Following Supreme Court’s ban on unloading of thermal coal at Karachi port, Pakistan’s thermal coal importers will now have to discharge all of their cargoes at Port Qasim from August.
According to a section of the media, notice has been served to Karachi Port Trust directing that vessels whose bills of lading have declared Karachi as their port of discharge will be allowed to use to port till the end of July and after all vessels will have to use Port Qasim to discharge cargoes.
Supreme Court (SC) in its judgement on June 20, cited environment pollution and health issues as reasons behind the new ruling. “The Supreme Court has ordered to shift the offloading and handling of imported coal from Karachi port to Port Qasim and directed to make necessary arrangements in six weeks”.
Many term SC’s decision as a victory for the environment and the lawsuit, that was filed by environmentalists, highlighted that the storage and transport of coal at Karachi port violated local health and safety regulations.
From August, all coal imports into Pakistan will be received at Port Qasim, which has three dedicated coal terminals namely Pakistan International Bulk Terminal or PIBT, PQEPC and MW IV. PIBT, out of the three, is considered to have the necessary requisites for handling dirty cargoes in an environmentally friendly manner.
The terminal has the capacity to handle up to 12 million metric tonnes (MTT) a year of coal and 4 MMT a year of cement and clinker.
“Importers that had been using Karachi port will likely incur higher port costs at Port Qasim with average handling costs at $10-$14/mt compared with just $4/mt at Karachi,” a trade source said.
The higher handling charges at Port Qasim was cited as a reason why many importers prefer using Karachi as the discharge port despite ocean freight into PIBT being lower by 75 cents/mt to $1/mt.
“Although PIBT is more advanced and the [unloading rate] is good, the handling charges are high. Which is why no one wants to use it,” a ship operator said.
Meanwhile, sources within the shipping industry say that the lack of availability of storage space at Port Qasim is an important bottleneck.
“As per the Port Qasim Authority chairman, they will take coal vessels till they run out of storage space. Once stockpiles are full, vessels would have to wait at Port Qasim’s outer anchorage,” a section of the media reported.
Pakistan’s coal imports have been rising sharply over the last few years with the demand coming from power utilities as well as the country’s fast-growing cement industry.
Industry estimates have put Pakistan’s coal imports at 11.2 million mt in 2017, up sharply from 3.42 million mt in 2013.
Given the significant investments in coal-fired power plants under the China-Pakistan Economic Corridor plan, imports are expected to rise to 40 million mt by 2025, according to industry experts.