WB supports Karachi Port reconstruction

KARACHI: The World Bank’s Board of Directors on Thursday endorsed the $115.8 million Karachi Port Improvement Project. The financing will help reconstruct the country’s largest port to ease capacity constraints and strengthen shipping revenues for the economy.

“Improving the efficiency of Pakistan’s trade corridors is a key element of the Bank’s support to trade facilitation in the country,” said Rachid Benmessaoud, World Bank country director for Pakistan, according to a press statement released on the Bank’s website.

“Karachi Port, as the main international gateway, provides a key link to international markets and through efficient and cost-effective operations can significantly reduce the cost of doing business. This operation will support both the provision of infrastructure capable of handling modern bulk cargo vessels and the institutional support required to promote international best practices in the management of port facilities,” he added.

This is an International Bank for Reconstruction and Development’s (IBRD) flexible loan with a fixed-spread, commitment-linked repayment schedule and 28 years maturity including a grace period of seven and a half years.

“Berths at the Karachi Port are too shallow and ill-equipped to handle heavy cargo,” said Simon David Ellis, World Bank task team leader and senior transport economist.

“Reconstruction of the berths is necessary to increase the effectiveness and efficiency of port operations, as well as to enhance its environmental sustainability.”

The Karachi Port Trust (KPT) currently has a substantial development programme, but needs additional financial assistance to improve utilisation of available resources.

The development programme includes deepening the channel and harbour to accommodate large ships, reconstructing old and shallow berths and investing in cross-harbour bridges and cargo villages.

The reconstruction of old and shallow berths will reduce ship waiting times and provide necessary capacity at the port for long-term growth. Continued focus on the operational aspects of the port will ensure its long-term sustainability and competitiveness both locally and regionally.

The Karachi Port is a large entity that has seen growing cargo volumes. Already in 2008-09, the limitation in KPT’s general and bulk cargo capacity delayed wheat imports with serious economic and social repercussions for the government.

Port improvement is a key component of the National Trade Corridor Improvement Programme (NTCIP) which was initiated by the Government of Pakistan in 2005.

The Karachi Port handles approximately 60 per cent of Pakistan’s international trade volume, reaching 38.7 million tons in 2008-09. Although a number of operations have been initiated at the port to improve overall efficiency, there are still several important areas requiring reform.

Published in The Express Tribune, September 11^th, 2010.