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PIBTL views PKR devaluation as beneficial and reduced tariffs.

Pakistan International Bulk Terminal (PIBTL) has addressed details of its operation and the future outlook for coal and cement handling in Pakistan. Topline Pakistan Mid Cap Call Conference 2024 provided the platform. The key speakers for the session were Mr. Shariq Azam Siddiqui, CEO of PIBTL, and Mr. Arsalan I. Khan, CFO of PIBTL.

They talked about the foreign Loan Exposure: The foreign loans have been reduced to US$20mn and will be further reduced to US$16mn by June 30, 2024. The dollar-based loan repayment will be completed by June 2026. A couple of years ago, management tried to swap this foreign currency loan with PKR; however, SBP didn’t allow this.

Coal handling at Port Qasim vs. KPT:

They said that the Supreme Court directives banned coal handling at Karachi Port. This order has been imposed due to health and environmental issues. At Port Qasim, besides PIBT, no commercial terminal handles coal. Some IPPs have terminals for coal handling; however, they use them for their purposes.

Impact of devaluation: In the future, PKR devaluation will benefit the company since its revenue is dollar-linked and dollar-based loans have been reduced.

Clinker and Cement handling:

The company is facing competition from Karachi port for the export of clinker. Abu Dhabi ports have been granted a royalty payment of 15% from the government compared to 35% of PIBTL. Due to this, PIBT needs to improve handling volumes related to cement/clinker export. However, management has reduced tariffs to remain competitive in this segment.

Commodities which PIBT can handle:

PIBTL is only permitted to handle coal, clinker, and cement, which are classified as dirty bulk cargo. Other items, such as rice, are not permitted. Permission for other items must be obtained from the Port Qasim Authority (PQA), which is part of the federal government. In the future, the company can handle commodities like minerals; however, permission would be obtained as mentioned above.

Previously, PQA allowed the handling of LPG to a few terminals, including PIBT. However, that segment is no longer available due to a change in PQA management.

Current year volume handling: PIBTL has handled 5.37mn tons of imported coal in 9MFY24. Despite the threat from Afghan coal and Thar coal, management expects to also handle 5-6mn tons of coal per annum in the future.

Quantum of Afghan coal: According to PIBTL management, Afghan coal imports are between 2 and 3 million tons per annum.

Debt Covenants and Dividend Payment Outlook: The company has debt covenants for maintaining debt servicing benchmarks. There are no covenants particularly restricting dividend payments. The company currently utilises its cash flows for operations and debt repayments; therefore, there is no space for dispensing dividends to shareholders. Once the debt repayments are concluded in two years, management expects free cash flows to be available for shareholders.

The highest-handled coal in Pakistan’s economy was 20 million tons, including three IPPs and PIBTL. Currently, total coal imports stand at 15- 16 million tons.

PIBTL faced exchange losses of Rs2.23bn in FY23 due to dollar-based loans.

Courtesy – Topline Research.

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