong and Schenzon volumes have dropped upto 19%, but port of Singapore is assisting the bleeding shipping lines by lowering its tariff by 35%. The above is true in today's perspective but there will be turnaround in economy world wide by 2014/15.
The strong argument in favour of building deep water port is that, it will not be ready before 2014, thus recession may be over and on completion of phase I of KDWEP it will have 1500m quay length to accommodate 5th and 6th generation container ships of over 350 LOA, 55.0 meter beam. Carrying about 10/1100 TEUS thus giving advantage on economy of scale, lower freight rates and initiating first time transshipment from KDWCP.
But an act is necessary to root out evils of KDLB, trade unions and of course, tariff compatible to transshipment ports. Unfortunately the 3 terminals at both ports are handling feeder vessels due to restrictions of draft, but KDWCP will cater to 16 m draft initially, thus saving our impo/expo double handling cost due to feederings. Trade will get edge on freight rates.
Due to economic glut it is the right time to build the asset as KPT with 40 billion rupees plus in coffers is only saving interest, but by building asset it will have multiplier effect and when recession is over, we will be ready to take the challenge. It is also true that most of the contractors world wide are idling and will be most willing to undertake any job even at break even to avert insolvency due to liquid cash flow crunch and tightening by banks.
I was amazed to learn that CWE has taken capital dredging on less than 8 USD per cu. meter when bench marked to 20 USD per meter in 2007/08. They are said to be dredging 33 million cubic meter at a cost said to be 220 mill USD, a peanut. However, the firm has no expertise in designing of navigable channel and ports, but they may sublet the assignment, due to their limited port skill, as they specialise in Dam / Reservoirs, Hydro power project etc. KPT and its consultants will have to keep an stringent eye on the scope of work awarded and to ensure they effectuate world class standards. The designing of channel, basins etc are highly specialised skill jobs, unlike laying rail tracks or roads with generalist experience.
Once dredging and reclamation is completed by CWE, the marine protection work may commence and project shall include construction of 3 break waters and sand dyke. The marine protection works may comprise three rocks or concrete ( CORE-LOC units, armoured break waters to provide shelter to the basin particularly in SW monsoons from May 15 to September 15th, when sea is extremely rough.
The latest breakwater technology must be used to prevent sedimentation and seepage of sand into basin. Dubai palms break water is a living example. It may cost 0.5 bill USD in today's market. KPT has already awarded two terminals based on landlord concept on BOT basis, which after construction of KDWCP, may cater to small feeder vessels and may give back up support.
After completion of dredging and break water the concessionaire M/s. HPH who are the leading terminal operators of the world will do civil construction of 1500 m quay wall and equip port with state of art gantries, RTGS etc to give fast turnover at KDWCP to calling ships.
It is expected that HPH will invest 457 mill UISD and it is said that they have already paid 50 mill USD to KPT and have shown commitment earlier too by completing KICT extension project at west wharves.
I do not wish to comment on KPT's projections of earning as it is too early to predict, as we have to wait and see the revival of shipping industry and economic glut, which has caused downward spiral, but as an optimist I see that recession will be over by the time KDWCP is ready in 2013/14 to handle ships. It is also true that DP world has backed out from QICT extension at Port Qasim and so from London gateway port, so is PSA from Hazira deep water port in India.
The future of Bombay gateway port is also in doldrums as Dravados the Spanish firm who got concession with Gammon India, has been sold out to China merchants, thus Indian Govt will never give NOC to a Chinese firm, as had been the case in earlier tender, when Turbo Larsen was denied due to Hong Kong connection.
The Colombo South Port is also in doldrums as no terminal operator came forward to bid. If KDWCP is ready prior to Colombo and Bombay, HPH may turn this into regional Hub for transshipment, but will have to compete with Dubai, Salalah, JNPT and Colombo. HPH will be testing its management/marketing and port operator skills to attract lines but KPT has to match its wet dues and avoid undue interference giving a free hand to HPH to market and operate the terminal. However the role of regulator in today's world is imperative. KPT is committed to make connectivity to cargo village and Northern Bye-pass which may cost 56 billion rupees as reported in media, but it will be a lifeline of project, otherwise the project will be hampered by operational delays due to congested connectivity to groyne.
