Oil imports: PNSC refuses vessels at old freight rates

Seeks revision in rates, initially proposes 10% administration charges.

Our Correspondent June 02, 2015
The actual cost would be payable before the vessel started offloading the cargo at the Karachi Port under an interim arrangement. PHOTO: PNSC

ISLAMABAD: Pakistan National Shipping Corporation (PNSC) has refused to provide vessels for the import of petroleum products at freight rates agreed in the contract with Pakistan State Oil (PSO) and has proposed 10% administration charges under a temporary arrangement for June.

In a letter to the PSO managing director, PNSC Chairman Arif Elahi said the national shipping line would provide vessels at actual cost including freight, demurrage and other charges and collect only 10% as administration charges. The actual cost would be payable before the vessel started offloading the cargo at the Karachi Port under an interim arrangement, he said.

“As a first step, as discussed and agreed in a meeting with the petroleum secretary and the ports and shipping secretary on above terms, PNSC nominated MT (motor tanker) Tonna with estimated time of arrival at the loading port is June 3,” he said in the letter.

Earlier, a news report revealed that the country could face a severe shortage of petrol and furnace oil as PNSC had delayed the provision of vessels for oil imports.

Officials suggest that in the face of this letter, the Contract of Affreightment between PSO and PNSC has become null and void. No organisation, especially PNSC, can revise the rates unilaterally and demand an increase in freight margins without any consultation or discussion between the two sides, they say.

They pointed out that PSO’s Acting Managing Director Shahid Islam was not part of the meeting referred to in the letter.

“It is utterly strange how such a major decision on the increase in freight margins could be discussed and taken in absence of the PSO chief,” an official remarked.

In the communication, the PNSC chairman referred to a high-level meeting on April 14, headed jointly by the petroleum secretary and the ports and shipping secretary, which decided that officials of PSO and PNSC would agree on a mechanism and revised freight rates, but the rate revision was still pending.

He said the body constituted by the Economic Coordination Committee (ECC), headed by the finance secretary, in a meeting held on April 15 was also of the view that PSO and PNSC should resolve the rate revision and freight payment issues, but nothing had happened yet.

“PNSC incurred huge losses on PSO shipments due to no revision in freight rates. Due to audit objection, PNSC is unable to provide vessels to PSO on the 2013 freight rates,” the PNSC chairman declared.

Published in The Express Tribune, June 2nd, 2015.

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