The government has decided to install ship lift and transfer system to provide docking and repair facilities to surface ships, submarines and commercial vessels, sources close to Minister of Defence Production, Chaudhry Pervez Elahi told Business Recorder here on Wednesday.
The original PC-1 cost of the project on September 2007 stood at Rs 3 billion whereas according to the revised PC-1 the cost came to Rs 5.848 billion in March 2010. However, the cost has been revised to Rs 5.640 billion in the light of CDWP recommendations, the sources added.
The revised project envisages enhancement and modernisation of existing capacity of ship repair of Karachi Shipyard & Engineering Works (KS&EW) through installation of ship lift system replacing old and obsolete machines with state-of-the-art new machines and acquiring additional land (five acres) of Pakistan Navy adjacent to KS&EW). The new system will be capable of lifting vessels up to 7,781 tons and capability of repairing and maintaining more than 13 ships/vessels at a time.
At present, KS&EW has two dry docks of a capacity 26,000 DWT tons and 18,000 DWT tons constructed in 1956/70-71 having average capacity to repair 16 ships per annum. After completion of the project, the repair capacity of the project will be enhanced to 39 ships per annum in addition to the existing capacity of 16 vessels.
The scope of work comprises installation of ship lift system, transfer system, upgradation of existing technology, marine civil works and procurement of equipment/machines, etc. Official documents reveal that Chief Transport and Communication, Planning Division, maintains that the revised project sponsored by the Ministry of Defence Production at a cost of Rs 5.848 billion (FEC: Rs 1,566.00 million) envisaged enhancement of existing capacity of ship repair of KS&EW.
He revealed that the original project with lifting capacity of vessels up to 4,000 tons was approved by Ecnec on 19th September 2007 at a cost of Rs 3 billion with FEC of Rs 2.07 billion. An expenditure of Rs 1.807 billion also stands incurred so far against the original cost for hiring of consultants and opening of LC for the proposed system.
Following approval of the project an international consultant was hired for detailed designing of project. Keeping in view the present and future traffic of big surface ships and to get optimum output of the proposed facility, consultant proposed to enhance the lifting capacity of ship lift system besides replacement/refurbishment of existing old machinery.
Owing to change of scope and allied works, the cost of project increased resulting in revision of a revised PC-I for processing of CDWP/Ecnec. He stated that a pre-CDWP meeting was held and observations raised in the working paper for the CDWP were resolved. However, costs components of escalation, project management organisation, dredging of channel and associated workshop machinery needed review. Based on the above observations, he supported the revised project for approval of Ecnec.
Secretary Defence Production while providing justification for increased scope and cost stated that the original project was based for construction/repair of small vessels and crafts. After hiring of consultant, on their recommendations, scope increased resulting in increase of cost. Managing Director, KS&EW while endorsing the viewpoint of the Secretary DP and Chief T&C, elaborated that the increased lifting capacity of proposed facility would fetch more business and the revenues earned after completion of the project within 6 years of operation would become equal to the cost. He further revealed that besides enhancing lifting capacity of the proposed system, additional piece of land of Pak Navy measuring 5 acres adjacent to KS&EW had also been acquired on 30 years lease for provision of more docking and repair facility to harmonise with the designed output of the proposed lifting system. He stated that owing to less docking facility and repair stations, KS&EW loses business of repairing of average 20 foreign ships per year operating in the area. Owing to this, estimated loss is approx. Rs 500 million per year. He further informed that at present KS&EW have orders of construction/repair of various types of surface ships and allied equipment from domestic clients ie PN, KPT, PQA, MSA, GPA and PNSC, etc. With the proposed new system, KS&EW would be able to meet the orders of its client easily.
While replying to a query by Chairman CDWP regarding funding of project through PSDP considering that shipyard was supposed to earn its own revenue, MD KS&EW stated that it was under the control of the Defence Production Division, therefore PSDP funding was asked for its development.
The existing machinery and allied equipment of more than 55 years of age had become obsolete and needed urgent replacement. He also stated that revenues generated from the shipyard will go to government exchequer. He requested approval of the project at reviewed scope and cost and agreed to resolve the outstanding issues with the Planning Commission.