The Pakistan National Shipping Corporation (PNSC) has announced plans to acquire new Aframax vessels as part of its fleet renewal strategy to bolster maritime capabilities and align with international emission reduction targets.
In a recent corporate briefing, PNSC discussed its financial performance for FY24, outlining future growth plans, including replacing aging vessels and meeting market demands.
Financial Performance Highlights
PNSC reported a consolidated revenue of Rs. 46 billion for FY24, marking a 15% year-on-year (YoY) decline. This drop was attributed to:
- A 48% YoY reduction in revenue from the dry cargo segment due to lower average charter rates.
- A 33% YoY decline in slot charter operations, driven by reduced government consignments and no business from the Trading Corporation of Pakistan (TCP), which had contributed Rs. 2.8 billion in FY23.
However, the liquid cargo segment maintained stable revenue of Rs. 40 billion.
Other income declined by 17% YoY, primarily due to the absence of vessel disposal gains (Rs. 3.3 billion in FY23) and stable currency exchange rates.
Aframax Fleet Renewal Plans
PNSC intends to replace four of its five Aframax vessels, which are currently 18–19 years old. The corporation has floated international tenders and received bids from shipyards in the UK, China, and other countries. Contract finalisation is expected by the end of CY24, subject to federal cabinet approval under the State-Owned Enterprises Act 2023.
The new vessels will meet the International Maritime Organization (IMO) emission reduction goals, including a 20% reduction by 2030, 70% by 2040, and achieving net-zero emissions by 2050. The tankers will also feature internally coated tanks, enabling them to transport both clean and dirty liquids, enhancing market competitiveness.
Financial Considerations and Procurement Details
PNSC plans to finance the acquisition through a mix of equity and debt, with 80% of the cost covered by debt. Estimated costs include:
- $85 million for early-delivery contracts for new Aframax tankers.
- $73–$75 million for new-built tankers.
Regulatory requirements prohibit the purchase of vessels older than five years. Currently, used Aframax vessels are priced at $12 million, with a scrap value of $7–10 million.
Current Fleet and Operations
PNSC’s fleet comprises:
- Aframax vessels (18–19 years old).
- LR-1 tankers (12 years old).
- Dry bulk carriers (16–17 years old).
Charter rates for PNSC vessels are as follows:
- Aframax tankers: $30,000–$35,000 per day.
- LR-1 tankers: $10,000–$11,000 per ton/day.
- Bulk carriers: $11,000 per day.
Dry dock operations are scheduled for five vessels, including one tanker vessel (40–45 days downtime) and four dry bulk vessels (25–35 days downtime each).
Market Outlook
The outlook for Aframax operations remains positive, driven by steady demand for refinery products. Limited tonnage supply is expected to create favourable freight market conditions over the next three years. The dry bulk segment has surpassed budgeted targets due to record exports of iron ore, coal, and minor bulk commodities.
Collaboration with Reko Diq Project
PNSC is also exploring potential collaboration with a Chinese company involved in the Reko Diq mining project, indicating a strategic move to diversify its operations and strengthen its market position.
This ambitious fleet renewal and operational expansion plan highlight PNSC’s commitment to sustaining its leadership in maritime transportation while meeting environmental and market demands.