The forecast in 2007 was world container volumes will touch 557 mill TEUS by 2010. Let's keep our fingers crossed and pray for early recovery of world from recession. HPH, being common carrier terminal operator may face tough time with Maersk and NOL, who have strong interest in Salalah and being shipowners as well as dedicated terminal operators may patronise their own terminals of Salalah for transshipment as it is handling 3.4 mill TEU and new concession with NOL: may double the capacity.
In today's world no one can make a firm forecast, but as the saying goes, I quote George Soros " Fear when greed is on and be greedy when fear is on. The 14 m plus deep water ports in the region are Singapore, Sohar, Salalah, Schenzen, Shanghai, Kakinada and Hazira (India) The proposed 16 m plus deep water port in India is Chennai, Vizhingam Kakinada, in Bangladesh is Sonadia near Cox's Bazar and Nobel Laureate Yunus has appealed to government to expedite the project. In Burma is Kyekphyu and Colombo South Port in Sri Lanka, whilst Qatar is going ahead with Khalifa deep water port.
I have penned down merits and demerits but feel apparently that KDWCP may be a success subject to economic revival. It may not hurt existing terminals as the case in Vietnam, Bangkok etc, where after building of deep water ports existing terminals are busy in feeder operation.
Maritime experts may form their own opinion but one thing is clear that port management skill is a faculty and can't be left to callow generalists, with no commercial maritime background. Ships are required to maintain their schedules and terminals have windows for every line, unlike bus or rail road. You may arrive a day later. The fixed operating cost of a container ship per day is 40/50,000 USD. The project has been initiated and now we look forward for the goal to be achieved.
TAIL PIECE: I have collected data of Khalifa Port, Sohar, Chennai etc and will be analysing data, bench marking KDWCP evaluation matrix, dredging, navigation report and simulated conditions in my next detailed write up subsequently. However, I would like to make humble recommendation for consideration of Ministry of Ports and Shipping.
As per World Bank/IMF and financial analysts, presently world economy suffers from toxic assets of 4.1 trillion USD and revival of economy is expected by 2013/14. However nothing is firm, thus we are blessed with sufficient time to look into recommendations. Let this project be considered as stimulus package to our economy.
ENACT A DEEP WATER PORT ACT: Form a cluster group of maritime industry, taking onboard existing terminal operators to address the impediments in the new Act. Spain and other countries do so to get the best inputs. Since shipyards are idling, it is time to negotiate building min two 85 tons Bollard Pull Tugs of Z-propellers because of 360 degrees steer able propellers.
A very intricate calculation is needed to establish the exact Bollard pull required to hold a ship,. Opposing a measured surface to beam wind blowing x meters/second. Acquire two Pilot Boats to face sea conditions upto Beaufort scale 8-9, safe working platform, large GM constructional strength to control collisions. Everyday and of coarse a speed of 20/25 knots.
Renegotiate all contracts as Saudi Arabia and others are doing. Induct 100 young engineers/MBAs strictly on merits to groom them in port development, designing, dredging etc. Make use of indigenous dredgers under Pak flag, be it private or public and avoiding minor jobs to foreigners. Pakistani companies should have priority.
Reclaimed area must be subjected to latest compactness Technology with Canadians and Dutch. Allowing nature to compactness is considered obsolete as was done at Gwadar. Generate maximum, employment of Pakistanis by making mandatory on contractors to impart training to our youth. Debate with critics with logic and technical data and convince.
Saturday, April 25, 2009
The 'same people' mantra
Whenever, I visited India officially, it annoyed me as most of the bureaucratic and wholly-headed media and socialites said to be liberals, gave us the sermon that India and Pakistan are the same people. It was like a mission statement tailored to be given to all Pakistanis, with a soft note that the Partition was un-natural.
I listened without loosing my cool and intentionally avoided getting into any confrontation or argument to embarras my host. However I did communicate that I respect your views and I have equal rights to have my own views, which are contrary to yours.
The only person I come across, courtesy of a friend, was said to T.V., anchor and columnist of Hindustan Times, who vehemently debated and confronted the Indian Punjabi liberals to the effect that when it comes to India and Pakistan, we are the same people. He pleaded that it may be true before 1947 as Pakistan was part of British India and Punjabis from West Punjab were as Indian as, say, Tamils from Madras.
