KARACHI, Aug 13: The Port Qasim Authority (PQA) will be called upon to pay $15-16 million penalty in case it fails to meet the deadline for increasing draft from 11 meters to 14 meters by 2010, ports and shipping sources said.

At the time of leasing out Qasim International Container Terminal (QICT) to Dubai Ports World (DPW) it was agreed that PQA would increase the draft to 14 meters by 2010 and the former will build another container terminal with an estimated investment of $250 million by the end of the same year.

The agreement has a penalty clause under which the PQA was bound to complete the work to increase the draft to 14 meters within the stipulated time failing which the port will have to pay $2 per Teu to the terminal operator.Presently, the PQA is handling around 0.8 million boxes per annum and this would mean that the port will have to pay a total penalty of $15 to $16 million to DPW in case it fails to meet the draft condition.

According to shipping circles the DPW has already invited international bids in Dubai for an additional terminal at QICT. However, PQA is dragging its feet to meet the condition of the agreement. The PQA consultants Louis Berger floated tenders for pre-qualification and five companies were offered to pick tender documents. But only two firms -Dredging International (DI) and China Harbour & Engineering Company (CHEC) submitted bids. The bids were opened on February 29, 2008 with CHEC quoting Rs10.2 billion and DI around Rs10.7 billion.

In the last meeting of the Central Development Working Party (CDWP) the PQA was asked to make proper presentation of the capital dredging. With callous negligence, time was allowed to pass till the bid date expired in end July 2008.

Now the bidders have been asked to extend the date for six months, which is likely to take the completion of the project well beyond 2010, therefore, penalties would have to be paid by the PQA.

Experts said that the PQA in order to maintain 11 meter draft is annually carrying out maintenance dredging of around five million cubic meter at an estimated cost of Rs1 billion.