PIBTL plans capacity expansion to cater high coal demands

KARACHI: Pakistan International Bulk Terminal Limited (PIBTL) has planned expansion of annual cargo handling capacity to around 19 million tons from existing 16 million tons as the company foresees higher demand with coal-based power plants coming up.

“It may take 15-18 months to complete. However, the expansion is expected to commence within three months going forward,” PIBTL’s management commented at a corporate briefing on Wednesday.

The project would require a capital expenditure of around $50-60 million, comprising of equipment cost mostly.

“Going forward, 4.0 million tons of Lucky Power Plant cargo is also likely to be handled by PIBTL. In the long-run, power plants coming online including Lucky Power, may consume PIBTL’s additional capacity. Additional capacity stands at 3-4 million tons,” a report issued by Taurus Securities noted.

PIBTL handled volumes of 2.3 million tons of imported coal at 85 percent capacity utilisation in the first quarter ended September 30, 2020, while the terminal expects to handle 2.9 million tons of coal for the second quarter operating at utilisation levels of 87-90 percent.

Commenting on the ongoing railway project, terminal officials highlighted that Pakistan Railways was working on laying a 6km track, which would connect PIBTL’s terminal with Jumma Goth Junction, reducing the timing of dispatch of containers.

PIBTL further explained that fluctuations in commodity prices do not affect volume handling charges. Currently, average revenue stands $6.5/ton.

Management believes that the procurement witnessed in previous quarters was due to Covid-19 backlog and similar off-takes might not be witnessed going forward. Overall, demand for coal is expected to normalise till January 2021.

PIBTL is also negotiating conversion of its legacy project finance designated loans to term finance loans, in order to create capacity for dividend payouts in future.

Currently, PIBTL’s jetty is capable of handling two vessels, with a capacity utilisation of 8-9 million tons. However, PIBTL’s current infrastructure allows only one ship to be attended at a time. Constructing another jetty would require an investment of $250-300 million, as per the management.

The management also informed that PIBTL availed deferment of principal payments on domestic loans under the State Bank of Pakistan’s Covid-19 relief initiative, and availed standstill on foreign loans.