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ISLAMABAD, May 14: The government has allowed Karachi Shipyard and Engineering Works (KSEW) to launch its Rs3 billion modernisation programme to regain the business it had lost because of its "dilapidated”.

Official sources told Dawn on Monday that the ministry of defence had proposed the modernisation and up-gradation plan for KSEW to help fetch business amounting to Rs1.5 billion along with foreign exchange earnings of about $7.28 million annually.

The plan envisages enhancement of existing capacity of ship repair at KSEW by installation of a "ship lift system" and replacing old and obsolete machines with state-of-the-art new machines.

The new system will be capable of lifting vessels up to 4,000 tons and capability to repair 10 to 13 ships at a time. At present KSEW has two dry docks of 26,000 DWT tons and 18,000 DWT tons constructed in 1956 and 1970, having average capacity to repair 16 ships per annum. This will be increased to 39 ships per annum in addition to the existing capacity with installation of new ship-lift-system.

The scope of work will include Installation of ship-lift-system, transfer system, up-gradation of existing technology, marine civil works and procurement of new equipment.

The KSEW is the only shipyard in the country, which possesses comprehensive ship repair infrastructure. Before this facility was set up, Pakistani ships had to go to Malta for underwater repairs. Since its inception these limited facilities were fully utilised for domestic and foreign ship repairs.

However, these facilities have not been upgraded since their initial installation in 1957. Hence the demand and requirement is much more than the present capacity. Sources said that due to gradual increase in naval and commercial fleet and domestic ports the existing docks facilities have become inadequate.

This has created dual negative effects i.e. ships are not getting repairs in time and on the other hand losing business to the tune of Rs1.5 billion per annum. At present, it is not possible to entertain foreign ships’ clientele, although the sea trade at Pakistani ports is increasing at a brisk rate since Pakistan Navy (PN), Pakistan National Shipping Corporation (PNSC), Port Qasim Authority (PQA), Karachi Port Trust (KPT), Gwadar Port and Maritime Security Agency (MSA) have plans to rehabilitate and increase their existing fleets.

The ship owners are forced either to wait for prolonged periods or are constrained to send their ships to Dubai or elsewhere for repairs. Even the foreign fishing trawlers operating in Pakistani waters are forced to go to Dubai/Singapore for dry docking and repairs.At present location of KSEW has limitation of depth of water channel. To address this problem, KSEW will request KPT for allocation of requisite space at the deep draught container terminal and the cargo village being planned by KPT.

The project for overall revamping of shipyard costing Rs1.9 billion was first considered by the CDWP in its meeting held on February 18 2003. The CDWP decided to return the PC-I to the sponsoring agency with the direction that they should engage a renowned consultant to undertake a feasibility study to justify rehabilitation of KSEW.

Although the CDWP has approved the project, it observed that instead of undertaking feasibility study through engaging renowned consultants, the sponsoring agency, after more than 5 years, have come up with a PC-I costing Rs3 billion (53 per cent higher than the previous cost) with different nomenclature albeit the scope of work is similar (and lesser) to the BMR programme of the KSEW.

The sponsoring agency has been asked to clarify the position along with progress made so far as a follow-up of the CDWP decision.

It is stated in the PC-I that with the existing 2 dry docks, KSEW is able to repair 16 ships per year at an average rate. In this behalf, the sponsoring agency was asked to provide list of ships/vessels (including foreign and local) repaired/constructed along with tonnage during the last 5 years period. Inventory of major machinery resting with the KSEW should also be provided.

According to the PC-I, Rs153 million has been indicated as annual operating cost after completion of the project. The sponsoring agency was asked to indicate the source of funding to meet these expenses.