Millions paid for release of ships

Pakistan has spent millions of rupees on litigation for the release of Pakistan National Shipping Corporation (PNSC) vessels detained in South Africa due to the alleged outstanding financial claims against Pakistan Steel Mills (PSM).

To clear arrears of the litigation process, the government has recently approved the payment of Rs330.526 million.

The Ministry of Maritime Affairs informed the Economic Coordination Committee (ECC) of the cabinet, in a recent meeting, that PNSC, in a communication on July 12, 2025, had conveyed that an additional insurance premium of $290,200 was due as of July 2025.

PNSC made a total expenditure of Rs479.326 million to pay legal costs for the release of its vessels and to pay premium related to the surety of $11.6 million deposited in a South African court. Had the case been decided against PSM, Coniston Ltd would have seized PNSC's surety.

It was highlighted that PNSC was regularly paying the premium on the insurance guarantee. Since the last reimbursement of Rs149 million, PNSC has made an additional payment of Rs330.526 million.

The Ministry of Maritime Affairs said that PNSC was a statutory body governed under the Pakistan National Shipping Corporation Ordinance 1979. The government holds 87.35% shares in the company.

Vessels MV Chitral and MV Hyderabad of PNSC were detained by the South African court on the application of Coniston Ltd under Section 53 of the Admiralty Jurisdiction Regulation of South Africa. The ships were arrested because Coniston had outstanding claims against PSM. Subsequently, the vessels were released when PNSC provided security amount under the government of Pakistan's assurance.

The Ministry of Maritime Affairs recalled that the Finance Division, in March 2017, had conveyed government assurance to indemnify PNSC against the security amount in case of an adverse order against PSM. The ministry said that they submitted a summary to the ECC on August 30, 2017 for confirmation of the Finance Division's decision to indemnify PNSC for the guarantee placed and the cost incurred for the release of its vessels in South Africa on account of alleged claim of Coniston against PSM.

The ECC, while endorsing the decision, directed on September 14, 2017 to obtain legal advice on protecting the assets of PNSC.

The Ministry of Maritime Affairs shared that the ECC was approached again through a summary on February 6, 2020. The ECC, while considering the summary in its meeting held on February 19, 2020, directed the Ministry of Maritime Affairs, the Ministry of Industries and the Attorney General office to review the court order and recommend a way forward with viable proposals, besides reimbursement of Rs149 million to PNSC for the next financial year. Subsequently, the Finance Division reimbursed Rs149 million.

The Ministry of Maritime Affairs apprised the forum that, on the recommendations of the Attorney General office, the prime minister constituted a negotiation committee to engage with Coniston and chalk out an amicable way forward to settle the PSM liability dispute. The committee held multiple meetings and recommended that the Ministry of Maritime Affairs would prepare a summary for seeking approval for negotiations with the claimants, in respect of the counter-offer of $6-11 million against the claim of $15 million as a full and final settlement, which were approved by the PM.

The Ministry of Maritime Affairs added that following the committee's recommendations, the summary prepared for the ECC was sent to the Cabinet Division on January 10, 2025. The Cabinet Division called for obtaining comments from the Ministry of Industries, the Ministry of Law and the Ministry of Finance.

The Finance Division endorsed the draft and agreed to provide a technical supplementary grant of Rs330.526 million to PNSC from the savings available with the division.

The Ministry of Maritime Affairs pointed out that the summary was resubmitted to the Cabinet Division on July 4, 2025 for onward submission to the ECC. The Cabinet Division, however, underscored that fresh views should be sought from the Finance Division.

The Finance Division advised the Ministry of Maritime Affairs to meet the expenditure from its budgetary allocation. However, in case an exemption was required or in case of any shortfall, the division would assist the ministry.

Keeping in view the public importance and sensitivity of the matter, it was appropriate to take up the issue with the ECC for consideration of the recommendations of the committee constituted by the PM. Based on the recommendations, the Ministry of Maritime Affairs proposed that funds be arranged in the fourth quarter of the current fiscal year.

The ECC considered the summary titled "Arrest of Pakistan National Shipping Corporation Ships in South Africa on Account of Alleged Claims of Coniston against Pakistan Steel Mills" and approved the proposals.

It directed that Rs330.626 million shall be released by the Finance Division for the Ministry of Maritime Affairs as a technical supplementary grant in the fourth quarter.