Textile, cement and chemical: Hold in coal imports handling catalyses delay in production

ISLAMABAD: Up to 10 days’ hold in handling coal imports at the country’s only bulk dirty cargo terminal at the Port Qasim is delaying production plans and export targets of textile, cement and chemical manufacturers as well as adding to the generation costs of coal-based power producers.

According to the coal importers, the only berth available for offloading dirty cargo at the Port Qasim is operated by the Pakistan International Bulk Terminal Limited (PIBTL), which effectively enjoys a monopoly on handling dirty cargo imports under an exclusivity agreement with the Port Qasim Authority (PQA). This situation is further aggravated due to only day time channel facility / no night navigation and restricted movement on all cargo vessels during LNG vessel movement.

The PQA had signed the exclusive agreement bypassing good business practices with the PIBTL and the Supreme Court of Pakistan barred the Karachi Port Trust (KPT) from handling coal imports, and gave monopolistic powers to PIBTL.

“The PIBTL monopoly on dirty cargo imports is hurting the businesses that depend on imported coal,” said a senior executive of a power producer.

The vessels arriving at the port are made to wait for one to 10 days before they can offload their cargo. On top of that, the strict berthing time and limited capacity at the dedicated terminal for coal exposes the users to demurrage costs with the shipping lines penalising the importers by charging $15,000 per day for no fault of theirs.

Between Sep 15 and Oct 21 this year, 23 vessels carrying coal had to pay $1.62 million to the Authority for the delay of 108 days in offloading their cargo by the PIBTL.

“On the one hand we have to face a delay in the handling of our cargo after 3 times more cost than what we used to pay at KPT and on the other hand pay the demurrage because the PIBTL is not investing in expanding its cargo handling capacity and the PQA is not allowing another operator the rights to set up another terminal for the purpose,” a textile mill CEO complained. According to reports, the coal power generation cost has gone up by around Re0.40/ kWh because of the consistent delay in handling of the imports of coal power plants.

“What will the firms, dependent upon imported coal, do in case of sudden suspension of operations at the PIBTL terminal owing to some accident? That may hurt our exports as well as compromise our energy security. It is time we had more coal handling terminals to create competition by ending the monopoly,” the CEO said.

The coal-based power plant executive claimed that the PIBTL had fixed coal import handling charges at $5.49/ton, including the PQA royalty charges of $2.27/ton.

Copyright Business Recorder, 2020