He deliberated that gap between the Tamils and Indian Punjabis have narrowed, thanks to improved communications, shared popular culture and greater physical mobility, the gap between Indians and Pakistanis has now widened to the extent that we are no longer the same people in any significant sense. I argued with the view of Indian columnist, however politely disputing that we were different even prior to 1947, even though we shared cultural values, neighbourhoods and gastronomic habits, but there were many dividing factors, last religion. It is true that we inherited some Hindu cultural customs due to the dominance of the majority Hindu populace.
To support my argument I quoted Guru Gowalker who posited in his book, published in 1939, that the North Pole was in India and fudged what would be akin to Wagner's theory of continental shift to justify the location of Indo-Aryans as people eternally rooted in India. Gowalker's theory has neither been denied or disowned by his followers.
It is a pity that it continues to help rationalise the imagined " Son of the Soil" claims of a few, whereas all other groups who come to India later are projected as invaders. The Muslim fall in the category of invaders. Thus how we could be same people, when we are not treated as sons of the soil, despite living together for generations. It is not easy to market your own ideas, although duly supported by logic and history. Some saner elements accepted them but Rhetoric, of the same mantra by government officials continued to brain wash us.
I, had the privilege of visiting many states in India and I can say that due to abject poverty many cities in particular, the city of Jaipur islands, on the main road near Hawa Mahal, are infested with various statues of gods and flowers and every Indian to me was far more religious than a Pakistani.
Indians are equally proud of their history and religion both, which is evident with temples, be it at Bombay or Amritsar, full of the masses. I was awakened at 4 am in my Clark hotel, with the Bhajans that continued upto 0800 hours. Thus religion in India too is a dominant force and the same is reflected by the BJP, whereas Islamists never win more than a few seats to form a federal or provincial government.
In spite of 123 separatist movements in India, the Bharat Mata has been a cohesive force, again a religious factor that needs not be elaborated. I was witness to a road show in Delhi where the Indian map was displayed and a leader in Safron cap was cursing us that the two hands of Bharat Mata, ie Pakistan and Bangladesh, have now been chopped off by invaders from the west.
I, agree the percentage of such fanatics may be minimal, but they do exist in secular India. We also cant deny such fanatics in our land of the pure. The suicide bombing invented by the Japanese in 40's was re-invented by PARBHAKARAN of LTTE who was trained in Tamil Nadu, and now our zealots are following same.
The majority of Pakistanis do not subscribe to extremism as the elections reflect, but some religious devotees feel so embattled and embittered by the questioning or rejection of their cherished beliefs that they are prepared to resort to murder, even indiscriminate mass murder as had been the case in Gujrat with Muslims and Christians in Orissa, so is the wave in Pakistan.
This only happens wherever fanaticism is mixed with resentment and ignorance to produce the hateful brew of what is done in the name of faith. Whilst watching the Indian media, it is astonishing to see that Indian leaders who in their election campaign, are promising a great past rather than future.
We, in Pakistan are unfortunate that due to poor governance / diplomacy we could not reflect a soft image of Pakistan, whereas in spite of religious / ethnic cleansing, Indians have been portraying their then soft image of an incredible / shining India. We must accept our failure that we could not project ourselves well. I have explained to my Indian friends that we don't have the same mind set, whilst Indians remain cool, we confront aggressively, damaging our case.
More so I have yet to meet an Indian in US/UK and Gulf, who publicly condemns a India irrespective of being a Tamil or Northeren, but we Pakistanis, as a fashion, in particular the well-to-do condemn Pakistan in public abroad, which is a shameful act, as there is nothing wrong with any country.
It is the governance to be blamed and we must not cast any aspirations on our motherland. We should learn from the Indians to restrain ourselves, at-least when abroad. I still recall a Pakistani cursing Pakistan a few years back on the US media, who has now been rewarded and is now a diplomat.
It gave me immense pleasure to read an article in the Hindustan Times of Saturday 14th March by Vir Sanghvi the famous anchor and columnist, at last agreeing that Indians and Pakistanis are poles apart, and the Indian mis-guided liberals who keep blathering on about us being the same people forget that in the 60 odd years since independence, our two nations have traversed very different paths. I tend to agree and only subscribe to his above observation and not the article in totality.
