KARACHI: Pakistan State Oil (PSO) and Pakistan National Shipping Corporation (PNSC), the nation’s flagship oil marketing and shipping companies respectively, solidified their partnership by signing a contract of affreightment (COA) on Friday at the PNSC building.
COA is the expression employed to describe a contract between a ship-owner and a charterer, by which the ship-owner agrees to carry goods for the charterer or give the charterer to use the ship for transport on a specified voyage.
This auspicious occasion of signing the agreement was jointly led by PNSC Chairman Vice Admiral Saleem Ahmed Meenai and PSO CEO Naeem Yahya Mir.
A successful test shipment of 71,500 tons of furnace oil had already been brought into Pakistan through a PNSC vessel. Under the said agreement, in effect from January 1, 2013, PNSC will be arranging shipment initially for about three million tons per annum on its ships which will gradually increase to cater for the entire import of PSO.
Through this agreement, the national oil marketing company will be able to minimise dependence on foreign supply lines and reduce its transportation costs by paying in Pakistani rupees translating into savings worth Rs2.5 billion annually to the national exchequer. The agreement will also strengthen the flagship carrier’s business and will help them further consolidate their fleet of vessels.
Additionally, this arrangement will have a positive impact on the national economy by increasing employment opportunities for sailors and improve the skill sets of the workforce in the oil shipping business.
Speaking on the occasion, both the PSO chief and PNSC chairman said that it was a historical day, as it marked the first occasion that such a mutually beneficial agreement had been formalised between two significant national companies. They also remarked that through this arrangement, Pakistan’s reliance on domestic sources will increase, resulting in savings of precious foreign reserves as well as enhancement in operating efficiency.
Published in The Express Tribune, October 6th, 2012.
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This is captive business and all will depend on the negociated freight rates. It sounds like PSO will be subsidising PNSC for the purchase of vessels, which appears to be a good idea.