29. Transport Development
29.1.
Introduction
Transport is an important sector of the economy contributing 10 per cent of the GDP and
over 17 per cent of the Gross Capital Formation. The sector consumes 35 per cent of the total
energy annually and is recipient of 20 per cent to 25 per cent of the annual federal public
sector development program.
The transport sector covers roads, road transport, railways, ports and shipping, and
aviation. The sector has direct and indirect linkage with all important sectors of the
economy, which influence economic and social development. An efficient transport system
contributes to economic growth by lowering domestic production cost through timely
delivery of raw materials (in agriculture and manufacturing sectors), enhancing economies
of scale in the production process, and creating economic opportunities and
communications links among people. The sector generates a large number of employment
opportunities currently estimated at 2.3 million jobs (5.9 per cent of employed labour
force). It also helps in integrating markets, strengthening competition, and increasing access
to improved farming techniques and social services, besides promoting trade, tourism and
foreign investment. The sector also contributes to the Government revenues through taxes
and duties on production and import of vehicles and parts, petroleum products, and fees on
ownership and operation of vehicles.
The total inland traffic by road and rail transport is currently estimated at 239 billion
passenger-km of passenger traffic and 153 billion ton-km of freight traffic (Annex II).
Freight and passenger traffic has been growing at 3 per cent and 4.5 per cent per annum
respectively. Road transport accounts for 91 per cent of passenger traffic and 96 per cent of
freight traffic. The deregulation of the road transport services in the 70s has resulted in
development of a competitive and vibrant private sector for goods and passenger transport.
The road network is about 258,000 km with on-road vehicles at about 4.2 million. The
National Highway Authority (NHA) maintains the national highway network while the
Provincial Communications and Works Departments are responsible for the provincial road
network. Following the implementation of the devolution plan, a majority of the intradistrict provincial networks have been devolved to the districts.
The road transport services are regulated by the provincial governments through the
Provincial Transport Departments. The Provincial Transport Authorities (PTAs) and
Regional Transport Authorities (RTAs) plan, allocate routes, regulate, enforce and assert
day-to-day control over inter- and intra-city passenger transport services, which are
dominated by the private sector.
Road related public revenue collection is about Rs.32.5 billion per year (52 percent
from surcharge on POL products). The total public expenditure on roads is over Rs.30 billion
per year, with 65 percent on national highways. The road sector has been the main recipient
of public sector funding, consuming about 69 per cent of the PSDP allocation for Transport
and Communications sector. However, road maintenance expenditures over the years have
only been at about 20 per cent to 30 per cent of the requirements.
Around 95 per cent of the country’s imports and exports are handled through the
ports. The two existing national ports are handling about 40 million tons of cargo annually.
Karachi Port, maintained by the Karachi Port Trust, handles about 30 million tons of cargo,
while Port Qasim, maintained by the Port Qasim Authority, handles about 11 million tons.
There are 44 airports maintained by the Civil Aviation Authority of which only 25 are
operational. There is one major public sector airline and a few private airlines.
An efficient transport system is a pre-requisite for Pakistan to become globally
competitive. The growth in capacity must be achieved while increasing service levels and
decreasing costs. Internationally, prices of transport services have fallen due to increased
productivity, increased competition between suppliers and pressure from users who face
growing global competition in their own markets. There would be need for a higher level of
investment in transport with enhanced private sector participation in the provision of
transport infrastructure and services.
During 2001-2005, most of the on-going schemes were completed and new projects
largely oriented towards consolidation and upgradation of the existing system launched.
The allocations were nearly fully utilized with an overall expenditure of Rs. 186 billion
including Rs. 148 billion under the PSDP, Rs. 14 billion under the self financed / corporate
sector programme and Rs.24 billion under the private sector financing programme
(Annex I).
In the subsequent paragraphs, a brief overview of the transport sector is followed by
detailed coverage by sub-sectors.
29.2.
The vision
The vision for the transport sector is the establishment of an efficient and well
integrated transport system that will facilitate the development of a competitive economy
and poverty reduction, while ensuring safety in mobility. The strategic thrust is on optimal
utilization of the existing capacity, improved management for maintenance and operation
and coordinated use of various modes of transport. Private sector participation in the sector
would be enhanced and institutional capacity building and Research and Development
activities undertaken to enhance sector efficiency.
29.3.
Issues
The performance of the transport system has been poor, with high economic losses
from congestion and poor quality roads and a mismatch between supply and demand for
transport services and supporting infrastructure. There are logistics constraints, which
impede competitiveness of the country’s trade and industrial development. The
conventional system towards documentation clearance, movement facilitation and electronic
data interchange is yet to be modernized. It is estimated that the inadequate and inefficient
transport system is imposing a cost to the economy in excess of Rs.220 billion annually or 8.5
per cent of the GDP, constraining economic growth, reducing export competitiveness, and
hindering social development. The development of an efficient transport sector has also
been hindered due to misplaced priorities and the absence of an approved transport policy.
29.4.
Policy and Strategy
A comprehensive and integrated transport policy will be developed during the
MTDF. The broad strategy will include the establishment of a multi-model transport system;
an emphasis on asset management with consolidation, upgrading, rehabilitation and
maintenance of the existing system; enhanced private sector participation in sector
development and institutional capacity building, with research and development and use of
modern technology, procedures and processes to increase sector efficiency. The strategy
also takes into account the regional and domestic scenarios, particularly with respect to rail,
road and shipping sub-sectors, enhancing regional connectivity to improve links to the
Central Asian States, Iran, Afghanistan and India. During the MTDF, ways and means to
improve the transport planning, prioritization and rationalizing public sector expenditure
and mobilization of resources from users and the private sector and other institutions
governance reforms would be explored. An integrated and holistic approach would be
adopted for making transport system more productive, efficient and reliable, which may
lower the transport costs and enhance the productivity in the economy. It is planned to
revitalize the Railway by transforming it into a commercially oriented entity, while retaining
the railway network in public ownership. Development of the port infrastructure and
rationalization of the port charges is envisaged to cater to trans-shipment through the
landlord port concept with enhanced private sector participation. Likewise rationalization of
airport charges and the development of airports through the private sector are also planned.