Pakistanis are well advised to see the Slum dog millionaire' to know the real face of shining India. The movie has exposed the poverty of a G-20 nuclear and most cherished state in the US and West.
Some in the Sub-continent try to palliate or even excuse the crimes committed in the name of religion in human history by invoking the glorious art and music it has produced, to which the answer is that Greek mythology and secular avocations have done the same, without burning anyone at the stake in process.
I am the fervent opinion that we live and trade as good neighbours whilst respecting each other mutually, without any hegemony, as two different nations but good neighbours and friends, forgetting the past aiming for a prosperous future for South East Asia. I am sure this is achievable if we don't mix religion with governance and draw political mileage out of religion.
I listened without loosing my cool and intentionally avoided getting into any confrontation or argument to embarras my host. However I did communicate that I respect your views and I have equal rights to have my own views, which are contrary to yours.
The only person I come across, courtesy of a friend, was said to T.V., anchor and columnist of Hindustan Times, who vehemently debated and confronted the Indian Punjabi liberals to the effect that when it comes to India and Pakistan, we are the same people. He pleaded that it may be true before 1947 as Pakistan was part of British India and Punjabis from West Punjab were as Indian as, say, Tamils from Madras.
He deliberated that gap between the Tamils and Indian Punjabis have narrowed, thanks to improved communications, shared popular culture and greater physical mobility, the gap between Indians and Pakistanis has now widened to the extent that we are no longer the same people in any significant sense. I argued with the view of Indian columnist, however politely disputing that we were different even prior to 1947, even though we shared cultural values, neighbourhoods and gastronomic habits, but there were many dividing factors, last religion. It is true that we inherited some Hindu cultural customs due to the dominance of the majority Hindu populace.
To support my argument I quoted Guru Gowalker who posited in his book, published in 1939, that the North Pole was in India and fudged what would be akin to Wagner's theory of continental shift to justify the location of Indo-Aryans as people eternally rooted in India. Gowalker's theory has neither been denied or disowned by his followers.
It is a pity that it continues to help rationalise the imagined " Son of the Soil" claims of a few, whereas all other groups who come to India later are projected as invaders. The Muslim fall in the category of invaders. Thus how we could be same people, when we are not treated as sons of the soil, despite living together for generations. It is not easy to market your own ideas, although duly supported by logic and history. Some saner elements accepted them but Rhetoric, of the same mantra by government officials continued to brain wash us.
I, had the privilege of visiting many states in India and I can say that due to abject poverty many cities in particular, the city of Jaipur islands, on the main road near Hawa Mahal, are infested with various statues of gods and flowers and every Indian to me was far more religious than a Pakistani.
Indians are equally proud of their history and religion both, which is evident with temples, be it at Bombay or Amritsar, full of the masses. I was awakened at 4 am in my Clark hotel, with the Bhajans that continued upto 0800 hours. Thus religion in India too is a dominant force and the same is reflected by the BJP, whereas Islamists never win more than a few seats to form a federal or provincial government.
In spite of 123 separatist movements in India, the Bharat Mata has been a cohesive force, again a religious factor that needs not be elaborated. I was witness to a road show in Delhi where the Indian map was displayed and a leader in Safron cap was cursing us that the two hands of Bharat Mata, ie Pakistan and Bangladesh, have now been chopped off by invaders from the west.
I, agree the percentage of such fanatics may be minimal, but they do exist in secular India. We also cant deny such fanatics in our land of the pure. The suicide bombing invented by the Japanese in 40's was re-invented by PARBHAKARAN of LTTE who was trained in Tamil Nadu, and now our zealots are following same.
The majority of Pakistanis do not subscribe to extremism as the elections reflect, but some religious devotees feel so embattled and embittered by the questioning or rejection of their cherished beliefs that they are prepared to resort to murder, even indiscriminate mass murder as had been the case in Gujrat with Muslims and Christians in Orissa, so is the wave in Pakistan.
This only happens wherever fanaticism is mixed with resentment and ignorance to produce the hateful brew of what is done in the name of faith. Whilst watching the Indian media, it is astonishing to see that Indian leaders who in their election campaign, are promising a great past rather than future.
