Port Congestion is Causing Heavy Losses for Oil and Shipping Industries

Port congestion and infrastructure issues are causing delays and financial losses for the shipping industry.

The government’s failure to address port disruptions has resulted in heavy fines that are eventually passed onto consumers, the official told a national daily. Moreover, the delays are causing supply chain problems that permeate through the entire economy.

He added that two ministries have been directed to implement standard operating procedures (SOPs) to resolve port disruption problems. However, little progress has been made so far.

The two ports in Karachi, Karachi Port Trust (KPT) and Fauji Oil Terminal (Fotco), manage petroleum product imports. KPT primarily deals with crude oil and petrol, while diesel and furnace oil are handled at Fotco.

Fotco can manage 14 to 15 ships in a month, which means it can only handle diesel and petrol cargoes. However, six to seven cargoes of furnace oil per month arrive at the port in the summer. Due to the port’s capacity limitations, the petroleum division is compelled to intervene and prioritize certain cargoes over others to ensure supply across the country.

According to the official, frequent interventions by the petroleum division have led to confusion and miscommunication issues with the maritime affairs ministry. Both ministries have raised concerns that the other’s prioritization of certain products and companies is causing port disruptions and supply chain problems.

Meanwhile, the Directorate General of Oil and Gas Regulatory Authority (Ogra) submitted a working paper submitted to the ministers for energy and maritime affairs in which it highlighted challenges the oil industry was facing due to delays in discharging petroleum products at ports.

In a working paper, the petroleum division made several suggestions to resolve port congestion problems. For example, it suggested that Fotco be converted to a purely finished products and fuels jetty. Meanwhile, condensate and naphtha export vessels should be shifted to Keamari port. It also proposed that a dedicated tanker discharge line from the Fotco jetty to the White Oil Pipeline (WOP) should be built to separate the unloading of petrol and diesel cargoes.

According to the oil industry, Fotco and KPT unloaded over 450 ships with a delay of an average of at least five days. As a result, oil companies had to pay about $45 million in demurrage last fiscal year.


Via Dawn