Benchmarking will be carried out and performance indicators would be developed for each
of the sub-sectors to assess progress against envisaged targets.
29.5.
Programme
The programme includes: (a) in the Roads sub-sector, improvement and construction
of 21,100 km of roads, including 9,000 km under the federal program, 1,500 km in Special
Areas and 10,600 km in provinces; (b) in the Railways sub-sector, upgradation, improvement
and doubling of selected track; establishment of rail link to Gwadar, and procurement of
passenger carriages, diesel electric locomotives and other equipment; (c) in the Ports and
Shipping sub-sector, improvement of physical facilities at Karachi Port and Port Qasim in
line with growth in traffic forecasts, further development of Gwadar Deep Sea Port and
procurement of additional ships and crude oil tankers; and (d) in the Aviation sub-sector,
development of the New Islamabad International Airport, upgrading of airports at Gwadar
and Peshawar, and an increase in PIA fleet.
29.6.
Financing
The MTDF 2005-2010 envisages an allocation of Rs.573 billion, which includes Rs.304
billion under the public sector development programme, Rs.160 billion under the self
financed programme and Rs.109 billion for development work to be taken up under the
private sector (Annex III)
29.7
National Transport Research Center
The MTDF provides Rs. 112 million for National Transport Research Center (NTRC)
to continue research work in the field of transport planning and engineering. The Centre
would prepare a comprehensive and integrated National Transport Policy covering all
modes of transport. Besides the Pakistan Transport Plan Study for preparing the medium
term transport plan and a 20-years Master Plan for the country with focus on national inter
regional and international trunk routes. This would also help in reviewing the Framework
targets and mid-course corrections, if so needed.
29.8.
Roads
The current road network in the country is about 258,000 km (with worth estimated
at about Rs.1100 billion) including 9,000 km National Highways, 101,000 km provincial
intercity roads, 94,000 km local government roads, and 54,000 km municipal and
cantonment roads. The road density in the country stands at 0.32 km per sq. km. It is
proposed to enhance this to 0.42 km per sq. km through construction of 80,000 kilometers of
roads in the years ahead.
National Highways
During 2001-2005, work on the Islamabad-Peshawar Motorway (M-1) was initiated,
while dualization of the National Highway N-5 over the Hala – Moro Section was
completed. Other major accomplishments include (i) upgradation / rehabilitation of 743 km
of the 1200 km long Indus Highway (N-55) which constitutes the north-south link on the
west bank of the River Indus; (ii) completion of Kohat Tunnel and link roads; (iii) initiation
of work on inter-provincial links including Dera Allah Yar – Nutal – Sibi road (N-65); and
(iv) substantial progress on construction of the 653 km long Makran Coastal road which
would link the under construction Gwadar Deep Sea Port with the National Highway
network and Karachi.
Provincial Programme
During 2001-2005, the work included (i) in Punjab, improvement of 685 km of
existing roads and construction of 45 km of new roads, (ii) in Sindh, improvement of 200 km
of the existing roads, and rehabilitation of 150 km of the existing roads, (iii) In NWFP,
construction of 208 km of new roads and 278 km improvement of existing roads and (iv)
construction of 150 km of new roads in Balochistan.
Special Areas Programme
During 2001-2005, in Azad Jammu and Kashmir (AJK), 1155 km of roads were
constructed/improved. In the Northern Areas, 96 km of jeepable shingled roads, 39 km of
metalled roads and 3 km of truckable roads were constructed, while 100 km of jeepable
shingled, 45 km of metalled and 24 km of truckable roads were improved. In addition, 3 km
of Jeepable shingled roads and 36 km of metalled roads were rehabilitated.
In financial terms, an expenditure of Rs.110 billion was incurred (Rs.99 billion under
the public sector and Rs.11 billion under the private sector) for the improvement and
construction of National and Special Area roads.
Issues
The following are the main issues in the road sub-sector:
i)
The road density in Pakistan at 0.32 km per sq km is considerably lower than
the density of approximately 0.50 km per sq. km in neighboring countries. By
this standard the road deficiency in Pakistan works out to around 144,000 km.
ii)
The initiation of too many road schemes has diluted the already constrained
resources, delaying completion of on-going projects and creating a large
throw-forward of ongoing projects, estimated at Rs.203 billion during the
MTDF.
iii)
As a result of inadequate maintenance, about three-fourth of the National
Highways network, which caters to more than 70 per cent of the total inland
traffic, and 70 per cent to 90 per cent of the provincial roads are in a poor to
fair condition.
iv)
The road network lacks a proper hierarchical arrangement, with an acute
shortage of tertiary roads.
v)
Overloading, resulting from inadequate checks, has lead to rapid
deterioration of the roads.
vi)
There are institutional deficiencies in the national and provincial road
organizations including over-staffing, low salary structure and highly
centralized decision making.
vii)
The involvement of the private sector in road sector development and
maintenance has remained minimal. There is a need to develop a policy
framework and package of incentives.
Policy and Strategy
The main elements of the policy and strategy include (i) optimal utilization of the
existing capacity with emphasis on rehabilitation and upgradation, (ii) selective and cost
efficient investments in economically viable new roads, including expansion of the rural
network, (iii) development / improvement of road network to facilitate transport and trade
with Afghanistan, Central Asian States and India, (iv) development of innovative financing
mechanisms and enhancement of private sector participation, (v) priority to roads
maintenance and safety, (vi) effective control of overloading on the roads, and (vii)
enhancement of capacity of the road sector agencies.
Programme
With an annual growth rate of 7.0 per cent for passenger traffic and 6.0 per cent for
freight traffic, it is estimated that 302 billion-passenger-km of passenger traffic and 197
billion-tons-km of freight traffic will be handled by roads by the year 2010. The MTDF
provides for the improvement and rehabilitation of about 14100 km of the existing roads and
construction of 7000 km of new roads as indicated in Table 1 below:
Table 1.
Roads Targets 2010
Description
Improvements
(km)
Sr. No.
Construction
(km)
1
National Highways
6500
2500
2
Provincial Roads
6600
4000
3
Special Area Roads
1000
500
14100
7000
Total
Details of the programme are outlined below: National Highways
The programme is primarily oriented towards consolidation of the existing assets
and the provision of linkages from the main road system to remote areas. An alternate high-
speed facility for the north-south traffic will be developed as another economic corridor to
facilitate trade with the Central Asian States and augment the National Highway network.
