KARACHI, July 12: The World Bank has suggested privatising the state-owned Pakistan National Shipping Corporation (PNSC) to increase participation of private sector in Pakistan-owned vessels.

The bank believes that removal of condition under which all types of government cargo is handled by the PNSC will create space for the private sector operations. The reassurance by the government that it would continue with the current set of tax incentives over a specified time period would also encourage private sector to register under Pakistan flag.

The World Bank in its report ‘Transport competitiveness in Pakistan,’ pointed out that currently besides PNSC international shipping companies are catering to Pakistan’s requirements. The report has suggested that the PNSC be privatised and tax concessions given under the shipping policy should continue.

However, the World Bank feels that it will take some time for the private sector to regain confidence. The government needs to take confidence building measures by reassuring prospective ship-owners that it is committed to facilitate private participation in the sector.

The report has suggested that reservations of all government cargo (including liquefied cargo) for PNSC has discouraged private sector. This condition need to be removed and contracts for handling all such cargo should be made on the basis of merit (time and freight rates). This could go a long way in attracting private sector in this key sector. These measures by strengthening the shipping sector can reduce foreign exchange bill of the country on freight.

With the growth of private shipping industry, employment opportunities for seafarers and other shore employees would open up. It would improve Pakistan’s position in the maritime nations of the world.

Presently the PNSC owns 10 cargo vessels and four liquid bulk carriers (tankers), which were built in 1979-80 and had a total of 645,000DWT (dead weight tonnage). However, most of these vessels would have to be scraped by 2007-2008 as they are aging.

Under the international convention ships over 25 years are not allowed to operate and tankers are allowed with a maximum age of 20 years. Many Western ports have already imposed restriction on old ships and do not allow them berths at their ports and even detain them in case they report at their ports.

Shipping circles said that many PNSC ships do not report at European and other Western countries to avoid being detained or caught at these ports.

Barring bulk carrier ‘Kaghan’, which is of post-Panamax category, almost all other cargo carriers owned by PNSC would have to be scraped by 2007 or 2008. Therefore, shipping experts suggested that if the government wants to encourage private sector in shipping industry as per the World Bank advice it would be better to take a decision at this stage because after inducting more vessels it will become difficult to make such a decision.

However, other vessels owned by the PNSC, including tankers could stay in operation up to 2010, subject to International Maritime Organisation’s (IMO) convention of Condition Assessment Scheme (CAS).