Poor port management causing huge losses to oil companies: OMAP

ISLAMABAD: The Oil Marketing Association of Pakistan (OMAP) on Thursday warned that poor planning in handling oil ships at the country’s ports is causing massive financial losses to the importing companies that are made to pay high demurrage fees.

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

These issues were raised in letters written by the OMAP to Minister of Maritime Affairs Ali Zaidi and Minister of Energy Hammad Azhar, following a study that was undertaken by the association that is the only recognized and legitimate DGTO-certified body representing the oil marketing sector.

Emphasizing the importance of efficient management of oil piers and jetties, the association in a statement reminded that Pakistan imports 70% of its motor spirit (MS), 50% of its high speed diesel (HSD), and approximately 90% of the crude needs.

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-utilized because of multiple planning and operational factors.

The study that involved vessels, which berthed at various ports in the country between March 1, 2020 and July 26, 2021, revealed that 450 vessels handled by the FOTCO and the KPT waited an average of nearly 5 days for berthing after issuance of the notice of readiness.

This delay cost the industry approximately Rs 7 billion ($45 million) in demurrage fees. The average waiting time was 4.17 days for all vessels – with 6.24 days at the FOTCO and 2.77 days at the KPT. Vessels carrying crude and jet fuel faced shorter delays of 1.34 days and 1.75 days respectively.

Ships bringing in high speed diesel and premium motor gasoline, meanwhile, had to face longer waits – 5.49 days and 5.41 days respectively. Similar variations were noted for ships chartered by different oil marketing companies.

The longest average waiting time was 8.56 days for the Byco Petroleum, while the shortest was for the PSO, whose cargo had to wait for 3.61 days. “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 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 private parties which spend millions of dollars per tanker on the product that they bring but also end up paying demurrages in billions of rupees for their efforts,” Dr Fazil said.

The OMAP proposed regular convening of an inter-ministerial meeting of the Petroleum Division, the Power Division and the Ports & Shipping Ministry to be attended by key personnel involved in the planning of oil and gas imports. This meeting, it suggested, should then feed the monthly product review meeting, co-chaired by the Petroleum Division and the OGRA that decide about meeting the requirement of various products.

Additionally, setting up of a separate panel of experts from oil, gas, power, ports & shipping was proposed, which could attend both meetings to share the experience as well as monitoring progress. The OMAP also raised concerns about the state of affairs at the Keamari Oil Installation Area (KOIA) which manages over 70% of the country’s petroleum product requirements including refined products, petrochemicals and crude oil. Most of these products are transported from the port through trucks with many having a carrying capacity of 50,000 liters.

The association said that the roads of the area, which bear a daily traffic of about 1000 tankers, are completely destroyed and full of big potholes and craters. “One can appreciate the dangerous condition and health and safety issues which drivers of these trucks loaded with highly explosive products face whilst circumnavigating these broken roads and potholes and saving their trucks from turning turtle. They are taking huge risk, not only to themselves but to all in the area (motorists, installation staff as well as pedestrians),” it said.

The OMAP regretted that neither the KPT nor the Sindh government is taking responsibility for the maintenance of roads which have been neglected as an “abandoned child”. The association drew the attention to existence of several unauthorized workshops in KOIA, which are engaged in fabrication and refurbishing of petroleum products. This, it said, is highly hazardous for the Oil Installation Area as hot work – gas welding, etc is involved.