Delayed berthing of oil vessels cause Rs7 billion loss in demurrage fees

Web DeskWeb Editor

16th Sep, 2021. 07:23 pm

Overall, the Petroleum Division would spend Rs3.249 billion on 13 ongoing and new projects during the year 2021/22. Photo: File

KARACHI: The delayed berthing of oil products vessels caused a loss of Rs7 billion ($45 million) in demurrage fees during March 2020 to July 2021, the Oil Marketing Association of Pakistan (OMAP) noted.

“Data involving vessels, which berthed at the various ports in the country between March 1, 2020 to July 26, 2021 showed that 450 vessels handled by Fotco and KPT waited an average of nearly five days for berthing after the issuance of “Notice of Readiness”.

This delay costs the industry approximately Rs7 billion ($45 million) in demurrage fees,” OMAP noted in letters to Minister of Maritime Affairs Ali Zaidi and Minister of Energy Hammad Azhar following a study that was undertaken by the association.

Pakistan imports 70 per cent of its motor spirit (MS), 50 per cent of its high-speed diesel (HSD) and approximately 90 per cent of the crude requirements.

These imports are done through Keamari, Karachi Port Trust (KPT), Fotco Terminal Port Qasim, and Byco’s Single Point Mooring.

Most of these facilities are under-utilised because of multiple planning and operational factors.

“The results are an eye-opener in themselves and point to the need for urgent action to avoid future problems and financial losses,” OMAP chief technical advisor Dr Ilyas Fazil said.

“The main issue; therefore, is [the] lack of planning, not learning from our mistakes, spreading of responsibilities to multiple parties, and preferential treatment given to certain entities at the expense of the private parties who also spend millions of dollars/tanker on the product that they bring but also end up paying demurrages in billions of rupees for their efforts,” Dr Fazil said.

OMAP also pointed towards the dilapidated condition of the paraphernalia around the ports, particularly the state of roads, saying it was not only a potential safety hazard, but could also cause supply disruptions.

OMAP regretted that neither the KPT nor the Sindh government was taking responsibility for the maintenance of the roads.

OMAP proposed better coordination between the ministries and divisions, which decide about meeting the requirements of various products. Additionally, setting up of a separate panel of experts from oil, gas, power, and ports and shipping to assist the authorities in planning oil and gas.

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