ISLAMABAD, Jan 21: The World Bank has asked the government to break the monopoly of the Pakistan National Shipping Corporation (PNSC) in cargo services, and speed up its privatisation to save over $2 billion in foreign exchange and encourage private shipping lines, a senior official told Dawn on Sunday.

The World Bank has made a strong recommendation for the ‘permanent removal of all reservation of cargoes for PNSC, especially government cargoes; and all bulks, including those for government agencies (iron ore, coal, wheat, fertilizers etc) and the final abolition of the waiver system’.

This is part of a plan prepared by the World Bank for the restructuring of Pakistan’s shipping industry prepared at the request of Prime Minister Shaukat Aziz under $8-10s billion umbrella programme called the National Trade Corridor.

The main benefit would be reduced foreign exchange payments to foreign shipping lines, probably amounting to over $2 billion per annum," said a World Bank report.

However, as a large part of vessel costs, including fuel, vessels and spare parts etc, are incurred in foreign exchange, so the net foreign exchange saving would be much less, it added.

It has also advised the government to strongly lobby abroad to have visa problems for Pakistani sailors removed because they used to be major foreign exchange earners abroad. Pakistan has over 20,000 trained seafarers and most of them were employed abroad on foreign ships. The PNSC currently employs only about 600 seafarers.Before the 9/11 attacks on the US landmarks, about 90 per cent of Pakistani seafarers were in employment, but now only 25 per cent are employed. The main reasons are problems in obtaining visas and a condition imposed by the US Homeland Security Department for the need for security guards at ports where Pakistani sailors land.

Pakistan considers this unfair because there have been no cases of terrorism amongst sailors, and repeated requests to the US by Pakistani authorities for the removal of these conditions have not been entertained.

The bank said the Pakistani freight rates were broadly in line with its international competitors and transit times from Pakistan are also satisfactory but no Pakistani shipping lines provided container services. "There is, however, the danger that limited port drafts may leave Pakistan as the poor relation in regional shipping services, with larger and more economic ships calling at Indian ports but not at those of Pakistan".

The report said the government should take steps to reduce freight rates for both container and non-container cargoes to dredge entrance channels and berths to allow larger vessels and thus obtain the economies of vessel size. “The current channel depths at both Karachi and Port Qasim are well below the Panamax depth which is now the standard at many major international ports. The diseconomies of limited ship size are a direct cost to the economy and will become increasingly serious as the size of container vessels rise," it said.

The Bank said the protection provided to the PNSC should be dismantled immediately. The PNSC is the only company with Pakistani registered ships. It has 14 ships and four of them are oil tankers and the remainder old, outdated general cargo ships. It has no container ships.

Twenty-five years ago, the PNSC had a fleet of 50 ships but it lost most of its liner cargo by late 1990s. The PNSC, says the World Bank, has prevented the growth of private shipping in Pakistan.