Overall about 6500 km of the existing highways will be improved and 2500 km of new roads
will be constructed. NHA will also undertake institutional reforms, including
reorganization, training, highway safety, road assets management, an axle load control
regime / weigh stations, afforestation, financial management and management reforms and
accountability.
Among the on-going projects, work on the Islamabad-Peshawar Motorway (M-I),
Khangah Dogran and Sial Morr on the Lahore-Islamabad Motorway (M-2), Makran Coastal
road, Islamabad-Muzaffarabad road, Lyari Expressway, Karachi Northern Bypass,
Mansehra-Naran-Jalkhad road and Jaccobabad Bypass will be completed. Regional
connectivity will be improved by completion of Peshawar-Torkham road, Kalat-QuettaChaman road and the Khori-Quba Saeed Khan and Gwadar-Khuzdar sections of the
Gwadar-Ratodero road. Work will be initiated on the Lowari Tunnel, which on completion
will provide an all weather link between Chakdara and Chitral districts. In Baluchistan,
D.I.Khan-Mughalkot road (N-50), Qilla Saifullah-Loralai-Bewata road (N-70) and Dera-Allah
Yar-Nutal road (N-65) will be completed.
Among the new projects, upgradation / improvement of the remaining sections of
the Indus Highway (N-55) measuring 465 km will be taken up under Phase-III and NWFP
Road Sector Development Project. Improvement of Multan-DG Khan-Sakhi Sarwar stretch
of the National Highway (N-70), Kuchlak – Zhob Section of the National Highway N-50,
improvement of two sections of N-65 (via Sukkur to Jaccobabad bypass and Sibi to Quetta),
Jalkhad - Chilas road (an extension of Mansehra-Naran-Jalkhad road) and the Nowshera–
Chakdara–Chitral road (N-45) will also be taken up. The National Highway Improvement
Project which provides for the improvement of 856 km of the National Highway (N-5), will
be launched. Work on the Sindh Coastal Highway (Thatta - Badin- Nagarparkar), second
bridge on River Indus at Ghazi, Larkana bridge, National Highway N-5 and the
Khushalgarh bridge (N-80) will be initiated. Work on the improvement of Kohala –
Muzaffarabad road, dualization of Hassanabdal – Abbottabad -Mansehra road (90 Km) and
interchanges at Kot Sarwar, will also be undertaken.
Public-Private Partnership
In addition to the highways public sector programme, several projects are proposed
to be taken up under the private sector. Some of the projects currently in pipeline for
execution on BOT / public private partnership for which an amount of Rs.31 billion is
envisaged include Tarnol Interchange at Rawalpindi, Rawalpindi Bypass Expressway,
Shahdara Flyover, Faisalabad-Multan Motorway (M-4), the Multan-D.G.Khan Motorway
(M-5), Construction of Additional Carriageway from Lodhran to Khanewal Section of N-5
and Lakpass Tunnel.
Provincial Programme
The MTDF provides for the construction of 4000 km of new roads and improvement
/ rehabilitation of 6600 km of the existing roads. In Punjab, improvement / rehabilitation of
about 1900 km of the exiting roads and construction of 150 km of new roads will be
undertaken to enhance capacity of the existing roads in line with the traffic demand and to
provide the missing links. In Sindh, construction of 400 km of new roads and 24 bridges and
improvement / rehabilitation of 1000 km of the existing roads will be undertaken. In NWFP,
construction of 2600 km of new roads and 101 bridges and improvement / rehabilitation of
2600 km of the existing roads will be carried out to enhance connectivity. In Balochistan,
construction of 850 km of new roads and improvement/rehabilitation of 1100 km of the
existing roads alongwith construction of bridges will be undertaken.
Special Areas
The MTDF provides for the construction of 500 km of new roads and improvement /
rehabilitation of 1000 km of the existing roads. Detail of the programme is given as under.
Azad Jammu and Kashmir (AJK)
In AJK, construction of 239 km of new roads and bridges and improvement /
rehabilitation of 600 km of the existing roads will be undertaken during the MTDF period.
The programme has been formulated with a view to upgrading the roads linking district
headquarters with Pakistan to 24 ft paved width, providing mid altitude roads for
establishing an integrated road system network and three fair weather roads in Neelum
Valley, two to connect Neelum Valley with Kaghan and one with the Northern Areas. Upgradation / reconditioning of inter district roads to 18 ft paved width and launching of a
pilot project for land stabilization and experimental stretches of concrete pavement are also
envisaged.
Northern Areas
In Northern Areas, the MTDF provides for the construction of 261 km of jeepable
shingled roads, 16 bridges and 14 km of truckable shingled roads, and improvement /
rehabilitation of 202 km of the existing jeepable shingled roads, 5 bridges, 100 km of
metalled roads and 98 km of truckable roads, in addition to 4 RCC bridges.
Financing
An allocation of Rs.248 billion is envisaged for the road development programme,
including Rs.217 billion under the public sector and Rs.31 billion under the private
sector/public private partnership financing. Details are at Annex III.
Federal Road Fund
A Federal Road Fund (FRF) would be established to streamline financing of national
highways. In the past the implementation of national highways programmes has suffered,
among others, due to constraints of financing available under the PSDP. It is envisaged that
the annual PSDP allocation of NHA and toll receipts of NHA would be deposited in FRF.
Financial assistance for highways projects from international financial institutions would
also become part of FRF. By securitization of these funds, additional resources would be
raised through market borrowings and other instruments. This would enable expeditious
implementation of the programme and proper maintenance of the existing assets through
FRF. It will be important for NHA to improve their performance indicators, including better
toll collections, to service the loans and maintain the existing assets and without putting
undue pressure for higher PSDP allocations in the future.
29.9. Railways
The Pakistan Railway system is based on 11,515 km (broad gauge 10960 km and
meter gauge 555 km) of track kilometers and 7,791 km (broad gauge 7346 km and meter
gauge 445 km) of route network with 633 stations. Most of the network is single track.