We, in Pakistan are unfortunate that due to poor governance / diplomacy we could not reflect a soft image of Pakistan, whereas in spite of religious / ethnic cleansing, Indians have been portraying their then soft image of an incredible / shining India. We must accept our failure that we could not project ourselves well. I have explained to my Indian friends that we don't have the same mind set, whilst Indians remain cool, we confront aggressively, damaging our case.
More so I have yet to meet an Indian in US/UK and Gulf, who publicly condemns a India irrespective of being a Tamil or Northeren, but we Pakistanis, as a fashion, in particular the well-to-do condemn Pakistan in public abroad, which is a shameful act, as there is nothing wrong with any country.
It is the governance to be blamed and we must not cast any aspirations on our motherland. We should learn from the Indians to restrain ourselves, at-least when abroad. I still recall a Pakistani cursing Pakistan a few years back on the US media, who has now been rewarded and is now a diplomat.
It gave me immense pleasure to read an article in the Hindustan Times of Saturday 14th March by Vir Sanghvi the famous anchor and columnist, at last agreeing that Indians and Pakistanis are poles apart, and the Indian mis-guided liberals who keep blathering on about us being the same people forget that in the 60 odd years since independence, our two nations have traversed very different paths. I tend to agree and only subscribe to his above observation and not the article in totality.
Pakistanis are well advised to see the Slum dog millionaire' to know the real face of shining India. The movie has exposed the poverty of a G-20 nuclear and most cherished state in the US and West.
Some in the Sub-continent try to palliate or even excuse the crimes committed in the name of religion in human history by invoking the glorious art and music it has produced, to which the answer is that Greek mythology and secular avocations have done the same, without burning anyone at the stake in process.
I am the fervent opinion that we live and trade as good neighbours whilst respecting each other mutually, without any hegemony, as two different nations but good neighbours and friends, forgetting the past aiming for a prosperous future for South East Asia. I am sure this is achievable if we don't mix religion with governance and draw political mileage out of religion.
Saturday, April 11, 2009
Save mother nature for posterity
It was most welcome news for Karachiites that government has approved 22 billion rupees for turning Karachi green from rocky / sandy and concrete jungle. The City Nazim has done bit of his work by planting button mangrove plants of conocorpus, which attains height and does not need water after five months. You can see these plants on islands of the roads being lush green, but more is needed to save the city from air and sewerage pollutions.
The sea is polluted by pumping daily raw sewerage of about 400 million gallons as the city can treat about 100 million gallons. You can notice the Karachi harbour, which receives the maximum city untreated sewerage, thus depleting the marine life and making fish catch around Karachi port and east coast unhygienic and unsafe for human consumption.
One wonder as to why Karachi Port having 40 billion rupees in coffers, do not come forward to install a sewerage treatment plant, if city government is restrained with finances, Pakistan Navy may also contribute being user of the port.
I, recall attending International Maritime Organisation Committee on Marine Environment Protection commonly known as MEPC. Most of the countries agreed to Marpol convention 73/78 Annex VI to check the emission from ships funnel, however Pakistan has yet to ratify Annex VI and ballast water convention for the reasons best known to concerned or unawareness.
We now see the light at the end of the tunnel as US President Obama is seriously concerned not only about economic melt down but equally on environmental degradation and have approved 86 billion USD to protect the environment. The burning of fossil fuels and destruction of forests are expected to increase the earths average temperature upto 5 degree by 2100.
The rise will create more stress on Asias already overtaxed environment and change the way we live. Sixteen countries spanning Pakistan to the Philippines. Home to 1.6 billion people in six of the worlds 25 largest cities. It is well documented fact that Himalayan glaciers will melt causing floods.
Silty run off will contaminate water supplies and clog our hydro electric projects. It is also feared that increase in temperature may cause low yield of rice and our farms will be vulnerable to new pest and natural disasters. It is also estimated by environmental Scientists that sea level may rise by one meter flooding coastal cities.
Malaria, dengue fever and schistosomiasis will move into new regions on the margins of current endemic areas. The above effects are only for tropical Asia, whilst effect will vary from temperate Asia to Australia. It is nothing new the world was aware of the problem, thus in 1997, governments around the globe agreed to give the 1992 convention on climate change some bite and adopted the Kyoto Protocol, which came into effect by 2005.
