KARACHI: Even after the release of Pakistan National Shipping Corporation’s (PNSC) arrested vessel MV Hyderabad by the South African authorities in Port Elizabeth last month, the threat of recurrence of such an embarrassing incident still looms large, according to sources.

The MV Hyderabad was arrested on Aug 19 on court orders when it was on way to the West African port of Pedro but had to stop over for refuelling at the South African port. The court had issued a decree in a freight default case against the Pakistan Steel Mills (PSM).

The sources told Dawn on Friday that the vessel was released in the last week of August after PNSC arranged an international surety and also furnished a guarantee from the government of Pakistan.

They said that despite the measures that had to be taken and after huge costs had been incurred in making payments to meet the daily expenses, including port charges, during the detention period of about nine days, the PNSC vessels were still not safe as they could be arrested at any port having laws to arrest ships and boats.

South African authorities have released MV Hyderabad

A Singaporean shipping company had filed a case against the PSM over its failure to pay freight against the haulage of iron and ore in 2008. Because, according to the court, the claim of the shipping company will be valid till such time as the payments are made or the issue is resolved amicably, the arrest of PNSC ships cannot be ruled out.

The PSM had engaged the shipping company in 2008 for the haulage of one million tonnes of iron/ore from South Africa but could not make freight payments of $7.5 million after the company had carried 0.8 million tonnes in four trips out of the six expected trips.

The court not only ruled that $7.5m be paid towards freight but also ordered the PSM to pay $6.5m in interest to the shipping company, taking the total claim of the Singaporean company to $14m.

According to the sources, the PNSC has given an international surety against MV Hyderabad’s original cost of $5m on paying hefty commission at the rate of 2.5 per cent along with Pakistan government’s guarantee on the total decree amount of $14m.

They said that the PNSC had incurred a cost of around $0.3m towards daily costs during the detention period and also paid about $40,000 to lawyers for getting the vessel released.

According to the sources, the Singaporean company sought a sovereign guarantee from the Pakistan government because the PSM, which is the actual defaulter in the case, doesn’t have the capacity to make the payments.

Answering a question, a PNSC official said that since the arrest of MV Hyderabad was not a marine-related issue, the insurance cover under the Protective and Indemnity Club could not be evoked.

Published in Dawn, September 3rd, 2016