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ISLAMABAD: The Ministry of National Food Security and Research (MNFS&R) has proposed to allow TCP to award contract of imported wheat, initially for three smaller vessels not exceeding 40,000 MT tonnage, for berthing at Gwadar Sea Port, official sources told Business Recorder.

The ECC of the Cabinet on May 9, 2022, allowed staggered import of 3 MMT of wheat and directed MNFS&R to devise modalities for import.

After a consultative meeting with Ministry of Commerce and Trading Corporation of Pakistan (TCP) on May 14, 2022, modalities for the import of specified milling wheat were devised. ECC of the Cabinet on May 28, 2022 approved the proposal and allowed TCP to import 1 MMT through open tendering process and 2 MMT under G2G arrangements from Russia.

A meeting on wheat issues was held on July 6, 2022, at the PM Office. It was directed that to support economic activities and port operations, a portion of wheat may be shipped through Gwadar Port.

In compliance with the directions, views were sought from Passco, NLC, Ministry of Maritime Affairs and Ministry of Commerce/TCP. Passco has shown a willingness to transport 20,000 MT wheat through Gwadar Sea Port for supply to Pak Army stores located at Karachi and Balochistan. PASSCO has further intimated that currently the average transportation cost from Karachi Sea Ports i.e. KPT and FAP (Bin Qasim) is @ Rs 10,980/MT, whereas cost from Gwadar port is [email protected] Rs18,960/MT. Therefore, the cost differential of Rs 7,980/MT will be incurred as an additional cost.

ECC allows TCP to import 0.3m tonnes of wheat

NLC has submitted a detailed report and recommended that keeping in view the road conditions, non-availability of transport vehicles, repair /recovery facilities, cost effect, safety/security and weather hazards import operations may be continued from Karachi Sea Ports. However, import of wheat from Gwadar Port is possible after revival of roads, bridges and other infrastructure.

Ministry of Maritime Affairs noted that Gwadar Port has capacity and experience to handle two panamax vessels simultaneously with DWT tonnage of up to 50,000 tons.

TCP has stated that 0.986 MMT of wheat import has been awarded. Out of this 0.681 MMT has arrived at Karachi, whereas 0.305 MMT is in transit. All vessels are over and above 57,000 MT tonnage.

Therefore, their arrival at Gwadar Port is not possible due to its declared lower draft of 12.5 meters as compared to 13 meters at Karachi Ports. Gwadar Port can be used for 40,000 MT tonnage vessels for which there would be enhancement of freight cost @ USS 11.55 and USS 7.30/MT in case of import of wheat from Russia and Romania respectively. With additional transportation charges from Gwadar to inland, total price differential as compared to KPT, Karachi is estimated @ Rs. 10,683 and Rs. 9,688/MT in case of import of wheat from Russia and Romania respectively. However, all costs/prices mentioned are tentative, and can only be finalized after tenders are awarded and firmed prices are given by the companies.

Summarizing the case, the Ministry of National Food Security and Research has said that cost differential per MT of imports through 40,000 MT tonnage vessels as compared to 60,000 tonnage vessels from Russia to Gwadar instead of Karachi Ports is 38.3% higher while for the same if imported from Romania is 40.27% higher, adding that all the recipients of imported wheat are requesting PASSCO and Federal Government to further subsidize their purchases. Additional high costs due to import and transport from Gwadar may not be acceptable to them.

The Ministry maintained that wheat can be imported through Gwadar with following options: (i) TCP may award contract, initially for three smaller vessels not exceeding 40,000 MT tonnage for berthing at Gwadar Sea Port, keeping in view the low draft of 12.5 meters; and (ii) Federal Government may pick up the additional cost of imported wheat or PASSCO may be allowed to pass it on to the recipients.

Copyright Business Recorder, 2022

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Ch K A Nye Sep 22, 2022 08:59pm
What possible reason is there to incur additional costs for using Gwadar? This is plain stupidity.
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