The protocol commits developed countries to achieve goals by 2012, however, Australia, USA , Singapore, Hong Kong, Macau and China did not sign the Protocol, which was a great set back. The green house gas emission continue to rise from coal powered plants, ships, aeroplanes and burning of fossil fuels.
The developed nations committed to reduce their collective emissions of carbon dioxide, methane and nitrous oxide by at-least five percent by 2012, whilst EU agreed to 8 percent reduction and Japan 6 percent. The protocol is silent on any penalty for exceeding the targets.
The global response to Kyoto is talk fests, usually nothing gets done, but at least protocol has pushed governments to work together to ensure developed nations cant damage the economics of developing countries. It is well recognised truth that saving environment is expensive, so the countries that reduce emissions by more than their targets can sell their credits.
Countries can also benefit by financing international projects. Pakistan can also be benefited by selling its credit due to low industrialisation. Now all eyes are set on crucial UN meeting in Copenhagen in December.
Since taking power in the US Obama has signalled his readiness to enter into international agreement on reducing emissions to be negotiated in Copenhagen, in contract to his predecessor Bush, who dropped out to sign Kyoto, as protocol did not set binding targets for big developing nations ie BRIC countries (Brazil, Russia, India and China).
The Chinese have taken a logical position, that consumer countries may take responsibility for the carbon emissions generated in the manufacture of goods, not the producer country that exports them. A deal between China and USA is imperative as China overtook USA as the biggest CO2 emitter in 2006, due to its dependence on coal fired power and likely to remain in position for decades.
China blames Western consumers as Chinese claim that 15 percent and 25 percent of countries CO2 emissions resulted from manufacturing exports. Japan and EU do not buy the Chinese stance. The two positions appear ominously far apart and critical, but there appears to be sign and scope for rapprochement.
Chinese continue to argue that wealthy nations should contribute more, as they have historically responsible for the carbon emission. All friends of earth and environmentalist have pinned their hope of saving the mother nature to December UN summit. We are seeking justice from big polluters, USA, China, India and Russia to save the earth from further devastation, for our posterity.
The good news for International Maritime Organisation (IMO) and Marine Environment Protection Committee (MEPC) and maritime fraternity is that in accordance with Marpol 73/78 Annex VI, a Singapore company has developed a ship exhaust scrubber CSNOX, a method of removing planet warming gases and soot from ship exhausts without causing secondary environmental damage.
This system will remove from ship exhaust 90 percent of Sulfur Dioxide, 80 percent Nitrogen Oxide 75 percent Carbon Dioxide. This new innovation is welcomed by IMO and MEPC and will help EU to enforce Annex VI by 2012. Airline industry must also come up with some solution as aeroplanes flying in stratosphere create artificial clouds due to emission and the heat is refracted to the earth.
Whilst the world is on move to arrest degradation of environment, we must increase our forest area and in particular join hand with the city government to make Karachi environmental friendly, green and free of pumping raw sewerage to our sea and also get rid of plastic bags.
Every one must contribute to save our city and country both. We must also ensure using of recycled water for farms and industries to meet growing need of fresh water. The knowledge of environment is a very necessary like grace and beauty. It breeds mutual liking and love for the mother nature.
The sea is polluted by pumping daily raw sewerage of about 400 million gallons as the city can treat about 100 million gallons. You can notice the Karachi harbour, which receives the maximum city untreated sewerage, thus depleting the marine life and making fish catch around Karachi port and east coast unhygienic and unsafe for human consumption.
One wonder as to why Karachi Port having 40 billion rupees in coffers, do not come forward to install a sewerage treatment plant, if city government is restrained with finances, Pakistan Navy may also contribute being user of the port.
I, recall attending International Maritime Organisation Committee on Marine Environment Protection commonly known as MEPC. Most of the countries agreed to Marpol convention 73/78 Annex VI to check the emission from ships funnel, however Pakistan has yet to ratify Annex VI and ballast water convention for the reasons best known to concerned or unawareness.
