ISLAMABAD, Feb 7: The ministry of ports and shipping will spend additional Rs5.3 billion in 2005 to drastically expand shipping activities at Port Qasim.

Official sources told Dawn here on Monday that the ministry had finalized a plan to undertake a "Deepening of Port Qasim Navigation Channel Project" that seeks to largely benefit Pakistan Steel (PS), Pakistan State Oil (PSO), traders, importers and exporters.

Realization of the project would result in tangible positive socio-economic impacts on sectoral portfolio as this would imply qualitative and quantitative improvement in the national port sector and Port Qasim.

The PS, the PSO and the business community would be the direct beneficiaries in the first instance, due to reduction in the per ton cost of marine transportation of respective commodities. An increase in lowering of ship-related tariffs and timely dispatch of export-oriented goods in the competitive world economy would raise the income of Port Qasim Authority (PQA).

The project has been conceived on the recommendations of Consultants M/S Posford Duvivier, UK, Delft Hydraulics - Netherlands and Techno Consult International Pakistan.

Deepening of the channel would facilitate use of the port by large size vessels having much lesser freight charges. The government's organizations like PSO, PS would save tremendous amount per annum at the rate of average $2.25 per ton for steel mills import, $0.57 per ton by PSO and about $100 per TEU on container import/export by using deep draft vessels, which will be an indirect income of the government. The PQA would benefit on account of handling of volumes of cargo.

The ministry of ports and shipping maintained that the deepening of the channel was essentially required to meet the demand of the port users, otherwise shipping would be severely constrained as modern deeper draught vessels, now sailing in the region, would not be able to call at the port.

The objectives of the project are associated with the all-round objectives of the national transport sector providing support in the process of economic development. Originally, this project formed an integral part of the Oil Terminal Project, which was to be constructed under public sector financing through the Asian Development Bank (ADB). Oil terminal project has since been completed by FACTO on Build Operate Own (BOO) basis in 1995.

It was said that under the present maritime scenario in the region, Pakistani ports will have to increase their declared draughts to the level of neighbouring countries so that vessels in service covering Middle East, Pakistan and India keep calling on Pakistani ports. If not done, only feeder vessels from Middle East or Colombo would call, resulting in higher freight rates to be paid by Pakistani importers and exporters putting them in disadvantageous position.

The forecast traffic and the market potential makes it mandatory to ensure adequate depths for safe navigation of ships sailing and being handled in the region which are predominantly 75,000 to 85,000 dwt for dry and liquid bulk handling.

With this project of capital dredging for deepening of channel, the ministry of ports and shipping believed that Port Qasim will be able to accommodate cargo vessels of 75,000dwt and above and container vessels 3,500 TEUs and above up to 4,500 TEUs on board in all states of tide by taking tidal advantages, which is necessary also to optimize port cargo handling capacity.

Also, with the completion of the project, reduced vessel waiting time would be further reduced in freight charges and there would be an increased navigational confidence reducing accident risks.

The project envisages, after removal of backlog, further dredging for deepening of channel up to 17.6m outer channel, 15 m inner channel and 13.5m reach channel up to marginal wharf, including straightening of bends. It would also create employment opportunities to about 100 technical and non-technical personnel.

About 50 jobs-technical and skilled workers- would also be created due to annual increased maintenance dredging.