Islamabad: The Pakistan National Shipping Corporation (PNSC) has revealed plans to purchase new Aframax vessels by 2028 as part of its strategy to modernize its fleet and enhance maritime capabilities, according to a report by JS Global.
During a company press conference, PNSC highlighted its FY24 financial performance and future outlook. The company reported a consolidated total of Rs 46 billion for FY24, which is a 15 percent decline year-on-year. This decline was primarily due to a 48 percent year-on-year decline in the dry freight segment due to lower average charter rates. In addition, slot rentals declined by 33 percent year-on-year as government shipments dwindled, with no business being received from the Commercial Corporation of Pakistan (TCP), which contributed Rs2.8 billion in the previous fiscal year. Meanwhile, liquid cargo revenue remained stable at Rs 40 billion.
Other revenues declined by 17 per cent year-on-year, impacted by the absence of gains on vessel disposal (Rs 3.3 billion in FY23) and lack of exchange gains amid a stable currency. However, PNSC management expects demand to improve in the current year, driven by the dry bulk sector and new bulk orders from the government.
The company plans to replace four of its five Aframax vessels, which are 18 to 19 years old. International tenders were invited, with bids received from shipyards in the UK, China and other countries. The contract is expected to be completed by the end of 2024. Under the State-Owned Enterprises Act 2023, PNSC can now align its procurement policies with international shipping industry standards, pending approval by the Federal Cabinet.
The new ships will meet IMO emissions reduction targets, including a 20 percent reduction by 2030, 70 percent reduction by 2040, and net zero emissions by 2050. These ships will have internally encapsulated tanks, allowing them to carry both Dirty and polluted. Clean fluids, thus enhancing market acceptance.
PNSC intends to finance the purchases through a mix of equity and debt, with 80 percent of the cost expected to be financed with debt. The estimated cost of new or under construction Aframax tankers is $85 million each, while new contracts range from $73 million to $75 million. Regulatory requirements restrict the acquisition of vessels older than five years. Currently, the price of used Aframax vessels is around $12 million, and the scrap value is between $7 and $10 million.
The company also aims to maintain drydock operations, with five vessels scheduled for maintenance. One of the tankers will be out of service for 40 to 45 days, while four dry bulk vessels will be dry docked for 25 to 35 days.
The current fleet consists of Aframax vessels that are 18-19 years old, LR-1s that are 12 years old, and dry bulk carriers that are 16-17 years old. Charter rates range from US$30,000 to US$35,000 per day for Aframax tankers, US$10,000 to US$11,000 per ton/day for LR-1 tankers, and US$11,000 per day for bulk carriers.
The future outlook for Aframax operations remains optimistic, supported by continued demand for refined product shipments. The dry bulk sector has exceeded budgeted targets due to record exports of iron ore, coal and small bulk commodities. Demand for tankers is expected to grow, driven by limited tonnage supply, creating favorable conditions for the shipping market over the next three years.
In addition, PNSC is reportedly in discussions with a Chinese company involved in the Reko Diq mining project.