January 8, 2003	Wednesday	Ziqa’ad 4, 1423

KARACHI, Jan 7: A shipment tender for transportation of 250,000 tons of iron ore from Indian port Goa to Karachi has become a controversial issue between the giant Pakistan Steel and shipping companies in which both sides are now ‘unofficially trading accusations’.

Shipping circles blame Pakistan Steel of blatantly flouting its own tender conditions by retendering haulage rates within the validity period of 30 days for the shipment of 0.250 million tons of iron ore from Indian port city of Goa, shipping sources said here on Friday.

“This deviation from tender conditions is going to inflict a loss of around Rs60 million (one million dollars) to the state owned steel mill as it will now have to pay higher rates for the haulage of same cargo from Goa,” a close observer of the whole tender game remarked.

Pakistan Steel accuses shipping companies of forming a cartel. A shipping company with low freight rates was forced to quit and accept confiscation of 100,000 dollars earnest money. Now, none of the shipping companies is ready to oblige Pakistan Steel to offer rates which were given by second and third highest in the first bid.

A tender was floated by Pakistan Steel inviting haulage rates on Nov 19, 2002, for the shipment of iron ore from the Goa port. It has to retender as the lowest bidder expressed its inability to perform at the rates offered by him, sources said.

According to details, the lowest bidder Mellum Maritime (a subsidiary of Gokal shipping) through their local agents Uniship offered lowest rate at $7.70 per ton, followed by Pan Ocean quoted $8.13 and Boble Chartering $8.18 per ton.

The tender document of PS had laid down a condition that the offer given by participants will remain valid for 30 working days from the date of opening of tender. This would mean that tender rates opened on Nov 19, 2002, would remain valid up to Dec 19, 2002.

However, the management of the steel mills did not comply with the condition set by itself in the tender went for retendering the bids on Dec 13, 2002, and kept the bid opening date unchanged for Dec 19, 2002.

When the offers were opened on Dec 19, 2002, the lowest rate quoted by a participant stood at $12 per ton for the haulage of iron ore from Goa. This increased the rate by $4.30 per ton from the last lowest rate of $7.70 opened on Nov 19, 2002.

But the matter did not end at this juncture and the PS management once again advertised for the tender seeking rates for the third time for the haulage of iron ore from Goa and fixed Jan 3, 2002 as the opening date.

Shipping sources said that on Friday, the lowest bid offered by Noble Chartering through its local agent Pacific Chartering at $11.25 per ton which again means, if awarded, that the steel mills would be paying $3.55 higher freight rates to the shippers against the original lowest rates it received on Nov 19, 2002.

The question is that as to why the PS felt appropriate to retender the freight rates when it already had better offer at $8.13 per ton given in tender opened on Nov 19, 2002. Even the third lowest at $8.18 given by Noble Chartering itself could have saved a huge amount of foreign exchange to be paid by the country in hard currency, shipping sources said.

On putting this question to a spokesman of the Pakistan Steel, he said, “undoubtedly the tender condition gives 30 working days for the validity of the tender but when a lowest bidder backed out and his earnest money $100,000 has been confiscated the PS approached the second and third lowest bidder but they too declined to accept the offer.”

Since the steel mills, he said, need the shipment for January and March, the management was left with no choice but to retender the freights rates but unfortunately the participants gave higher rates with lowest at $11.99 per ton, and this was also not acceptable to the PS. Consequently, PS decided to call bids for the third time on Jan 3, 2003, but again the shipping companies gave very high bid rates with lowest at $11.75 per ton.

Looking the development the management of the PS asked the bidders to lower their rates but up to Tuesday, January 7, 2003, there was no development on this front, the spokesman said.

The PS spokesman alleged that the shipping companies have formed a cartel to press their rates but he added if no choice was left with the steel mills it will go for spot chartering and engage one-by- one ship or single ship for the haulage of this cargo which will carry less freight cost.

He said the Pakistan Steel, having a production capacity of 1.1 million tons annually, imports around 1.8 millions of iron ore cargo for its plant because the raw material have a content of 60 to 65 per cent.

However, the tender issuing authority of the Pakistan Steel has asked the lowest bidder of Friday, January 3, 2003, to lower the rates as they have received another offer at $10.90 per ton through a fax message, a participant told the Dawn.