Lahore – Khanewal Section is electrified. The traction and rolling stock includes 592 DE
locomotives, 1914 passenger coaching vehicles and 21,812 freight wagons. Railways is
currently earning about Rs.15 billion annually. Efforts are underway to construct a railway
track up to Gwadar to facilitate the functioning of the Gwadar deep-sea port, which on
commissioning will play a major role in linking Pakistan with the Central Asian countries. A
survey has also been conducted with regard to the rail links from Gwadar to Taftan,
Chaman to Qandhar and from Badin to the Thar coalfields. The annual freight and
passenger traffic carried by the Pakistan Railways in 2004-05 was 5.46 billion-ton-km of
freight and 23.759 billion-passenger-km of passenger traffic.
Physical achievements during 2001-2005 include induction of additional passenger
coaches, track rehabilitation, rail and sleeper removal, locomotives rehabilitation, and
various other improvements. In financial terms, during 2001-2005 an expenditure of Rs.31
billion was incurred (Annex I).
Issues
The main issues in the railway sub-sector include the following:
(i)
The inability of Railways to develop a competitive role, following deregulation of the trucking industry in the seventies has lead to a large
proportion of the inland freight and passenger traffic shifting to the roads.
(ii)
A large proportion of the railways stock has become overage and needs to be
replaced.
(iii)
The Railways set up has not been progressive. Reorganizations have not been
effective in contributing to modernization and cost effective operations. Staff
motivation has remained low. Attention has also not been paid either to
research and development or to marketing, including coordination with
various multinational shipping lines and cargo operators in the private sector.
Policy and Strategy
The main elements of policy and strategy include:
(i)
Revitalization of railways into a more commercially oriented entity, while
retaining the railway network in public ownership.
(ii)
Corporatization of railways.
(iii)
Induction of private sector capital and management expertise into the sector,
particularly into railway support industries and train operations.
(iv)
Emphasis on inland freight traffic handled by the railways, to achieve
maximum utilization of the inherent capacity.
It is envisaged that Railway will operate on commercial lines, with government
meeting the full cost of public service obligations. The Railway infrastructure, especially that
on the main corridor, will be rehabilitated and a culture of scheduled freight trains
introduced, with priority to bulk movement of goods over long haul. The private sector will
initially be allowed to operate freight trains on payment of track access charges. A strong
team of financial managers will be introduced to work on commercial accounting principles
and practices. The rehabilitation, improvement and development of the railway network
would include the following:
i)
Improvement of the entire main line section from Karachi to Rawalpindi and
from Lahore to Faisalabad, and its upgradation to cater for sectional
maximum speeds of 140 kmph for passenger and 100 kmph for freight
carriers. The following table gives a picture how productivity increases with
increase in speed:
Table 2
Productivity increases with Speed
S.No
Description
Unit
Impact of High Speed
1.
Freight Volume Per
Year
Tons
500000
500000
500000
500000
500000
500000
500000
500000
2.
Single Trip
Kms
1250
1250
1250
1250
1250
1250
1250
1250
3.
Annual TKMs
Earned
Million
625
625
625
625
625
625
625
625
4.
Pay Load Wagon
Tons
60
60
60
60
60
60
60
60
5
Wagon / Train
Number
24
24
24
24
24
24
24
24
6
Pay Load / Train
Tons
1440
1440
1440
1440
1440
1440
1440
1440
7
Loading and
Unloading
Hours
48
48
48
48
48
48
48
48
8
Removal,
Placement and
Exam.
Hours
24
24
24
24
24
24
24
24
9
Working Period
Days
300
300
300
300
300
300
300
300
10
Trains / Day
Number
1.16
1.16
1.16
1.16
1.16
1.16
1.16
1.16
11
Average Speed
KMPH
20
25
30
40
45
50
55
60
12
Running Time (Out
and Back)
Hours
125
100
83
63
56
50
45
42
13
Wagon Turn
Round
Hours
197
172
155
135
128
122
117
114
14
Wagon Fleet
Required
Number
274
239
216
187
177
169
163
158
15
Locomotive
Turnaround Time
Hours
137
112
95
75
68
62
57
54
16
Locomotive Fleet
Number
7.0
5.7
4.9
3.8
3.5
3.2
2.9
2.7
17
Annual Prod /
Loco in TKMs
Million
89
109
128
164
181
197
213
228
18
Freight TKM
Rs.
0.92
0.92
0.92
0.92
0.92
0.92
0.92
0.92
19
Annual Revenue
(Rs)
Million
575
575
575
575
575
575
575
575
20
Annual Production
/ Loco (Rs)
Million
82
100
118
151
167
181
196
210
ii)
Upgradation and rehabilitation of important branch lines to make them fit for
a sectional speed of 100 kmph.
iii)
Introduction of the latest version of the rolling stock and light axle weight
traction equipment and best precision system for effective carriage capacity in
line with the latest international standards, so as to provide real comfort to
commuters.
iv)
Initiation of public – private partnerships including use of vertical space of
operational areas, leasing out of train operations viz-a-viz freight and
passenger.
v)
Conversion of all railway manufacturing and repair units viz carriage factory,
locomotive factory, sleepers factories, Moghalpura shop and steel shop, into
autonomous units with diversifications of activities, and to make them selfreliant.
vi)
Development of Research and Development Cell for the planning and
designing of infrastructure, rolling stock and traction movers.
vii)
Development of the Railway Accounting System to bring it at par with the
international accounting standards including segmental, cost accounting and
separation of accounts relating to remunerative and un-remunerative
activities.
The above initiatives are expected to increase the quantum of passenger and freight
traffic by 18 per cent and 76 per cent respectively, by the end of the MTDF period. With
estimated annual growth rates of 12.0 per cent and 3.3 per cent for freight traffic and passenger
traffic respectively, Railway is projected to carry 10 billion ton km of freight and 28 billion
passenger km of passenger traffic by 2010.
