ISLAMABAD, Sept 10: The Board of Directors of the World Bank has endorsed $115.8 million Karachi Port Improvement Project, the financing will help reconstruct the country’s largest port to relieve the capacity constraints and strengthen shipping revenues.

Port improvement is a key component of the National Trade Corridor Improvement Programme (NTCIP), which was initiated by the government in 2005.

The financing is an IBRD flexible loan with fixed-spread, commitment-linked repayment schedule, level repayments, and 28 years maturity including a grace period of 7.5 years.

The World Bank has said that a number of operations have been initiated at the Karachi port to improve overall efficiency but several areas still requiring reform.

“Improving the efficiency of Pakistan’s trade corridors is a key element of the bank’s support to trade facilitation in the country,” said Rachid Benmessaoud, World Bank Country Director for Pakistan.

“Karachi Port, as the main international gateway, provides a key link to international markets and through efficient and cost-effective operations can significantly reduce the cost of doing business in Pakistan,” he added.

This operation will support both the provision of infrastructure capable of handling modern bulk cargo vessels and the institutional support required to promote international best practice in the management of port facilities.”

The Karachi Port Trust (KPT) currently has a substantial development programme, but needs additional financial assistance to improve utilisation of its available resources.

Aspects of the development programme include, deepening the channel and harbour to accommodate mother ships, reconstructing old and shallow berths, and investing in cross harbour bridges and cargo villages.

Finance from the Karachi Port Improvement Project will be used for the reconstruction of old and shallow berths which will reduce ship waiting times and provide the necessary capacity at the Port for long term growth. Continued focus on the operational aspects of the port will ensure its long term sustainability and competitiveness both within Pakistan and regionally.

The World Bank said that Karachi port has witnessed growth in cargo volumes, and in the fiscal year 2008-09, the limitation in KPT’s general and bulk cargo capacity delayed wheat imports which had serious economic and social repercussions for the country.

“The berths at the Karachi port are too shallow and ill-equipped to handle heavy cargo,” said Simon David Ellis, World Bank Task Team Leader and Senior Transport Economist.

“Reconstruction of the failed berths is necessary to increase the effectiveness and efficiency of port operations, as well as to enhance its environmental sustainability.”The bank has been active in the port of Karachi since 1955. It has supported six projects to date with the last being the Karachi Port Modernisation project during 1991-1998.

With today’s approval of the Karachi Port Improvement Project, the World Bank hopes to achieve both short and long term goals to ensure a stronger transport system for Pakistan.