Pak Minister seeks foreign loan for Rs 10.305 bn project

Karachi: The ministry of ports and shipping is considering to seek foreign loan for financing the Rs 10.305 billion project on deepening and widening of 45 kilometre long navigational channel at Port Qasim.

After completion of the project, which is aimed at deepening the channel to 14.0 meters by May 2010, the Port Qasim Authority (PQA) would be able to accommodate post-Panamax vessels of a draught ranging from 11.5 to 14.0 meters, which would ultimately augur well on the financial front, sources told Business Recorder on Sunday.

They said in view of the high priority Islamabad was attaching to the project owing to its importance for catering to future shipping needs of the country, the Development Working Party (DWP), at a meeting on July 11, had asked PQA to evaluate comparison of financing cost of loan through the government with that of the 'sellers credit' to be sought from a foreign bank. The DWP, sources said, has also asked the Authority to include some minor amendments and proceedings of bid evaluation to the PC-1.

'PQA and the project consultants (M/s Engineering Consultants Intl. (pvt) Ltd and M/s Louis Berger (USA)) would be presenting the PC-1 with the requisite additional information and amendments to the Central Development Working Party as soon as the month of August 2008,' they added. About the feasibility of a foreign or domestic financing, official sources in PQA said, though the government backed loaning was cost-effective, despite its additional mark up rate of 1 to 3 percent, one could prioritise 'sellers credit' when it comes to the lengthy processing of government allocation.

'A timely and quick release of project payments is vital in accomplishing any big project, like this one, but unfortunately this is not the case with government backed financing,' he complained. Highlighting the importance of the project, the PQA official said, regional ports, like Mundra and Colombo, had continued to deepen their channels to maintain draughts to 11.5 to 14.0 meters to accommodate the deep-draft ships.

'The 11.5 meters to 14.0 meters draughts gives a saving of US $ 2.0 to US $ 4.5 per tonne of cargo respectively, thus manifesting the benefit of economies of scale,' he said. He said the comparatively shallow draughts at Pakistani ports, Karachi, Qasim and Gwadar, were turning out to be expensive to the national economy with high freight, tariff and other charges. With such developing trends, the official said, PQA had a commitment to provide the private sector projects, including the 2nd QICT Container Terminal, with a 14.0 meters draught by 2010.

He said work on the project, which includes 30 million cubic meters of capital and maintenance dredging on Design, Construct and Finance basis, would be started by October this year to meet the target of providing a deep draught channel at PQA by 2010. According to the official a timely start-up was important for the project which had a significant bearing for sustenance of new terminals and berths being planned at PQA by 2010-2011.