Programme
The on-going projects, including manufacture / procurement of 175 new diesel
passenger carriages, procurement of 300 high capacity bogie oil wagons 69 diesel electric
locomotives (DEL), rehabilitation of track, re-commissioning of 55 stabled D.E. locomotives,
modification of 320 redundant tank wagons, provision of assemblies for 680 wagons and
improvement of telecom facilities, would be completed. The new projects to be undertaken
include doubling of track over the Khanewal- Raiwind and upgradation and improvement of
track between Khanpur and Lalamusa, procurement / manufacturing and assembling of 100
locomotives (75 diesel and 25 electric), procurement / manufacturing and assembling of 1000
freight and 150 passenger coaches, electrification of the Lahore-Khanewal double line section
with rehabilitation of the existing single line (285 km) and extension upto Samasatta (163 km),
establishment of rail link to Gwadar port and upgradation of the Rohri-Quetta-Taftan section.
Financing
The MTDF 2005-2010 envisages an allocation of Rs.60 billion for the railways. This
includes Rs.23 billion for on-going works and Rs.37 billion for the new projects. Details are at
Annex III.
29.10. Ports and Shipping
Ports
The two commercial ports of Pakistan viz Karachi Port and Port Qasim enjoy a
monopoly situation in that over 95 per cent of international trade passes through these two
ports.
Karachi Port
Karachi Port is the principal seaport of Pakistan, which handles approximately 75
percent of the entire national trade. The Port is currently handling 28 million tons of cargo,
which has grown at 3.1 percent per annum over the years. Keeping in view the port
facilities, changes in maritime transport, and future requirements of trade and commerce,
Karachi Port Trust has launched a number of projects, which are at different stages of
planning, tendering and execution. Under the self-financed programme, work on the Oil
Pier OP-2 with an annual handling capacity of 8 million tons is continuing and feasibility
studies initiated relating to the development of a cargo village in the Western Backwaters.
Bids were invited for capital dredging of the navigation channel to increase its depth to 13.5
meters to cater to 12 meters draft vessels. Karachi Port Trust has also explored private sector
participation in port operations. Adopting the landlord port strategy, it has privatized all its
container handling and is in the process of privatizing all its bulk and general cargo. This is
in keeping with a long term plan to privatize dredging and engineering services.
Port Qasim
At Port Qasim, a cargo volume of about 10 million tons is being handled currently.
The Port Qasim Authority has also launched a number of projects, which are in different
stages of implementation. Under the self financed programme, work has been undertaken
on the provision of water supply and drainage system in the molasses area, infrastructural
facilities in the Eastern Industrial Zone and water tower in the North Western Industrial
Zone. Feasibility studies were carried out in respect of various development works relating
to roadwork and utilities, storm water, drainage, and water supply in the industrial zones,
establishment of the second oil jetty, establishment of a liquid cargo, grain, fertilizer and
clinker / cement terminals (to be built on BOT basis), establishment of a marine workshop,
and dry docking facilities. Substantial progress was also made in respect of the Gwadar
Deep Sea Port Project.
During 2001-05, an expenditure of Rs.22.8 billion (Rs.14.8 billion under the public
sector, Rs.3.1 billion under the self financed programme and Rs.4.9 billion under private
sector financing) was incurred (Annex I).
Issues
The main issues in the Ports sector include the following:
i)
There is a dearth of container and other dedicated berths, with inadequate
depths of navigational channels. Likewise there is a lack of facilities for full
night navigation, which has adversely affected the annual throughput.
ii)
The tariffs at Pakistan ports are not competitive. Concession and subsidies
extended to individual ports are discriminatory leading to tariff anomalies
and discouraging private investments and transshipment. Port charges on
equipment at BOT terminals like wharfage are discouraging private sector
investment in BOT projects.
iii)
The mandatory levy on port users, ship-owners / agents and stevedores on
account of substantial expenditure of Karachi Dock Labor Board adds to the
operational costs.
iv)
The port and customs clearance procedures are tedious and time consuming.
v)
There is a need for infrastructure improvement including access channel
conditions, design depths at berths and port equipment, in line with changes
in shipping modalities, economies of scale, larger parcel size of vessels and
WTO considerations.
vi)
Lack of management reform and corporatization and an inadequate legal and
institutional framework has resulted in inefficiencies at the ports. There is
also no coherent policy for training and technical knowledge up-gradation of
the port managers. The landlord port concept has not been implemented in its
entirety leading to inefficiencies and losses. Although dedicated terminals
were awarded to the private sector on BOT basis, simultaneous
rationalization of the workforce was not carried out, which has resulted in an
excessive workforce.
Policy and Strategy
The development, management and operation of ports would be based on the
landlord port concept. Under this concept, the ports would desist from and dispossess
operating functions, investment in port operations and assets related to vessel services,
cargo plants, equipment and flotilla. The port’s responsibilities would be limited to (i)
provision of fixed infrastructure such as land wharves and buildings; (ii) ownership of
wharves, buildings, harbour structures, navigational aids, and electrical installations; and
(iii) control and regulatory functions with respect to services of the port and port
conservation and development. All port operations would be done through private sector.
The strategy would include development of new/conversion of conventional berths into
dedicated terminals for the handling of different commodities and mechanization/
automation of cargo handling equipment. Deepening, widening and improvement of
navigational channels at Port Qasim and Karachi Port to ensure full time night navigation is
also envisaged. In case of Gwadar Deep Sea Port also, all port operations would be done
through private sector, while marketing plans for Phase-II would be prepared on priority.
The Port authorities would be made fully autonomous.
Programme
The programme is based on the following total traffic forecast on the two ports, i.e.
Port Qasim & the Karachi Port:
Cargo
General Cargo
Dry Cargo
Liquid Bulk
Iron Ore and Coal
Containers (Nos.)
Table 3.
Total Ports Traffic Forecast
Units
2004-05
Forecast (2009-10)
M. Tons
11.55
17.54
M. Tons
5.81
10.24
M. Tons
19.58
28.00
M. Tons
3.46
8.31
Nos. (000)
1340
2361
ACGR per cent
8.7
12.0
7.4
19.2
12.0
Karachi Port Trust (KPT)
Karachi port is expected to handle the following annual traffic by 2009-10:
Cargo
General Cargo
Dry Bulk
Liquid Bulk
Containers
Table 4.
