Pakistan to waive demurrage charges as containers clog ports during lockdown

A Pakistani Naval personnel stands guard beside a ship carrying containers during the opening of a trade project in Gwadar port, some 700 kms west of Karachi on November 13, 2016. (AFP)
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Updated 07 April 2020

Pakistan to waive demurrage charges as containers clog ports during lockdown

  • Around 20,000 containers are stuck at the two Karachi ports due to virus lockdown, official says
  • Importers are using containers and terminals as storage areas after closure of factories and retail outlets

KARACHI: Pakistan has decided to waive port charges to clear the containers piling up at Karachi seaports after the country entered strict lockdown amid rising coronavirus cases, maritime ministry official said Monday.
“The government has decided to waive demurrage and detention charges which will now be borne by national exchequer,” Mahmood Moulvi, adviser to ministry of maritime affairs, told Arab News. “The decision would be notified in the next few days,” he added. 
A large number of imported consignments are piling up at port terminals due to absence of transportation.
“Around 20, 000 containers with import and export goods are estimated to be stuck at the ports due to lockdown,” said Khurram Ijaz, vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

“Many traders may go bankrupt if the government did not intervene in time,” Ijaz said, adding that relevant authorities including the ministry of ports and shipping and Karachi Port Trust (KPT) are silent as “no official decision has been announced regarding port charges.”
Pakistan’s port city of Karachi which houses two main harbors — the Karachi Port and Port Qasim — is almost under complete lockdown since March 23 following the virus outbreak, which has infected more than 3,500 people and claimed over 52 lives. 
The lockdown and restriction on mass movement has resulted in imported raw materials and finished goods to pile up at warehouses and factory outlets that has compounded the situation at Karachi’s ports, which handle an average 1500 to 2000 containers on a daily basis. 

Stakeholders say the importers are unable to move the containers as warehouses and factories have no space to accommodate new cargoes though the ports operate as per routine.

“Importers are not lifting the cargoes and now the pressure is mounting on the container terminals,” Aasim Siddiqui, Chairman of All Pakistan Shipping Association (APSA) told Arab News. “They want the demurrage and detention charges waived and are using containers and terminals as storage area.” 

Exporters are also adversely affected by the lockdown as most of the export orders are either being canceled or pushed for postponement.
“Some buyers are asking for shipment of goods but we don’t have the orders ready due to closure of factories,” Shabbir Ahmed, chairman of Bedware Exporters Association (BEA), a major component of textile exporters, told Arab News. “The containers cannot be loaded and unloaded as no labor is available due to lockdown,” he added.

Pakistan expects the global economic meltdown and trade tensions to further impact the country’s economy which is now projected to grow at 2.6 percent during the current fiscal year, according to ministry of planning. 

Pakistan plans to raise $1.5bln in Eurobonds, officials say

Updated 29 May 2020

Pakistan plans to raise $1.5bln in Eurobonds, officials say

  • The country’s central bank recently cut its policy rate drastically to cope with the coronavirus
  • The Pakistani economy is likely to contract -1% to -1.5% in the current financial year, according to the IMF

ISLAMABAD: Pakistan plans to raise $1.5 billion through Eurobonds to bridge a balance of payments gap for the financial year beginning July 1, two government officials said on Friday.
With the country’s fiscal deficit likely to rise as high as 9.4% and a shortfall in revenues due to COVID-19 economic losses, Pakistan desperately needs funds to stave off balance of payment pressure caused by dwindling foreign reserves and a current account deficit.
“Pakistan plans to launch these bonds in next fiscal year. Exact dates and amount can’t be confirmed at the moment as it depends on market situation,” an official at the finance ministry told Reuters.
Another official at Pakistan’s ministry of economic affairs said Pakistan wants to raise an estimate $1.5 billion. Both officials requested anonymity.
The Pakistani economy is likely to contract -1% to -1.5% in the current financial year, which ends in just over a month, on June 30, according to the International Monetary Fund and the country’s finance ministry.
The plan is subject to approval from Pakistan’s cabinet. Its terms would be made public at launching.
In the current financial year, Pakistan attracted over $4.4 billion in carry-trade funds through government financial instruments, including treasury bills and bonds, offering rates as high as 13%.
Pakistan’s central bank recently cut its policy rate drastically to cope with the coronavirus. Over $4.1 billion has flowed out of government instruments to date as the effects of the global pandemic hit markets.
Pakistan is also expecting more multilateral and bilateral external inflows in next financial year, including the IMF, as well as debt relief from G20 countries.
Moody’s has placed Pakistan’s local and foreign currency long-term issuer B3 ratings under review for downgrade, citing a potential default on private sector debt.