The Economic Co-ordination Committee (ECC) of the Cabinet which is scheduled to meet on Tuesday (today) with Minister for Petroleum and Natural Resources, Syed Naveed Qamar, in the chair will allow the Ministry of Ports and Shipping to hire a dredging firm to deepen and widen Port Qasim navigation channel.
Official summary obtained from the Cabinet Division reveals that the Ministry of Ports and Shipping had submitted a proposal at a meeting presided over by the finance minister for extending sovereign guarantee to the bankers of the consortium of Dredging International, Jan de Nul & China Harbour Engineering Company, the successful bidders. The meeting had directed the ministry to explore the cost benefit analysis of purchase and/or rent of dredgers.
The summary reveals that the Ministry of Ports and Shipping collected the rates of the required dredgers and accessories from relevant quarters and accordingly a comparison of both options to undertake the project through purchase of dredgers and dredging contractors/firms was made.
Upon evaluation, the cost of the project through dredging firms as per existing bid stands at $199.48 million, whereas the same through purchase of dredgers comes to $583.3 million. According to the ministry, following conclusions may be drawn from the comparative study: (a) the option of purchase of dredgers not only increases the impact of the project by 192.41 percent but extends the completion time of the project by 3.5-4 years as well.
Port Qasim Authority does not have the required in-house expertise; and (b) in both cases loan financing in foreign exchange through commercial banks would be required, but the option of purchase of dredgers would require more financing.
With a view to gaining competitive advantage in the region, meeting the pressing demand of port users particularly Qasim International Container Terminal, Fauji Oil Terminal Company, grain and fertiliser terminal, coal/clinker terminal and prospective LNG operators and extract benefits through economy of scales, undertaking of the capital dredging project through contracting firm as per existing bid appears to be the only feasible and cost effective option at this stage.
The ministry has re-submitted its proposals for consideration as follows: (a) To accord approval for sovereign guarantee enabling loan financing for the project; (b) to allow negotiation with the bankers on the basis of sovereign guarantee for getting better financing terms; and (c) to allow use of foreign exchange by PQA as the project involves foreign exchange component exceeding 25 percent of the total project cost.
Port Qasim maintains 45 kms long navigational channel for handling ships with draught up to 11.5 meters. In order to meet the pressing demand of port users, particularly QICT, Fotco, grain and fertiliser terminal and prospective LNG operators there is a need to undertake dredging.
Source:brecorde,March 9,2010;Image:Wikimedia,November 2,2009