Traffic Forecast at Karachi Port
Units
2004-05
Forecast (2009-10)
M. Tons
10.74
15.48
M. Tons
4.07
5.17
M. Tons
14.82
20.00
Nos. (000)
894
1340
ACGR per cent
7.6
4.9
6.2
8.4
Major projects include deepening of the navigation channel, reconstruction of Oil
Pier-2 with 8 million tons annual capacity to cater for 75,000 DWT tankers, development of a
cargo village on KPT Estate in the Western Backwaters Area, construction of deep draught
berths at Keamari Groyne, procurement of two harbour tugs and one dredger, procurement
of anchor hoist vessel, procurement of self propelled barge, establishment of a container
terminal at Berths 6-9, setting up of a dry bulk cargo handling terminal, construction of a
port tower complex, setting up of a desalination plant, rehabilitation of roads and
construction of a bridge under the Tameer-e-Karachi programme, procurement of trailer
suction hopper dredger and construction of a container terminal at berths 28-30.
Port Qasim Authority
Port Qasim is expected to handle the following annual traffic by 2009-10:
Table 5.
Traffic Forecast at Port Qasim
Cargo
Units
2004-05
Forecast (2009-10)
ACGR per cent
General Cargo
M. Tons
0.82
2.06
20
Dry Bulk
M. Tons
1.74
5.07
24
Liquid Bulk
M. Tons
4.6
8.00
11
Iron ore and Coal
Berth
M. Tons
3.46
8.31
19.2
Containers
Nos. (000)
446
1022
18
Major projects include deepening of channel under the public sector programme and
construction of the second container terminal, a liquid cargo terminal, the second oil jetty by
FOTCO, a desalination plant and a LPG terminal under the self financing / private sector
programme.
Gwadar Port Authority
Deep Sea Port at Gwadar, after its completion by September 2005 is expected to
handle the following annual traffic including Transshipment and transit trade by 2009-10:
Table 6.
Traffic Forecast at Gwadar Port
Cargo
Unit
2005-06
2007-08
2009-10
ACGR
per cent
General Cargo
Local Consumption
Million Tons
0.36
0.42
0.48
7.46
Transit Trade
Million Tons
-
0.68
0.71
2.03
Dry Cargo
Local Consumption
Million Tons
0.33
0.38
0.45
8.63
Minerals
Million Tons
-
0.44
0.52
8.71
0.07
0.09
12.28
Liquid Bulk
Local Consumption
Million Tons
Storage/distribution
Million Tons
Containers (TEUs)
Nos.
0.06
5.0
-
264
307
7.91
During the MTDF, 3 multi-purpose berths under Phase-1 of the Gwadar Deep Sea
Port Development Programme would be completed and process for phase-II under the
private sector would be initiated.
Shipping
Following nationalization, the fleet has dwindled from over 50 vessels to mere 13
vessels currently owned by the Pakistan National Shipping Corporation (PNSC). It has also
resulted in the lack of availability of ship finance. The proposed procurement of an oil tanker
by the PNSC did not materialize.
Issues
The following issues in the shipping sub-sector require to be addressed:
i)
The PNSC fleet requires refurbishment. The ships are out-dated and do not
suit modern trade. PNSC has not taken the lead in acquiring vessels for either
the dry cargo trades or container / feeder trades, upgrading their old tanker
fleet or exploring joint ventures with the private sector.
ii)
Pakistan’s trade, barring crude oil, continues to be handled almost entirely in
foreign ships.
iii)
The role of the freight forwarding industry needs to be properly defined.
iv)
Both the public as well as private sector institutions responsible for imparting
maritime training to officers and ratings lack modern training equipment.
v)
Measures are required for strengthening of marine insurance to assist ship
owners and traders under local legislation.
vi)
There is need for a review of the existing shipping policy in the following two
areas:
•
The inability of Pakistan flag vessels to call at Indian ports for third
country cargo excludes one of the largest markets for the country.
•
The inability of Pakistani ship owners to arrange financing from local
banks, lack of confidence and procedures to have their mortgages
registered and laws of foreclosure have kept foreign banks also away
from the market.
Policy and Strategy
The existing shipping policy calls for expansion of the Pakistan flag merchant fleet,
so as to increase its present share of cargo to 40 per cent by the year 2020. Opportunities of
huge transit market offered by Afghanistan and Central Asian States need to be capitalized
through compatible development of the cargo fleet and port facilities; and revival of national
ship building capacity to meet the essential requirement of the Pakistan Merchant Marine.
The following measures are proposed under the strategy:
i)
Speedy enactment of the Merchant Shipping Ordinance.
ii)
Allowing Pakistan ship owners to act as if they are located in the EPZ , thus
enabling them to arrange international finance, and to have their banks
register a mortgage in Pakistan.
iii)
Encouragement of local banks towards extension of financial assistance to
potential ship-owners.
iv)
Enhancement of legislation giving clear rights to the banks and finance
institutions, both Pakistani based and from abroad, to foreclose on ships in
the event of default of loan agreement by ship owners, without any need to
obtain a court order.
v)
Amendment of bilateral shipping agreements having cargo reservation
clauses to enable national and third country flagship’s to call at ports and
carry national trade.
vi)
Institutionalization of role of freight forwarding agencies for efficient
movement of cargo.
vii)
Revitalization of Pakistan Marine Academy to facilitate training needs at par
with international standards, among others, by upgrading its status to Marine
University.
Programme
The MTDF provides for the procurement of 6 second hand panamax / handymax
ships and 4 crude oil tankers by the Pakistan National Shipping Corporation.
Financing
An allocation of Rs.117 billion (Rs.13 billion under the public sector development
programme and Rs. 104 billion under the self-financing and private sector financing
programme) is envisaged for the development works of Ports and Shipping sector
(Annex-III).
29.11. SUPARCO
Space technology and its applications are playing a significant role in a wide
spectrum of our daily life from entertainment to highly sophisticated civil and military
applications. SUPARCO, the National Space Agency has prepared a long term plan, which
includes work on communications and earth observation satellite phase, as a joint venture
project under the first phase, with internationally reputed manufacturers, and satellite
design and development indigenously under the second phase. The MTDF provides an
allocation of Rs.6.64 billion for SUPARCO for its ongoing and new projects.
29.12. Pakistan Meteorological Department
The development works of the Pakistan Meteorological Department include
improvement and upgradation of metrological facilities at the existing airports and other
services including procurement and installation of equipment for which an allocation of
Rs.1.0 billion has been made in the MTDF.