We now see the light at the end of the tunnel as US President Obama is seriously concerned not only about economic melt down but equally on environmental degradation and have approved 86 billion USD to protect the environment. The burning of fossil fuels and destruction of forests are expected to increase the earths average temperature upto 5 degree by 2100.
The rise will create more stress on Asias already overtaxed environment and change the way we live. Sixteen countries spanning Pakistan to the Philippines. Home to 1.6 billion people in six of the worlds 25 largest cities. It is well documented fact that Himalayan glaciers will melt causing floods.
Silty run off will contaminate water supplies and clog our hydro electric projects. It is also feared that increase in temperature may cause low yield of rice and our farms will be vulnerable to new pest and natural disasters. It is also estimated by environmental Scientists that sea level may rise by one meter flooding coastal cities.
Malaria, dengue fever and schistosomiasis will move into new regions on the margins of current endemic areas. The above effects are only for tropical Asia, whilst effect will vary from temperate Asia to Australia. It is nothing new the world was aware of the problem, thus in 1997, governments around the globe agreed to give the 1992 convention on climate change some bite and adopted the Kyoto Protocol, which came into effect by 2005.
The protocol commits developed countries to achieve goals by 2012, however, Australia, USA , Singapore, Hong Kong, Macau and China did not sign the Protocol, which was a great set back. The green house gas emission continue to rise from coal powered plants, ships, aeroplanes and burning of fossil fuels.
The developed nations committed to reduce their collective emissions of carbon dioxide, methane and nitrous oxide by at-least five percent by 2012, whilst EU agreed to 8 percent reduction and Japan 6 percent. The protocol is silent on any penalty for exceeding the targets.
The global response to Kyoto is talk fests, usually nothing gets done, but at least protocol has pushed governments to work together to ensure developed nations cant damage the economics of developing countries. It is well recognised truth that saving environment is expensive, so the countries that reduce emissions by more than their targets can sell their credits.
Countries can also benefit by financing international projects. Pakistan can also be benefited by selling its credit due to low industrialisation. Now all eyes are set on crucial UN meeting in Copenhagen in December.
Since taking power in the US Obama has signalled his readiness to enter into international agreement on reducing emissions to be negotiated in Copenhagen, in contract to his predecessor Bush, who dropped out to sign Kyoto, as protocol did not set binding targets for big developing nations ie BRIC countries (Brazil, Russia, India and China).
The Chinese have taken a logical position, that consumer countries may take responsibility for the carbon emissions generated in the manufacture of goods, not the producer country that exports them. A deal between China and USA is imperative as China overtook USA as the biggest CO2 emitter in 2006, due to its dependence on coal fired power and likely to remain in position for decades.
China blames Western consumers as Chinese claim that 15 percent and 25 percent of countries CO2 emissions resulted from manufacturing exports. Japan and EU do not buy the Chinese stance. The two positions appear ominously far apart and critical, but there appears to be sign and scope for rapprochement.
Chinese continue to argue that wealthy nations should contribute more, as they have historically responsible for the carbon emission. All friends of earth and environmentalist have pinned their hope of saving the mother nature to December UN summit. We are seeking justice from big polluters, USA, China, India and Russia to save the earth from further devastation, for our posterity.
The good news for International Maritime Organisation (IMO) and Marine Environment Protection Committee (MEPC) and maritime fraternity is that in accordance with Marpol 73/78 Annex VI, a Singapore company has developed a ship exhaust scrubber CSNOX, a method of removing planet warming gases and soot from ship exhausts without causing secondary environmental damage.
This system will remove from ship exhaust 90 percent of Sulfur Dioxide, 80 percent Nitrogen Oxide 75 percent Carbon Dioxide. This new innovation is welcomed by IMO and MEPC and will help EU to enforce Annex VI by 2012. Airline industry must also come up with some solution as aeroplanes flying in stratosphere create artificial clouds due to emission and the heat is refracted to the earth.
Whilst the world is on move to arrest degradation of environment, we must increase our forest area and in particular join hand with the city government to make Karachi environmental friendly, green and free of pumping raw sewerage to our sea and also get rid of plastic bags.
Every one must contribute to save our city and country both. We must also ensure using of recycled water for farms and industries to meet growing need of fresh water. The knowledge of environment is a very necessary like grace and beauty. It breeds mutual liking and love for the mother nature.
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