29.13. Airport Security Force (A.S.F):
ASF is responsible for ensuring security of all airports, aerodromes and installations,
structure, equipment, material belonging to CAA, operators, Government and nonGovernment organizations within the limit of airports against acts of unlawful interference
or threat of such interference besides maintenance of general law & order and taking
cognizance of all offences committed within the limits of airports. An allocation of Rs.1.3
billion has been made in the MTDF for procurement of modern equipments.
29.14. Air Transport
Civil Aviation Authority
Currently Pakistan has an air transport load of 9.1 million passengers of which 3.1
million are domestic. In terms of Revenue Passenger Km (RPKs), the total annual passenger
traffic is 26.6 billion, which includes the traffic of foreign airlines operating to and from
Pakistan. This represents 10 per cent of the total passenger traffic in the country by all modes of
transport. The domestic passenger traffic carried by airlines is 2.5 billion RPKs, which is only 1
per cent of total passenger traffic carried in Pakistan.
The domestic terminal passenger traffic in Pakistan has sharply declined from 9.3
million passengers in 1995-96 to 5.8 million in 2003-04 (Terminal Passenger traffic is double the
passenger traffic). This can be attributed to suspension of operations by private airlines,
contraction of operation on domestic routes by remaining airlines and diversion of capacity on
services to the Gulf region, decrease of private trunk routes. Since 2000-01, due to
commencement of point to point services of major cities and withdrawal of PIA services on
feeder and tertiary routes. The international terminal passenger traffic has remained stagnant to
5.7 million.
During the last five years, major works included establishment of cargo centers with
facilities at the Jinnah International Airport Karachi and the New Terminal Complex (NTC)
Lahore and construction of the new Sialkot International Airport for promotion of air cargo
in private sector with land as Government equity. In addition, airports at Rahim Yar Khan,
Bahawalpur and Turbat were upgraded. CAA executed most of the above projects through
self-generated funds and foreign borrowings except the NTC Lahore for which
government’s equity through land valued at Rs.553 million was provided. An expenditure
of Rs.18.7 billion under the non-budgetary development programme was incurred for the
development works of the Civil Aviation Authority (Annex I).
Issues
High user charges at domestic airports by CAA and little assistance to facilitate
airline operations in Pakistan is affecting the airlines economics and has resulted in
bankruptcy of many new airlines. The landing rates for various types of aircraft at different
airports in Pakistan are much higher than other companies and need to be rationalized.
There is also a conflict of interest due to CAA’s dual role as a regulator and service provider.
Policy and Strategy
The existing Aviation Policy calls for assurance of safe and efficient civil aviation
operations in the country, and facilitation of operations in the domestic market of the safest
standards in conformity with ICAO standards by an optimum number of airlines to
encourage competition. For international operations, conditions conducive to fair and
reasonable competition to the Pakistan carriers are envisaged with adequate encouragement
to the foreign airlines to continue to serve Pakistan in the most efficient manner and in the
largest number possible. Eight destinations viz Chitral, Gilgit, Skardu, Gwadar, Panjgur,
Turbat, Pasni and Jiwani have been designated as socio-economic routes. New airports are
envisaged on BOT basis and private sector participation in the construction of airports
increased. The recommendations under consideration include: (a) CAA should limit its role
to regulatory function with Airport Development Authority (ADA) providing the aviation
infrastructure and services; (b) Pakistani private airlines on international routes should be
encouraged and be allowed to operate on viable domestic routes; and (c) the landing and
fuel charges should be brought at par with the neighboring countries.
The strategy includes the formulation of a comprehensive and integrated air
transport policy including reciprocity in granting of frequencies, capacity and availability of
airports to foreign airlines and an institutional and policy development framework to help
in implementation of the policy. The decision-making and project implementation process is
also proposed to be decentralized in accordance with the market focus. The role of the
government would be restricted to airworthiness, safety and security matters, while
economic activities and decision making would be determined by the market forces. A
conducive environment would be provided for private investments in air transport industry.
An integrated plan would be developed for upgrading, improving and enhancing the
operational and functional capability of the airports to provide safe, secure and efficient
handling and services to the operators and passengers in a comfortable and friendly
environment. This would include modernization of cargo handling strategy, fuel strategy and
the supply and security systems, complemented by an aggressive marketing campaign to
promote the country’s airports and demonstrate to international clienteles the availability of
facilities and offer incentives such as lower landing rates, parking / housing charges,
competitive fuel prices, attractive estate rentals, minimal transit and over-flying charges. The
strategy also includes upgradation and enhancement of the existing training facilities and
quality of courses in international studies at HDD for operational, technical and ground
personnel to produce a professionally sound work force. Data collection system and
perspective planning setups in all regulatory / operational organizations engaged in Civil
Aviation would also be institutionalized.
Programme
The programme is based on the following traffic forecast:
Domestic
International
Total
Table 7.
Passenger Traffic (Million )
2004-05
Forecast 2009-10
ACGR per cent
3.1
3.83
4.3
6.0
7.52
4.6
9.1
11.34
4.5
Table 8
Terminal Cargo Traffic (Million Tons)
2004-05
Forecast 2009-10
ACGR per cent
Domestic
0.11
0.14
5.8
International
0.20
0.24
3.8
Total
0.31
0.38
4.5
The major projects to be taken up under the MTDF include; (i) New Islamabad
International Airport (NIIA) for which over 3000 acres of land has already been acquired; (ii)
upgradation of Gwadar airport for Boeing 737 operations; (iii) development of New Airport
at Peshawar; (iv) completion of Turbat Airport and major cargo centers at JIAP Karachi, and
NTCL Lahore; and (v) procurement of fire crash tenders. The CAA would make an
investment of Rs.17.438 billion during the MTDF to complete its programme (Annex III).
Airlines
The airline industry is in the midst of the most serious short-term downturn in
modern aviation history. During the period 2001-2003, the world's airlines suffered the
successive impacts of the terrorist attacks in the USA (9/11), the Afghan and Iraq conflicts
and then SARS epidemic. World traffic measured in Revenue Passenger Kilometers (RPKs)
experienced negative growth in 2001 and zero growth in 2002. The impacts can be seen in
the following tables which give passenger (PAX) and cargo traffic carried by all the airlines
in Pakistan including foreign carriers:
Table 9
Airline Traffic
Traffic
Passenger (Million)
Domestic RPKs
Domestic PAX
International RPKs
International PAX
Total RPKs
Total PAX
Cargo (Million Tons)
Domestic
International
Total
2000-01
2001-02
2002-03
2003-04
2004-05
3057
3.2
20204
5.5
23261
8.7
2465
2.5
18567
4.8
21032
7.3
2157
2.7
18857
5.1
21014
7.8
2389
2.9
21080
5.7
23469
8.6
2506
3.1
22113
6.00
24619
9.1
0.040
0.172
0.212
0.041
0.157
0.198
0.047
0.175
0.222
0.049
0.190
0.239
0.052
0.20
0.252
The cargo traffic registered a modest growth rate of around 4 per cent per annum
during the past three-year period. The Pakistani airlines carried 3.1 million passengers in
2004-05 on domestic routes, about 2/3rd of 4.52 million carried during 1995-96. International
passengers carried by all airlines including foreign airlines have stagnated since 2000-01.
PIA ended the second half of 2001 at slightly above breakeven. In 2002 PIA posted a pre-tax
profit of Rs. 2.1 billion, which increased, to Rs. 3.7 billion in 2003, and Rs. 4.4 billion in 2004.
Issues
The following issues require to be addressed:
i)
Private airlines were given license to operate services in the country in 1992.
Due to high user charges and inadequate assistance by the government,
especially on unprofitable domestic routes, many of these airlines went out of
operations and owe large sums of money to government agencies, fuel
companies and suppliers. At present only four are in operation.
ii)
The 9/11 events led to reduced movements of foreigners into and out of
Pakistan on account of safety and security considerations.
iii)
Visa restrictions on Pakistani citizens by various countries decreased traffic.
iv)
The route towards Pakistan is less economical for many legacy airlines of
repute.
Policy and Strategy
The existing Aviation Policy calls for adoption of selective Open Skies Policy by
having agreements with countries on the principle of reciprocity and bilateralism. It
provides for free operation of PIA and the private sector airlines on domestic airlines.
Private sector airlines can also share operation on regulated routes with PIA on equitable
basis proportionate to their domestic operations. PIA and private airlines are treated at par
in levy of duties and taxes on import of aircraft and spares.
The proposed strategy includes; improvement of Pakistan’s image in international
market to attract air traffic; introduction of future Air Navigation System, provision of a level
playing field for private airlines to compete with the public sector’s enterprise, provision of
incentives to facilitate airlines to operate on the route so required by the Government and
rationalization of landing, parking, housing and air navigation charges to improve the
profitability of the airlines operating in Pakistan and attract foreign airlines to operate in
Pakistan for their scheduled and charter flights. Promotion of interline co-operation between
Pakistani Airlines for the convenience of passengers is also proposed.
Programme
The airline passenger traffic (domestic and International) is projected to grow at the rate
of 4.9 per cent per annum in term of RPKs. In terms of number of passengers, the traffic is
estimated to increase at the rate of 4.5 per cent per annum from 9.1 million passengers in 200405 to 11.34 million passengers by the year 2009-10. The above volume of traffic includes the
loads carried by foreign airlines. Domestic traffic in terms of RPKs is estimated to be around 10
per cent of the total traffic carried on both domestic and international routes. However, in terms
of number of passengers, domestic traffic is estimated to be 1/3rd of the total traffic.
Airline cargo traffic is projected to grow at the rate of 4.52 per cent from the current
level of 310000 metric tons in the year 2004-05 to 380000 metric tons by the year 2009-10. Based
on a seat factor ranging from 72 per cent to 74 per cent and a cargo load factor ranging from 66
per cent to around 70 per cent, the following capacity would be required to cater for the
projected traffic during the MTDF period:
Table 10.
Capacity Requirements
Traffic
Unit
2004-05
Target 2009-10
ACGR per cent
Passenger (*)
M. ASKs
34075
42302
4.42
M. AFTKs
1416
1807
4.15
Freight (*)
*All Pakistani and foreign airlines traffic
M.ASKs:
M.AFTKs:
Million Available Seat Kilometers
Million Available Freight Ton Kilometers
To generate the projected volume of capacity as well as to replace the aging fleet of
airlines operating in Pakistan, 37 aircraft are planned to be inducted during the MTDF as
follows:
Table 11.
Fleet Requirement (2005 – 2010)
Aircraft
Replacement
Growth
Total
300 and Plus Seater
6
2
8
200-250 Seater
4
2
6
130-150 Seater
6
5
11
40-60 Seater
5
3
8
20-30 Seater
-
4
4
21
16
37
TOTAL
Pakistan International Airline Corporation
PIA plans to bring forward eight new state-of-the-art Boeing 777 in line with its long
term Business Plan 2003-2011. Three have already been delivered. In addition seven new
Dash 8-300 Turbo Prop aircraft will be acquired as replacement of the aging Fokker F-27
fleet. Six half-life A310-300 aircraft have already been inducted into service as replacements
for the older Airbus A300-B4s.
Financing
An investment of Rs.116.5 billion is envisaged for procurement of aircraft, which
includes Rs.109.9 billion for aircraft to be procured by the PIAC and Rs.6.6 billion for aircraft
to be procured by the private sector (Annex III). Details of PIAC’s investment are given as
under:
Table 12.
PIA Investment
(US $ in million)
2005
4 A310-300
Lease
75
7 New Turbo-Prop
Purchase
105
2 Boeing 777-200LR
Purchase
360
3 Boeing 777-300LR
Purchase
600
1 Boeing 777-300LR
Purchase
160
Lease / Purchase
350
Lease / Purchase
120
2006
2007 / 2008
6 Narrow body Twinjet
2009 / 2010
2 Narrow body Twinjet
Total
1770
29.15. Conclusion
In recognition of the important role of transport in the economy, the MTDF provides
for a comprehensive programme for transport sector development covering roads, railway,
ports and shipping, and aviation sub-sectors. It is expected that with the establishment of a
multi-modal transport system, emphasis on asset management, enhanced private sector
participation, institutional capacity building and sector efficiency would increase.